There are a lot of things related to the cryptocurrency industry. Some of them are a bit confusing because of their names. like fork, burn, bull and bear, HODL, etc. But if you do research, you find them they are simple terms. So the Coin Swap is.
In today’s article I’m going to share with you, what is a swap and all the related stuff. Stick till the end. This article will not going to be so long.
Before getting started, There are two different terms for coin swap. In this article, you will learn about the coin blockchain swap.
The other swap is simple and private way to allow cryptocurrency holders to exchange coin (e.g. BTC→USDT or ETH→BTC) at a predetermined
Understanding Coin Swap
Here is the true story. Coin swap means exactly in the name. “Swap” Its like changing from an old coin to a new one. Simple.
But, there are some things that you need to know about.
It’s so complicated thing in cryptocurrency technology. We can say that its a change from old to new coin. But the fact is, its a blockchain change to a new one considering the cryptocurrency technology. Changing the blockchain? How could this happen?
I already explained in previous posts, Blockchain is the chain that records every transaction and related stuff of a cryptocurrency. It’s all about solving math. Check out my mining article for more.
If a swap happens to a cryptocurrency. The initial coins were burnt. Usually, swap occurs with a ratio which means something like this.
“A single coin worth 1000 coins after the swap”
Don’t you understand??
Let me explain, Its 1:1000 in professional. What does that mean? Assume ethereum having a swap with a ratio of 1:1000. Currently, you have 10 ethereum. You will immediately get 10000 ethereum after the coin swap.
“10 X 1000 = 10000”
Excited? This thing can be done in the opposite way (Like 1000:1) and it could be any ratio.
So, if your coins that holding in your wallet, scheduled to swap, do the math considering the ratio and determine how many coins you will own after the swap.
But, what about the price after a swap?
Also, it depends. Developers announce the price after the swap. It may higher than the before price or even lower than the current price.
Generally, it will be higher than the price before the coin swap when the swap ratio looks like this “1000:1” If the swap happens in the opposite way, the price will lower.
Okay, that’s it for today’s post. Hope you understood my simple explanation.
What do you think?
Do you have experience in coin swaps as well?
Is there anything that needs to change?
Share your ideas by leaving a comment down below.