A Hashed Timelock Contract (HTLC) is a type of smart contract that enables secure transactions between parties without needing intermediaries. It combines two key features: a hash and a time lock.In the first part, the hash ensures that the transaction can only be completed by someone who knows a specific secret. This secret is used to generate a hash, which is shared with the other party. To claim the funds, the recipient must present the secret that matches the hash.The second part involves a time lock. If the transaction is not completed within a specified time frame, the funds are automatically returned to the sender. This protects both parties by ensuring the sender doesn’t lose money if the recipient fails to act.HTLCs are commonly used in atomic swaps, allowing users to exchange different cryptocurrencies without needing a centralized exchange. They enhance security and trust, making it easier to conduct peer-to-peer transactions. Overall, HTLCs are an important tool for facilitating direct exchanges and ensuring fairness in transactions.