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Refine Summary for Tokenholders

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Ryan R. Fox 2018-09-21 04:34:46 -04:00 committed by GitHub
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bsip-0044.md
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@ -279,9 +279,9 @@ https://github.com/bitshares/bsips/pull/104
# **Summary for Tokenholders**
Hashed Timelock Contracts (HTLCs) allow account holders to transfer funds from their account (sender) to another account (receiver) before a certain time, only if the receiver knows the preimage (a.k.a. password). If used, the preimage is then published on the blockchain. If the transfer is not claimed before expiry, the funds return to the original account holder.
Hashed Timelock Contracts (HTLCs) enable conditional transfers, whereby distinct account holders may transfer tokens from one account (`sender`) to a second account (`receiver`) before a defined expiry (`timelock`), only if the `preimage` (a.k.a. password) is revealed (`hashlock`) on the blockchain. If the `hashlock` condition is not satisfied prior to the `timelock` the tokens are return to the `sender`.
Creating these contracts in pairs allow users to do a trustless exchange, even across blockchains. The typical scenario is that Account holder A agrees to make a transfer Account holder B on the Bitshares blockchain, and Account Holder B agrees to make a transfer to Account holder A on a foreign blockchain. Account holder A creates an HTLC on Bitshares, that includes a hash (an encrypted form of the preimage). Account holder B can view the HTLC, and decide to agree by creating an HTLC on the foreign blockchain, using the same hash. Account holder A then uses their preimage to receive the funds on the foreign blockchain, and in the process exposes the preimage. Account holder B can now use that preimage to receive the funds on the Bitshares blockchain.
A typical scenario involves “Alice” and “Bob” each having accounts on the BitShares Network and addresses on the Bitcoin Network willing to trade their tokens. Alice will begin by creating an HTLC on BitShares to transfer BTS tokens from account `alice` to account `bob` with conditions set for hash of preimage (`hashlock`) and contract expiry (`timelock`). Bob will review her HTLC, if acceptable he will create an HTLC on the Bitcoin Network to transfer BTC from `his address` to `her address` with conditions set to the same `hashlock` value and a `timelock` value approximately half that specified by Alice. Next, Alice will review Bob’s HTLC for correctness and if acceptable, will redeem the BTC therein by publishing her `preimage` to satisfy the `hashlock` prior to the `timelock` expiry. Finally, Bob will observe the revealed `preimage` and use it to redeem Alice’s HTLC on the BitShares Network resulting in the BTS transferring to his account. Alice and Bob successfully exchanged native BTS and BTC at their agreed to ratio without any intermediaries.
# **Copyright**