Bilateral Atomic Swap refers to a method that allows two parties to exchange different cryptocurrencies directly without the need for a centralized exchange. This is achieved through smart contracts, which facilitate the trade securely and trustlessly.

In a typical swap, both parties agree on the cryptocurrencies they want to exchange. They then create a smart contract that locks their funds, ensuring that both sides fulfill their end of the deal. If one party fails to complete the transaction within a specified time, the contract automatically returns the locked funds to their original owners.

This process eliminates the need for intermediaries, reducing fees and potential risks associated with centralized platforms. It also enhances privacy, as the transaction details are not publicly recorded on a centralized ledger. Overall, bilateral atomic swaps enable users to trade assets more efficiently and securely while maintaining control of their funds throughout the process.