Atomic Swap Explained

An atomic swap is a smart contract technology that empowers the exchange of one cryptocurrency for an alternative cryptocurrency without using central intermediaries, such as exchanges.

Atomic swaps can take place unswervingly amid blockchains of different cryptocurrencies, or they can be conducted off-chain, away from the foremost blockchain. They first came into prominence in September 2017, when an atomic swap between Decreed and Litecoin was conducted.

Since then, other start-ups and decentralized exchanges have allowed users the same facility. For example, Lightning Labs, a start-up that uses bitcoin’s lightning network for transactions, has conducted off-chain swaps using the technology. Cryptocurrencies and decentralized exchanges, such as 0x and Altcoin.io, have also incorporated the technology.

Atomic Swaps Break Down

As it occurs today, the process for switching cryptocurrencies is time-consuming and complex. This is due to several reasons. For example, the disjointed nature of today’s cryptocurrency ecosystem presents several challenges to average traders.

Not all cryptocurrency exchanges support all coins. As such, a trader wishing to exchange her coin for another one that is not supported on the current exchange may need to migrate accounts or make several conversions between intermediate coins to accomplish her goal. There is also an associated counterparty risk if the trader wishes to exchange her coins with another trader.

Atomic swaps solve this problem through the use of Hash Time- lock Contracts (HTLC). As its name denotes, HTLC is a time-bound smart contract between parties that involves the generation of a cryptographic hash function, which can be verified between them.

Atomic swaps necessitate both parties to admit receipt of funds within a specified timeframe using a cryptographic hash function. If one of the involved parties fails to authorize the contract within the timeframe, then the entire transaction is voided, and funds are not exchanged. The latter action helps remove counterparty risk.

Benefits of Implementing Blockchain Technology in Charity

Charitable giving is on the rise, mostly due to resilient economic conditions in North America and Europe over current years. According to Giving USA, 2017 was the first year that contributions from the US crossed the $400 billion mark, a rise of five percent over the preceding year.

While contributing to charity may deliver us with a warm glow, few people stop to consider exactly where their donations end up. Charity fraud is a global issue, creating a risk that donated funds end up being siphoned off through scams or corruption.

What can Blockchain do for Charity?

Blockchain technology is creating waves in many sectors such as supply chain due to its functionality in providing a secure, unalterable record of value transfers. This makes blockchain the ideal technology to bring transparency to the distribution of charitable donations.

Using an open public ledger, a charity or NGO could collect donations in a digital currency. Each unit collected is traceable from the moment it’s contributed to the point that it’s spent on goods or services. Cryptocurrency transfers are peer-to-peer, meaning that charities could also decrease fees incurred by intermediaries like banks or foreign currency exchange services. 2017 and 2018 saw a proliferation of tech start-ups generating blockchain-based digital tokens to crowdfund their new business venture. While the regulators have now started to clamp down, in 2019 blockchain innovators are now turning to regulated token generation events, known as security token offerings (STO.) Charities and NGOs could similarly use such a mechanism to crowdsource donations for their endeavours.

Furthermore, blockchain-based smart contracts could even automate the distribution of funds for particular projects. For example, if a charity collects funds to build a school, the funding could be released by smart contracts in stages once specific milestones of the construction project are completed. Some projects are already working on these kinds of solutions for charities. Alice is one example. The tech firm is collaborating with the Charities Aid Foundation and Imperial College London to develop a blockchain-based platform aimed at transparency in charitable fundraising.

How the Blockchain Community is Giving Back

The Bitcoin boom of late 2017 and early 2018 saw massive growth in the market size for cryptocurrencies and blockchain. Now, some blockchain firms are demonstrating their commitment to social responsibility by setting up charitable initiatives. In many cases, these are also leveraging the benefits of blockchain in managing charity funding.

#VoiceYourLove

For example, Tron is a decentralized application protocol, launched in 2018. The project is managed by the Tron Foundation, a non-profit based in Singapore with tech wunderkind Justin Sun at the helm.

Tron recently announced its collaboration with the ALS Association on an awareness campaign timed to coincide with Valentine’s Day, called #VoiceYourLove. The ALS Association had enormous success back in 2014 with the Ice Bucket Challenge, which went viral on social media. The new campaign invites people to create videos where they talk about their loved ones. Contributions to the #VoiceYourLove campaign will be tracked through to distribution using blockchain, with the results published at the end of the campaign. Sun himself has personally donated $250,000 and is “urging others in the blockchain industry to voice their love by donating to help find a cure.”

We strongly advise you to make your contributions to charities that accept bitcoin and other cryptocurrencies that work towards causes that resonate on a personal level.

What the Blockchain Technology Would Have on The Insurance Industry

Much has been made about blockchain’s utility across different industries. Critics oppose the technology is mere hype, that the alterations it makes is marginal and not worth spending money on. Supporters, on the other hand, willingly acknowledge that blockchain is not the answer being trumpeted in some corners, but also identify that there are use cases where it essentially makes sense. This is why noteworthy resources are being devoted to the study of the blockchain system/technology by some of the world’s major establishments.

Insurance is one such industry, but in fact, blockchain is exactly what’s required to inoculate some revolution into an industry that has not transformed much in decades. From global insurers down to start-ups, we are seeing a wave of new goods and services, everything from flight delay insurance to enhanced risk modelling. What we need to understand what it is about blockchain that makes sense for the industry, if you want to know more, then read on.

Information sharing

Imagine a situation where insurance firms can share customer KYC data instead of having to inspect every individual that requests to buy insurance. It could mean savings of thousands of dollars per customer. Blockchain makes this possible by allowing multiple insurance firms to contribute data to the same decentralized ledger. And because the data is immutable, the insurance companies can trust that it is authentic. One such information are claims records. If insurance companies contribute information to the same blockchain, duplicate claims can easily be detected.

Transparency

Historically, consumer data has been stored behind the walls of insurance companies. Consumers have little in the way of visibility of this data, and instead are given only what the insurance company decides via a portal. And if the information is shared with third parties, the consumer is not notified about it. The open and decentralized nature of blockchain means that consumers will always be able to see the data the insurance company has and what is being done with that data.

Trust

It is not unusual for consumers to mistrust insurance companies. Confusing policy terms, high premiums, and long claims processes all contribute to this. The blockchain, specifically smart contracts, bring trust back into the equation by simplifying the insurance contract and, with the help of AI, automating claims. No human intervention required.

Tokens

One reason the privilege pay-out process is slow is the need for fiat currency cheques or bank transfers. Consumers occasionally wait for weeks for the pay-out to show up in their account. Using digital tokens accounted for on the blockchain answers this problem. Pay-outs can be made promptly and then be re-used to purchase added coverage.

Smart contracts

Smart contracts are programmable contracts devoted to the blockchain. They are independent and, therefore, do not need human intrusion. For the insurance industry, smart contracts enable micro-insurance guidelines to be issued and claim pay-outs to be pre-programmed.

Lower costs

What all of this adds up to is lower premiums for consumers. Personalized insurance coverage has never been so affordable. Hearti is committed to providing the most innovative and hassle-free insurance products to its customers. Blockchain is one of the technologies that will help us get there.

Fraud deterrence

Fraud is a major problem in the insurance manufacturing, costing an estimated 80 billion USD each year⁽¹⁾. Blockchain, smart contracts, and AI can help reduce this figure by demanding info verified by AI from multiple sources before paying out a claim. And the immutability and decentralization of blockchain allows insurance firms to share fraud data.

Ref-

¹http://www.insurancefraud.org/statistics.htm.