Hash Time-Locked Contracts are smart contracts utilized to increase the safety of trustless over-the-counter transactions across blockchains. Used on atomic swaps and Bitcoin′s lightning network, HTLCs reduce risk by ensuring that transactions are time-bound.

These contracts state that both parties must recognize the stated payment within a specific timeframe for the transaction to be valid. If either party does not verify the payment within the set time, the exchange is canceled.

Q: What is a Hash Timelock Contracts (HTLC)?

A: is a type of smart contract used in blockchain applications. It reduces counterparty risk by creating a time-based escrow that requires a cryptographic passphrase for unlocking.

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Original link:https://www.investopedia.com/terms/h/hashed-timelock-contract.asp#:~:text=A%20hashed%20timelock%20contract%20(HTLC)%20reduces%20counterparty%20risk%20in%20decentralized,of%20time%20or%20forfeit%20it.


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