May 29, 2024

6 Benefits of Swapping Tokens With a Cryptocurrency App

6 Benefits of Swapping Tokens With a Cryptocurrency App

Token swaps allow crypto holders to trade their digital assets directly rather than converting them to fiat currency before buying or selling. With a cryptocurrency app that supports swapping, users can instantly trade tokens with each other. The swap can even be conducted directly from a secure crypto wallet for maximum simplicity.

This process reduces transaction fees, improves speed, and makes it easier to find low-capitalization tokens. As a result, swapping is rapidly becoming an increasingly important part of the overall crypto ecosystem.

If you're beginning to explore the crypto world or looking to download your first cryptocurrency app, you may have heard the phrase "token swap" a time or two. As the name suggests, a token swap is a method of exchanging two different digital assets. But how does it differ from buying and selling cryptocurrency, and what are its benefits? Here's what you need to know to get started with token swaps and find a cryptocurrency app that will help you conduct them securely.

What is a crypto token swap?

Simply put, a crypto swap is a direct exchange of one token for another without using a fiat currency as an intermediate step. In a swap, users send tokens from two different blockchains directly to each other's wallets.

Swaps typically take place via a dedicated cryptocurrency app that allows users to trade tokens directly between secure crypto wallets in a decentralized environment.  To do this, you'll need a wallet that supports swapping, such as RockWallet. Not all wallets offer this feature, but it's gradually becoming more common as crypto token swaps increase in popularity.

Benefits of a token swap

1. Lower transaction fees

Perhaps the largest advantage of swapping crypto directly is the reduction in transaction fees. In a traditional trade, one token must be exchanged for fiat currency or a major cryptocurrency. That medium of exchange is then used to purchase the buyer's desired token. Each step comes with its own transaction fees, which can add up to a significant amount.

In a swap, tokens are exchanged directly for one another from a secure crypto wallet or through a cryptocurrency app. Without the intermediate steps, the cost of changing one token for another drop dramatically. Thanks to these lower transaction fees, acquiring tokens through swapping is often much more economical.

It should be noted that swaps aren't completely free. Crypto swapping platforms will still apply a single fee for transactions that users should understand before initiating swaps. 

2. Access to a larger array of tokens

Most traders who are just starting out in the crypto world are initially introduced to two main digital assets: BTC and Ethereum. These two currencies are the most popular and widely used, making them natural starting places for those who are entering the crypto market for the first time. Every exchange and cryptocurrency app you'll use as a beginner deals heavily with these two dominant currencies.

As you begin to learn more about the crypto ecosystem, though, you'll be introduced to a wide range of different digital assets. In some cases, these assets will have small market capitalizations and be difficult to find on mainstream exchanges. These smaller tokens are often easier to acquire and exchange via swapping. If you have a cryptocurrency app that supports swapping, you'll have a much easier time finding and acquiring these tokens.

3. Improved speeds

Another benefit of swapping tokens directly is the fact that the transaction typically involves fewer steps. Without converting to fiat first, the transaction has fewer steps to go through. As a result, crypto swaps can be more or less instantaneous but are still subject to blockchain processing times. Once you initiate a swap through your cryptocurrency app, you should see the new tokens appear in your wallet shortly after the transaction is confirmed on the blockchain.

4. Greater flexibility in trading tokens

When converting tokens through a traditional exchange, users typically select from a short list of token pairs that can be exchanged for each other. Swapping platforms and cryptocurrency apps that enable swaps greatly expand this list. As long as the token you want is supported by your app, platform, or in-wallet exchange, you'll be able to conduct a swap for it. Likewise, you may be able to swap one smaller token for another, creating more options for buying and selling your digital assets.

5. Enhanced security

Security is one of the most crucial considerations whenever you're using or exchanging cryptocurrency. Swaps can improve security by eliminating third-party participants. When users swap crypto between two secure crypto wallets, they can take advantage of security similar to a decentralized exchange. Swaps are further secured by smart contracts, giving users peace of mind when exchanging tokens.

Enhanced security isn't an automatic benefit of all token swaps. Swaps conducted through centralized exchanges are still subject to ordinary security risks. If you're using a non-custodial wallet and swapping through a decentralized platform with a secure cryptocurrency app, though, you will enjoy improved security from swapping.

Are there drawbacks to token swaps?

For all of their benefits, token swaps aren't perfect. The one major downside you will encounter with swapping is the variability of exchange rates. When you begin a swap, you usually won't know exactly how much of the new token you'll receive. Some platforms and cryptocurrency apps offer fixed exchange rates, though these typically come with higher transaction fees.

As with anything else in the world of crypto, it's also crucial to vet the exchange or cryptocurrency app you're using to conduct your swaps. Using a trusted platform is key to achieving the highest possible level of security. It's also important to use a non-custodial wallet for your transactions, as custodial wallets are less secure. With a secure crypto wallet, though, you can conduct token swaps with peace of mind.

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