Lightning Network (LN) addresses the scalability problem of Bitcoin by leveraging off-chain transactions. Nevertheless, it is not possible to run LN on resource-constrained IoT devices due to its storage, memory, and processing requirements. Therefore, in this paper, we propose an efficient and secure protocol that enables an IoT device to use LN's functions through a gateway LN node. The idea is to involve the IoT device in LN operations with its digital signature by replacing original 2-of-2 multisignature channels with 3-of-3 multisignature channels. Our protocol enforces the LN gateway to request the IoT device's cryptographic signature for all operations on the channel. We evaluated the proposed protocol by implementing it on a Raspberry Pi for a toll payment scenario and demonstrated its feasibility and security.
Resource-constrained devices are unable to maintain a full copy of the Bitcoin Blockchain in memory. This paper proposes a bidirectional payment channel framework for IoT devices. This framework utilizes Bitcoin Lightning-Network-like payment channels with low processing and storage requirements. This protocol enables IoT devices to open and maintain payment channels with traditional Bitcoin nodes without a view of the blockchain. Unlike existing solutions, it does not require a trusted third party to interact with the blockchain nor does it burden the peer-to-peer network in the way SPV clien…
The Lightning Network (LN) is a prominent payment channel network aimed at addressing Bitcoin's scalability issues. Due to the privacy of channel balances, senders cannot reliably choose sufficiently liquid payment paths and resort to a trial-and-error approach, trying multiple paths until one succeeds. This leaks private information and decreases payment reliability, which harms the user experience. This work focuses on the reliability and privacy of LN payments. We create a probabilistic model of the payment process in the LN, accounting for the uncertainty of the channel balances. This enab…
While various covert botnets were proposed in the past, they still lack complete anonymization for their servers/botmasters or suffer from slow communication between the botmaster and the bots. In this paper, we propose a new generation hybrid botnet that covertly and efficiently communicates over Bitcoin Lightning Network (LN), called LNBot. LN is a payment channel network operating on top of Bitcoin network for faster Bitcoin transactions with negligible fees. Exploiting various anonymity features of LN, we designed a scalable two-layer botnet which completely anonymize the identity of the b…
Bitcoin, Ethereum and other blockchain-based cryptocurrencies, as deployed today, cannot scale for wide-spread use. A leading approach for cryptocurrency scaling is a smart contract mechanism called a payment channel which enables two mutually distrustful parties to transact efficiently (and only requires a single transaction in the blockchain to set-up). Payment channels can be linked together to form a payment network, such that payments between any two parties can (usually) be routed through the network along a path that connects them. Crucially, both parties can transact without trusting h…
BIP70 is the Bitcoin payment protocol for communication between a merchant and a pseudonymous customer. McCorry et al. (FC~2016) showed that BIP70 is prone to refund attacks and proposed a fix that requires the customer to sign their refund request. They argued that this minimal change will provide resistance against refund attacks. In this paper, we point out the drawbacks of McCorry et al.'s fix and propose a new approach for protection against refund attacks using the Bitcoin multi-signature mechanism. Our solution does not rely on merchants storing refund requests, and unlike the previous …
Lightning Network can execute unlimited number of off-chain payments, without incurring the cost of recording each of them in the blockchain. However, conditional payments in such networks is susceptible to Griefing Attack. In this attack, an adversary doesn't resolve the payment with the intention of blocking channel capacity of the network. We propose an efficient countermeasure for the attack, known as Griefing-Penalty. If any party in the network mounts a griefing attack, it needs to pay a penalty proportional to the collateral cost of executing a payment. The penalty is used for compensat…
Ransomware can prevent a user from accessing a device and its files until a ransom is paid to the attacker, most frequently in Bitcoin. With over 500 known ransomware families, it has become one of the dominant cybercrime threats for law enforcement, security professionals and the public. However, a more comprehensive, evidence-based picture on the global direct financial impact of ransomware attacks is still missing. In this paper, we present a data-driven method for identifying and gathering information on Bitcoin transactions related to illicit activity based on footprints left on the publi…
Bitcoin has emerged as a revolutionary payment system with its decentralized ledger concept however it has significant problems such as high transaction fees and long confirmation times. Lightning Network (LN), which was introduced much later, solves most of these problems with an innovative concept called off-chain payments. With this advancement, Bitcoin has become an attractive venue to perform micro-payments which can also be adopted in many IoT applications (e.g. toll payments). Nevertheless, it is not feasible to host LN and Bitcoin on IoT devices due to the storage, memory, and processi…
Payment channel networks provide a fast and scalable solution to relay funds, acting as a second layer to slower and less scalable blockchain protocols. In this paper, we present an accessible, low-cost attack in which the attacker paralyzes multiple payment network channels for several days. The attack is based on overloading channels with requests that are kept unresolved until their expiration time. Reaching the maximum allowed unresolved requests (HTLCs) locks the channel for new payments. The attack is in fact inherent to the way off-chain networks are constructed, since limits on the num…
PQLN: Post-Quantum Security for the Bitcoin Lightning Network's Off-Chain Surfaces
East Texas A&M University（东德克萨斯农工大学）；North American University（北美大学）；Florida Gulf Coast University（佛罗里达海湾海岸大学）；Florida Institute of Technology（佛罗里达理工学院）
Off-chain transaction channels represent one of the leading techniques to scale the transaction throughput in cryptocurrencies. However, the economic effect of transaction channels on the system has not been explored much until now. We study the economics of Bitcoin transaction channels, and present a framework for an economic analysis of the lightning network and its effect on transaction fees on the blockchain. Our framework allows us to reason about different patterns of demand for transactions and different topologies of the lightning network, and to derive the resulting fees for transacti…
Payment channel networks, and the Lightning Network in particular, seem to offer a solution to the lack of scalability and privacy offered by Bitcoin and other blockchain-based cryptocurrencies. Previous research has focused on the scalability, availability, and crypto-economics of the Lightning Network, but relatively little attention has been paid to exploring the level of privacy it achieves in practice. This paper presents a thorough analysis of the privacy offered by the Lightning Network, by presenting several attacks that exploit publicly available information about the network in order…
Bitcoin's success as a cryptocurrency enabled it to penetrate into many daily life transactions. Its problems regarding the transaction fees and long validation times are addressed through an innovative concept called the Lightning Network (LN) which works on top of Bitcoin by leveraging off-chain transactions. This made Bitcoin an attractive micro-payment solution that can also be used within certain IoT applications (e.g., toll payments) since it eliminates the need for traditional centralized payment systems. Nevertheless, it is not possible to run LN and Bitcoin on resource-constrained IoT…
The Lightning Network promises to alleviate Bitcoin's known scalability problems. The operation of such second layer approaches relies on the ability of participants to turn to the blockchain to claim funds at any time, which is assumed to happen rarely. One of the risks that was identified early on is that of a wide systemic attack on the protocol, in which an attacker triggers the closure of many Lightning channels at once. The resulting high volume of transactions in the blockchain will not allow for the proper settlement of all debts, and attackers may get away with stealing some funds. Th…
Lightning Network (LN) is designed to amend the scalability and privacy issues of Bitcoin. It's a payment channel network where Bitcoin transactions are issued off chain, onion routed through a private payment path with the aim to settle transactions in a faster, cheaper, and private manner, as they're not recorded in a costly-to-maintain, slow, and public ledger. In this work, we design a traffic simulator to empirically study LN's transaction fees and privacy provisions. The simulator relies on publicly available data of the network structure and generates transactions under assumptions we a…
It is now a whole year since Lightning Network (LN) has been launched on the Bitcoi's mainnet. LN has been claimed as the solution for several of Bitcoin's weaknesses such as its difficulty to scale in number of transactions per second and its expensiveness for relative small amount exchanged. LN is based upon a network of micro-channels opened and closed by issuing transactions on the Blockchain and capable to interact among themselves thanks to the Multi-hop framework. In this work I analysed the evolution of LN from its topological point of view and tried to understand how it impacts over s…
The Lightning Network is the most widely used payment channel network (PCN) to date, making it an attractive attack surface for adversaries. In this paper, we analyze the Lightning Network's PCN topology and investigate its resilience towards random failures and targeted attacks. In particular, we introduce the notions of channel exhaustion and node isolation attacks and show that the Lightning Network is susceptible to these attacks. In a preliminary analysis, we confirm that the Lightning Network can be classified as a small-world and scale-free network. Based on these findings, we develop a…
We propose an electronic payment protocol for typical customer-merchant relations which does not require a trusted (signed) payment descriptor to be sent from the merchant to the customer. Instead, the destination "account" number for the payment is solely created on the customer side. This eliminates the need for any encrypted or authenticated communication in the protocol and is secure even if the merchant's online infrastructure is compromised. Moreover, the payment transaction itself serves as a timestamped receipt for the customer. It proves what has been paid for and who received the fun…
Blockchain protocols are inherently limited in transaction throughput and latency. Recent efforts to address performance and scale blockchains have focused on off-chain payment channels. While such channels can achieve low latency and high throughput, deploying them securely on top of the Bitcoin blockchain has been difficult, partly because building a secure implementation requires changes to the underlying protocol and the ecosystem. We present Teechan, a full-duplex payment channel framework that exploits trusted execution environments. Teechan can be deployed securely on the existing Bitco…
Bitcoin cryptocurrency system enables users to transact securely and pseudo-anonymously by using an arbitrary number of aliases (Bitcoin addresses). Cybercriminals exploit these characteristics to commit immutable and presumably untraceable monetary fraud, especially via ransomware; a type of malware that encrypts files of the infected system and demands ransom for decryption. In this paper, we present our comprehensive study on all recent ransomware and report the economic impact of such ransomware from the Bitcoin payment perspective. We also present a lightweight framework to identify, coll…
Bitcoin is a electronic payment system where payment transactions are verified and stored in a data structure called the blockchain. Bitcoin miners work individually to solve a computationally intensive problem, and with each solution a Bitcoin block is generated, resulting in a new arrival to the blockchain. The difficulty of the computational problem is updated every 2,016 blocks in order to control the rate at which blocks are generated. In the original Bitcoin paper, it was suggested that the blockchain arrivals occur according to a homogeneous Poisson process. Based on blockchain block ar…
We propose a decentralized routing algorithm that can be implemented in Bitcoin Lightning Network. All nodes in the network contribute equally to path searching. The algorithm is inspired from ant path searching algorithms.
Payment channel networks (PCNs) such as the Lightning Network offer an appealing solution to the scalability problem faced by many cryptocurrencies operating on a blockchain such as Bitcoin. However, PCNs also inherit the stringent dependability requirements of blockchain. In particular, in order to mitigate liquidity bottlenecks as well as on-path attacks, it is important that payment channel networks maintain a high degree of decentralization. Motivated by this requirement, we conduct an empirical centrality analysis of the popular Lightning Network, and in particular, the betweenness centra…
Permissionless blockchains protocols such as Bitcoin are inherently limited in transaction throughput and latency. Current efforts to address this key issue focus on off-chain payment channels that can be combined in a Payment-Channel Network (PCN) to enable an unlimited number of payments without requiring to access the blockchain other than to register the initial and final capacity of each channel. While this approach paves the way for low latency and high throughput of payments, its deployment in practice raises several privacy concerns as well as technical challenges related to the inhere…
Making a payment in a privacy-aware payment channel network is achieved by trying several payment paths until one succeeds. With a large network, such as the Lightning Network, a completion of a single payment can take up to several minutes. We introduce a network imbalance measure and formulate the optimization problem of improving the balance of the network as a sequence of rebalancing operations of the funds within the channels along circular paths within the network. As the funds and balances of channels are not globally known, we introduce a greedy heuristic with which every node despite …
The Lightning Network is a scaling solution for Bitcoin that promises to enable rapid and private payment processing. In Lightning, multi-hop payments are secured by utilizing Hashed Time-Locked Contracts (HTLCs) and encrypted on the network layer by an onion routing scheme to avoid information leakage to intermediate nodes. In this work, we however show that the privacy guarantees of the Lightning Network may be subverted by an on-path adversary conducting timing attacks on the HTLC state negotiation messages. To this end, we provide estimators that enable an adversary to reduce the anonymity…
As Lightning network payments are neither broadcasted nor publicly stored. Thus LN has been seen not only as scalability but also as privacy solution for Bitcoin. The protocol guarantees that only the latest channel state can be confirmed on channel closure. LN nodes gossip about channels available for routing and their total capacities. To issue a (multi-hop) payment, the sender creates a route based on its local knowledge of the graph. As local channel balances are not public, payments often fail due to insufficient balance at an intermediary hop. In that case, the payment is attempted along…
Bitcoin is a popular digital currency for online payments, realized as a decentralized peer-to-peer electronic cash system. Bitcoin keeps a ledger of all transactions; the majority of the participants decides on the correct ledger. Since there is no trusted third party to guard against double spending, and inspired by its popularity, we would like to investigate the correctness of the Bitcoin protocol. Double spending is an important threat to electronic payment systems. Double spending would happen if one user could force a majority to believe that a ledger without his previous payment is the…
Blockchains such as Bitcoin and Ethereum execute payment transactions securely, but their performance is limited by the need for global consensus. Payment networks overcome this limitation through off-chain transactions. Instead of writing to the blockchain for each transaction, they only settle the final payment balances with the underlying blockchain. When executing off-chain transactions in current payment networks, parties must access the blockchain within bounded time to detect misbehaving parties that deviate from the protocol. This opens a window for attacks in which a malicious party c…
Lightning Network (LN) is a widely-used network of payment channels enabling faster and cheaper Bitcoin transactions. In this paper, we outline three ways an attacker can steal funds from honest LN users. The attacks require dilating the time for victims to become aware of new blocks by eclipsing (isolating) victims from the network and delaying block delivery. While our focus is on the LN, time-dilation attacks may be relevant to any second-layer protocol that relies on a timely reaction. According to our measurements, it is currently possible to steal the total channel capacity by keeping a …
The popularity of digital currencies, especially cryptocurrencies, has been continuously growing since the appearance of Bitcoin. Bitcoin's security lies in a proof-of-work scheme, which requires high computational resources at the miners. Despite advances in mobile technology, existing cryptocurrencies cannot be maintained by mobile devices due to their low processing capabilities. Mobile devices can only accommodate mobile applications (wallets) that allow users to exchange credits of cryptocurrencies. In this work, we propose LocalCoin, an alternative cryptocurrency that requires minimal co…
Following in the footsteps of pioneer Bitcoin, many altcoins as well as coloured coins have been being developed and merchandised adopting blockchain as the core enabling technology. However, since interoperability and scalability, due to high and capped (in particular cases) transaction latency are deep-rooted in the architecture of blockchain technology, they are by default inherited in any blockchain based applications. Lightning Network (LN) is one of the supporting technologies developed to eliminate this impediment of blockchain technology by facilitating instantaneous transfers of crypt…
Cryptocurrencies, based on and led by Bitcoin, have shown promise as infrastructure for pseudonymous online payments, cheap remittance, trustless digital asset exchange, and smart contracts. However, Bitcoin-derived blockchain protocols have inherent scalability limits that trade-off between throughput and latency and withhold the realization of this potential. This paper presents Bitcoin-NG, a new blockchain protocol designed to scale. Based on Bitcoin's blockchain protocol, Bitcoin-NG is Byzantine fault tolerant, is robust to extreme churn, and shares the same trust model obviating qualitati…
Bitcoin (BTC) is probably the most transparent payment network in the world, thanks to the full history of transactions available to the public. Though, Bitcoin is not a fully anonymous environment, rather a pseudonymous one, accounting for a number of attempts to beat its pseudonimity using clustering techniques. There is, however, a recurring assumption in all the cited deanonymization techniques: that each transaction output has an address attached to it. That assumption is false. An evidence is that, as of block height 591,872, there are several millions transactions with at least one outp…
We propose Parsec, a web-scale State channel for the Internet of Value to exterminate the consensus bottleneck in Blockchain by leveraging a network of state channels which enable to robustly transfer value off-chain. It acts as an infrastructure layer developed on top of Ethereum Blockchain, as a network protocol which allows coherent routing and interlocking channel transfers for trade-off between parties. A web-scale solution for state channels is implemented to enable a layer of value transfer to the internet. Existing network protocol on State Channels include Raiden for Ethereum and Ligh…
Payment channel networks are a highly discussed approach for improving scalability of cryptocurrencies such as Bitcoin. As they allow processing transactions off-chain, payment channel networks are referred to as second layer technology, while the blockchain is the first layer. We uncouple payment channel networks from blockchains and look at them as first-class citizens. This brings up the question what model payment channel networks require as first layer. In response, we formalize a model (called RFL Model) for a first layer below a payment channel network. While transactions are globally m…
Payment channel networks like Bitcoin's Lightning network are an auspicious approach for realizing high transaction throughput and almost-instant confirmations in blockchain networks. However, the ability to successfully make payments in such networks relies on the willingness of participants to lock collateral in the network. In Lightning, the key financial incentive is to lock collateral are small fees for routing payments for other participants. While users can choose these fees, currently, they mainly stick to the default fees. By providing insights on beneficial choices for fees, we aim t…
Digital payment schemes show an ever increasing importance. Out of the countless different schemes available this article focuses on the popular Bitcoin system. The authors provide a description of Bitcoin's unique technological basis and its accompanying ecosystem of users, miners, trading platforms and vendors. Furthermore, this article discusses Bitcoin's currency-like features and the first regulatory actions take in the European Union and in the United States of America.
The Lightning Network (LN) is one of the most promising off-chain scaling solutions for Bitcoin, as it enables off-chain payments which are not subject to the well-known blockchain scalability limit. In this work, we introduce CLoTH, a simulator for HTLC payment networks, of which LN is the best working example. It simulates input-defined payments on an input-defined HTLC network and produces performance measures in terms of payment-related statistics, such as time to complete payments and probability of payment failure. CLoTH helps to predict issues that might arise in the development of an H…
Bitcoin (BTC) pseudonyms (layer 1) can effectively be deanonymized using heuristic clustering techniques. However, while performing transactions off-chain (layer 2) in the Lightning Network (LN) seems to enhance privacy, a systematic analysis of the anonymity and privacy leakages due to the interaction between the two layers is missing. We present clustering heuristics that group BTC addresses, based on their interaction with the LN, as well as LN nodes, based on shared naming and hosting information. We also present linking heuristics that link 45.97% of all LN nodes to 29.61% BTC addresses i…
To mitigate the scalability problem of decentralized cryptocurrencies such as Bitcoin and Ethereum, the payment channel, which allows two parties to perform secure coin transfers without involving the blockchain, has been proposed. The payment channel increases the transaction throughput of two parties to a level that is only limited by their network bandwidth. Recent proposals focus on extending the two-party payment channel to the N-party payment hub. Unfortunately, none of them can achieve efficiency, flexibility in the absence of a trusted third-party. In this paper, we propose Garou, a se…
