What does "swap" mean on the blockchain?

New projects are emerging with their tokens and blockchains as they seek to accomplish specific goals. Many of these tokens are designed to beat Ethereum. They offer developers better scalability, low fees, and other perks. Some are only for use in decentralized applications like online casinos and crypto loan services.

Ultimately, we will need to exchange one crypto for another, just like we would exchange dollars or euros.

This guide will help you understand the various methods for switching cryptos and the pitfalls that cryptocurrency enthusiasts might encounter. It also explains what PerfectionGeeks has to offer to resolve those pitfalls.

Why Are There So Many Blockchains?

Bitcoin was invented in 2008 and launched one year later. It is peer-to-peer electronic cash that can be used.

The world has been devastated by centralized financial institutions and banks that have endlessly printed money. Satoshi Nakamoto was inspired to create an alternative payment method that didn't depend on any central system. He used a unique approach to computer code to make the payment. We're now calling it the "bitcoin protocol."

Buterin came up with the brilliant idea of smart contracts, which run on top of the blockchain. This makes it possible to perform transactions without human intervention. Two years later, the new Ethereum blockchain platform was launched. It has since become a foundation for the decentralized economy.

The ICO rally in 2017 almost caused Ethereum to crash under the sheer volume of demand. This led to the creation of many startups with the sole purpose of solving the most difficult scaling problem. We now have dozens of blockchains, each with their own unique value transfer mechanisms.

Tokens are not simply exchanged

What's the problem when you send funds from one cryptocurrency to another?

It can be tricky to navigate the world of cryptocurrency. You should be cautious when sending bitcoins from one address to another. If you make a mistake, your funds are lost without any chance of recovery. If you attempt to send Bitcoin to Ethereum addresses or vice versa, the same thing will happen.

It's difficult to link them. Some projects, such as Polkadot and Cosmos, are working to solve this problem. All of these projects are geared towards developers and not end-users, leaving frustrated users to search for the latest versions.

There are many workarounds, but each has its own set of challenges. Let's take a look at some of the most common options:

How To Swap Crypto: 3 Ways to Exchange Cryptocurrencies

These are the most popular methods for exchanging cryptocurrency, even if you don't have any technical knowledge. Let's look at the benefits and drawbacks of each.

Centralized Exchanges

Many centralized exchanges have emerged to meet the growing demand for cryptocurrencies, as has the popularity thereof. They compete against each other based on the number of trading pairs they offer. A trading pair allows you to exchange cryptocurrency at a lower cost or even for free.

But, this diversity comes with a price. These exchanges are primarily targeted at traders, which means that they adjust their offers according to market conditions. It doesn't make it easier for regular people to join.

These are the drawbacks to this method:

Complex interface Unprepared users may get lost among the many indicators, graphs, orders, and other elements.

Fees, fees, and more fees. You will need to pay fees at each step of the process, from deposit to withdrawal, to transact and exchange cryptocurrency for another. While centralized exchanges typically clearly state their terms, there is still a lot of room to manipulate them. You may not know the final amount you received in your wallet.

Complex KYC Process. Some exchanges have a complicated verification process. It can take several days, weeks, or even months to verify a user's account.

Price fluctuations The volatility of cryptocurrencies means that the price of assets can change in a very short time. You may lose your order and have to start over to complete the transaction.

Regional exchanges are limited to Because cryptocurrencies are still in the grey area, it can be difficult to find a platform that will operate in your region.

Decentralized Exchanges

DEXs were created to provide an alternative to centralized exchanges. They have overcome many of their problems.

Because the funds are transferred between wallets, they don't require verification. They are 'decentralized' and do not require any central servers.

But decentralized exchanges also have serious drawbacks:

Low liquidity is a result of the low popularity of decentralized exchanges. It would be difficult to exchange large sums.

There is a limited number of assets. DEXs are often attractive to projects that don't have the budgets necessary to be listed on large centralized exchanges. There is a small selection of coins available for trading, and most of these assets are not well-known to the general public.

OTCs

OTCs, or over-the-counter exchanges, are perhaps the most straightforward way for non-tech-savvy users to exchange cryptocurrency. They are typically integrated with central exchanges via API, and offer their users a simple interface with no confusing graphs.

But, this coin also has its dark side:

Opacity. OTCs may conduct transactions via centralized exchanges, but the entire process is still opaque. The final exchange rate may not be known by users and could fall prey to manipulation.

This is the worst rate. OTCs charge additional fees for every transaction. This would make the final rate much more expensive than centralized exchanges.

PerfectionGeeks offers a Solution

PerfectionGeeks has developed a unique way to exchange cryptocurrency. This eliminates all of the issues associated with the other methods and simplifies the entire process. If you don't want to be a blockchain programmer, this is the way to exchange cryptocurrency.

What makes us stand out?

It is simple and easy to use. PerfectionGeeks makes it easy to exchange cryptocurrencies. We don't overwhelm our users with complicated graphs. Instead, we strive to make it as easy as possible for all traditional payment methods.

The transaction rate will not change. We take on the risk of volatility in cryptocurrencies and ensure that your final exchange rate is the same as what you saw at the beginning.

No hidden fees. There will not be any additional fees beyond what you see when you initiate a transaction.

The most popular asset More than 300 popular cryptocurrencies are supported by us, including EOS, Litecoin, ERC-20 tokens, and Cardano.

Security: Our company is legally registered as a business in Estonia. This provides favorable conditions for startups using blockchain technology. We have implemented various layers of organizational and technological measures to increase the security of crypto assets that pass through our platform, including multi-factor authentication and SSL certification. We were awarded the ISO Information Security Accreditation after an independent audit for all of our efforts.

How Do Token Swaps Work?

This guide will focus on the first definition of token swap. This refers to seamless crypto-to-crypto exchange services, rather than the time-consuming and costly process of converting digital assets to fiat. Then you can use the fiat to purchase your desired coins. This solution is a simpler way to access cryptocurrencies with low market capitalization.

If you are looking to exchange your COMP coin for ZIL, then you'll likely find that there are very few exchanges that offer the COMP/ZIL trading pair. You may need to trade your COMP tokens first for fiat currencies, ETH, USDT, or other established coins such as BTC, ETH, and USDT. You can then exchange popular fiat or coins directly to ZIL.

This process is costly and time-consuming, as you will see. You would need to pay transaction fees a minimum of twice to execute such trades. It is difficult to determine how volatility in prices can affect the profitability of trades. Keep in mind that crypto-assets can be volatile. The above-mentioned method could make it more difficult to get your desired price.

These drawbacks were overcome by the instant cross-chain swap functionality added to exchanges, wallets, and other platforms. This allows users to exchange one crypto asset for another. Simply enter the amount that you wish to exchange, along with the desired trading pair, and the token swap service will instantly convert your coins. This method of transacting requires you to only pay one transaction fee.

Token swapping platforms offer a secure and convenient crypto-to-crypto gateway. You can exchange any amount you like from any custodial or non-custodial wallet. You may not have to send your coins to a cryptocurrency swapping service or exchange to access instant crypto-to-crypto exchange. This depends on how robust your wallet is. Crypto swapping services are often offered by wallet providers so users can securely convert their coins from their wallets.

These crypto swapping services offer simplicity, speed, affordability, and security. Some allow users to purchase cryptocurrencies using their debit or credit cards.

Changelly, Shapeshift, and Change Now is some examples of services that offer dedicated crypto-swapping services. In-house swapping services have been created by both wallets and exchanges. The DeFi token swap solutions were also created by the 2020 DeFi craze. This trend is also sweeping the NFT market. The options for token swaps are virtually limitless.

Due to the proliferation of swapping services, it is important to do your research before making a decision. You should be aware of whether the exchange platform offers a large selection of crypto pairs and how secure it is. Also, you need to know the speed at which the coins are being swapped. Slippage is not possible at high speeds. Slippage is when you receive less cryptocurrency A than the amount of another cryptocurrency B before the transaction is completed.

Some services offer fixed swap rates, which are kept from the beginning of the transaction until its completion. This eliminates slippage. These offers may come with an additional requirement: you might have to pay a higher transaction charge.

Conclusion

Token swap services play a key role in the ongoing cryptocurrency renaissance. They remove the barriers that prevent people from entering the altcoin marketplace. These solutions can be used to provide an easier way to access cryptocurrencies with low market capitalization. Token swaps are likely to continue to be a prominent part of the crypto industry due to their easy, quick, and simpler approach to digital asset trading.