Alice watches the Bitcoin blockchain

Setup:

- Alice has BTC, wants LTC

- Bob has LTC, wants BTC

- Alice generates secret S and computes H = HASH160(S)

- Alice shares H with Bob (but NOT S)

Bitcoin HTLC (Alice creates on Bitcoin chain):
"Bob can claim 1 BTC by revealing S before block 700,100
 OR Alice can reclaim after block 700,100"

Litecoin HTLC (Bob creates on Litecoin chain):
"Alice can claim 100 LTC by revealing S before block 3,500,000
 OR Bob can reclaim after block 3,500,000"

Alice's HTLC expires LATER than Bob's — this is critical for safety.

scriptPubKey:
OP_IF
    OP_SHA256 <hash_of_secret_S> OP_EQUALVERIFY
    <bob_pubkey> OP_CHECKSIG
OP_ELSE
    <locktime_block_700100> OP_CHECKLOCKTIMEVERIFY OP_DROP
    <alice_pubkey> OP_CHECKSIG
OP_ENDIF

ScriptSig: <bob_signature> <secret_S> OP_1

SHA256(<secret_S>) == <expected_hash>? → YES → continue

Verify bob_sig is valid for bob_pubkey → 1 (TRUE)

# Alice watches the Bitcoin blockchain
# When Bob's claiming transaction is confirmed, she extracts S:

def extract_preimage_from_transaction(tx):
    """Extract the secret S from Bob's claiming transaction."""
    for vin in tx.vin:
        script_ops = parse_script(vin.scriptSig)
        # In a typical atomic swap claim, S is the second push item
        # after the signature
        if len(script_ops) >= 3:
            potential_secret = script_ops[1]  # Second item
            if len(potential_secret) == 32:  # S is 32 bytes
                return potential_secret
    return None

# Alice then uses S to claim LTC:
# scriptSig for Alice claiming LTC: <alice_sig> <secret_S> OP_1

Why Alice's timelock must be longer than Bob's:

Timeline:
Block 3,500,000 → Bob's LTC timelock expires (Bob can reclaim LTC)
Block 700,100   → Alice's BTC timelock expires (Alice can reclaim BTC)

Dangerous scenario if Alice's timelock were SHORTER:

1. Alice claims LTC (reveals S)

2. Alice's BTC timelock expires before Bob sees the tx

3. Bob reclaims BTC

4. Bob ends up with both BTC and LTC ← catastrophic

Safe ordering ensures:

- If Bob claims BTC (reveals S), Alice has time to see S and claim LTC

- If Bob never claims, both timelocks expire and everyone gets refunds