An atomic swap is a decentralized exchange of one cryptocurrency for another, conducted directly between two parties, without the need for an intermediary like an exchange. This process uses smart contracts to ensure that the transaction is "atomic," meaning it is either completed entirely or not at all. If one party fails to meet the agreed terms, the entire swap is canceled, preventing any loss of funds. Atomic swaps help enable cross-chain exchanges, allowing users to trade different cryptocurrencies directly on their respective blockchains.