The first ever Lightning cross-chain swap from Bitcoin to Litecoin has been announced. Though still in a testing phase, the Lightning Labs team say they successfully swapped testnet Bitcoin for testnet Litecoin via a lightning channel to confirm the experiment.

It resulted in the ownership of coins being transfered from one person to the other but no transaction was recorded on either blockchain. Running Lightning Network on different blockchains means their chains can be linked together. The experiment comes in the wake of the canceled proposed software upgrade to the Bitcoin network, Segwit2x. The Lightning Network uses a special type of payment called a Hashed Time-Locked Contract (HTLC). HTLCs use timelocked refunds for safety, and atomically move funds by revealing preimages.

Impact on Litecoin
While the cross-chain swap is going to solve a few issues facing the world’s top digital currency, BTC, it would likely boost the value of LTC too. Since the announcement on Thursday Nov. 16, some holders have projected LTC’s rise to a price point of $80 from its current $66.

The narrative of BTC being the gold for storing value while LTC serves as the main currency for everyday use seems to be coming back. This is particularly because LTC’s transaction fee is designed to be always cheaper than BTC’s.
Litecoin’s Charlie Lee believes LN’s cross-chain atomic swaps are important to how cryptocurrencies can scale to seven billion people.

What is a swap?
It is a process whereby funds could be exchanged between two participants who have assets on separate blockchains. They will have to execute a protocol that guarantees the atomicity of the transfer. It will result in either the exchange of the assets or nothing. By so doing, the cryptocurrencies would be swapped between the two parties without a trusted third party. Also, neither party will be able to cheat the other. Some of the benefits of LN’s use to swap currencies include instant settlement, improved privacy and low trading fees.

Second layer off-chain solutions like LN are only practical with a transaction malleability fix like SegWit. The upgrade was implemented on the Bitcoin network a few months ago. Aside Litecoin, other altcoins that are forked from Bitcoin’s codebase e.g. Dogecoin or Zcash are capable of hosting LN.