Bitcoin Lightning Network Research Articles

Method for Determining the Level of Centralization in BTC Lightning Nodes: A Centrality Analysis of the Lightning Network

This study explores the Bitcoin Lightning Network (BLN), a Layer 2 solution for faster and cheaper transactions. Concerns about centralization have emerged due to the increasing concentration of power among specific nodes, named “hubs.” Statistical measures like the Gini coefficient reveal a trend towards centralization, challenging the LN’s decentralized nature. Consequently, further research is necessary to address this issue and ensure the integrity of the LN architecture. This paper aims to establish a method for determining the level of centralization within the BLN by applying centrality analysis techniques. Study revealed that over the six-year period Gini coefficient increased from 0.87 to 0.955, indicating significant inequality and apparent centralization of BLN nodes.

LNGate: Secure Bidirectional IoT Micro-Payments Using Bitcoin's Lightning Network and Threshold Cryptography

LNGate: Secure Bidirectional IoT Micro-Payments Using Bitcoin's Lightning Network and Threshold Cryptography

A secure payment channel rebalancing model for layer-2 blockchain

The concept of cryptocurrencies is prevalently used in the financial world. Some of the currencies like Bitcoin and Ethereum have shown promising outputs. The scalability problem of these cryptocurrencies is an ongoing challenge, solved through many facets. Bitcoin Lightning Network, a Layer-2 solution to Bitcoin Network, is an off-chain crypto transaction platform working on payment channels to transact bi-directionally between two parties. When the maximum payments flow is unidirectional, the individual balances of the parties in the direction of payment get exhausted. It results in the transaction failing for future payments in that direction and lowers the feasibility of network usage. In this paper, we propose a heuristic-based distributed solution by preserving the privacy and anonymity of the parties involved in the rebalancing procedure and improving the fund transfer capability of the channels. The rebalancing mechanism has a global solution that can rebalance to the maximum extent and a local solution using a significantly lower fee. Again the indirect and direct rebalancing schemes balance the imbalanced channel and prevent further transaction failure and closure of channels due to insufficient balance. The resultant method also has an updation in the HTLC message exchange protocol to avoid the Flood and Loot attack that may arise to maintain the safe state of every honest participant in the network.

The weighted Bitcoin Lightning Network

The Bitcoin Lightning Network (BLN) was launched in 2018 to scale up the number of transactions between Bitcoin owners. Although several contributions concerning the analysis of the BLN binary structure have recently appeared in the literature, the properties of its weighted counterpart are still largely unknown. The present contribution aims at filling this gap, by considering the Bitcoin Lightning Network over a period of 18 months, ranging from 12th January 2018 to 17th July 2019, and focusing on its weighted, undirected, daily snapshot representation - each weight representing the total capacity of the channels the two involved nodes have established on a given temporal snapshot. As the study of the BLN weighted structural properties reveals, it is becoming increasingly ‘centralized’ at different levels, just as its binary counterpart: (1) the Nakamoto coefficient shows that the percentage of nodes whose degrees/strengths ‘enclose’ the 51% of the total number of links/total weight is rapidly decreasing; (2) the Gini coefficient confirms that several weighted centrality measures are becoming increasingly unevenly distributed; (3) the weighted BLN topology is becoming increasingly compatible with a core–periphery structure, with the largest nodes ‘by strength’ constituting the core of such a network, whose size keeps shrinking as the BLN evolves. Further inspection of the resilience of the weighted BLN shows that removing such hubs leads to the network fragmentation into many components, an evidence indicating potential security threats — as the ones represented by the so called ‘split attacks’.

The Weighted Bitcoin Lightning Network

The Bitcoin Lightning Network (BLN) was launched in 2018 to scale up the number of transactions between Bitcoin owners. Although several contributions concerning the analysis of the BLN binary structure have recently appeared in the literature, the properties of its weighted counterpart are still largely unknown. The present contribution aims at filling this gap, by considering the Bitcoin Lightning Network over a period of 18 months, ranging from 12th January 2018 to 17th July 2019, and focusing on its weighted, undirected, daily snapshot representation. As the study of the BLN weighted structural properties reveals, it is becoming increasingly 'centralised' at different levels, just as its binary counterpart: 1) the Nakamoto coefficient shows that the percentage of nodes whose degrees/strengths 'enclose' the 51% of the total number of links/total weight is rapidly decreasing; 2) the Gini coefficient confirms that several weighted centrality measures are becoming increasingly unevenly distributed; 3)the weighted BLN topology is becoming increasingly compatible with a core-periphery structure, with the largest nodes 'by strength' constituting the core of such a network, whose size keeps shrinking as the BLN evolves. Further inspection of the resilience of the weighted BLN shows that removing such hubs leads to the network fragmentation into many components, an evidence indicating potential security threats - as the ones represented by the so called 'split attacks'.

Compact E-Cash with Efficient Coin-Tracing

Compact E-cash achieves an efficient system by withdrawing ${\text{2}}^{n}$ 2 n coins within $O{\text{(1)}}$ O (1) operations and storing the coins in $O(n)$ O ( n ) bits. For preventing a double-spender from cheating again, it is necessary to trace his e-coins. So full-tracing in compact E-cash system means tracing double-spender and tracing his coins. However, the efficiency problem caused by coin-tracing without TTP (trusted third party) has not been solved. For solving this problem, we introduce a non-standard construction into zero-knowledge proof of payment protocol, which leaks coin information when double-spending but is proven to be perfect zero-knowledge to verifier when spending a coin only once. Therefore, it achieves tracing dishonest users’ coins and preserving the anonymity of honest users. Comparing with the existing most efficient method of coin-tracing without TTP, we improve computational complexity from $O(k)$ O ( k ) to $O{\text{(1)}}$ O (1) with less storage space. In addition, to improve efficiency and practicality further, batch-spending (spending any number of coins in one operation) and compact-spending (spending all coins in one operation) had been proposed. Based on the non-standard zero-knowledge proof, our scheme provides more efficient batch/compact–spending. Moreover, we also make a comparison with Bitcoin and Bitcoin Lightning Network, which have attracted considerable attention.

Bitcoin Transaction Networks: An Overview of Recent Results

Cryptocurrencies are distributed systems that allow exchanges of native (and non-) tokens between participants. The availability of the complete historical bookkeeping opens up an unprecedented possibility: that of understanding the evolution of a cryptocurrency's network structure while gaining useful insights into the relationships between users' behavior and cryptocurrency pricing in exchange markets. In this article we review some recent results concerning the structural properties of the Bitcoin Transaction Networks, a generic name referring to a set of three different constructs: the Bitcoin Address Network, the Bitcoin User Network, and the Bitcoin Lightning Network. The picture that emerges is of a system growing over time, which becomes increasingly sparse and whose mesoscopic structural organization is characterized by the presence of an increasingly significant core-periphery structure. Such a peculiar topology is accompanied by a highly uneven distribution of bitcoins, a result suggesting that Bitcoin is becoming an increasingly centralized system at different levels.

Lightning network: a second path towards centralisation of the Bitcoin economy**J-HL and KP performed the analysis. TS, CD and CJT designed the research. All authors wrote, reviewed and approved the manuscript.

The Bitcoin lightning network (BLN), a so-called ‘second layer’ payment protocol, was launched in 2018 to scale up the number of transactions between Bitcoin owners. In this paper, we analyse the structure of the BLN over a period of 18 months, ranging from 12th January 2018 to 17th July 2019, at the end of which the network has reached 8.216 users, 122.517 active channels and 2.732,5 transacted Bitcoins. Here, we consider three representations of the BLN: the daily snapshot one, the weekly snapshot one and the daily-block snapshot one. By studying the topological properties of the binary and weighted versions of the three representations above, we find that the total volume of transacted Bitcoins approximately grows as the square of the network size; however, despite the huge activity characterising the BLN, the Bitcoins distribution is very unequal: the average Gini coefficient of the node strengths (computed across the entire history of the Bitcoin lightning network) is, in fact, ≃0.88 causing the 10% (50%) of the nodes to hold the 80% (99%) of the Bitcoins at stake in the BLN (on average, across the entire period). This concentration brings up the question of which minimalist network model allows us to explain the network topological structure. Like for other economic systems, we hypothesise that local properties of nodes, like the degree, ultimately determine part of its characteristics. Therefore, we have tested the goodness of the undirected binary configuration model (UBCM) in reproducing the structural features of the BLN: the UBCM recovers the disassortative and the hierarchical character of the BLN but underestimates the centrality of nodes; this suggests that the BLN is becoming an increasingly centralised network, more and more compatible with a core-periphery structure. Further inspection of the resilience of the BLN shows that removing hubs leads to the collapse of the network into many components, an evidence suggesting that this network may be a target for the so-called split attacks.

P4UIoT: Pay-Per-Piece Patch Update Delivery for IoT Using Gradual Release.

PUIoT—pay-per-piece patch update delivery for IoT using gradual release—introduces a distributed framework for delivering patch updates to IoT devices. The framework facilitates distribution via peer-to-peer delivery networks and incentivizes the distribution operation. The peer-to-peer delivery network reduces load by delegating the patch distribution to the nodes of the network, thereby protecting against a single point of failure and reducing costs. Distributed file-sharing solutions currently available in the literature are limited to sharing popular files among peers. In contrast, the proposed protocol incentivizes peers to distribute patch updates, which might be relevant only to IoT devices, using a blockchain-based lightning network. A manufacturer/owner named vendor of the IoT device commits a bid on the blockchain, which can be publicly verified by the members of the network. The nodes, called distributors, interested in delivering the patch update, compete among each other to exchange a piece of patch update with cryptocurrency payment. The pay-per-piece payments protocol addresses the problem of misbehavior between IoT devices and distributors as either of them may try to take advantage of the other. The pay-per-piece protocol is a form of a gradual release of a commodity like a patch update, where the commodity can be divided into small pieces and exchanged between the sender and the receiver building trust at each step as the transactions progress into rounds. The permissionless nature of the framework enables the proposal to scale as it incentivizes the participation of individual distributors. Thus, compared to the previous solutions, the proposed framework can scale better without any overhead and with reduced costs. A combination of the Bitcoin lightning network for cryptocurrency incentives with the BitTorrent delivery network is used to present a prototype of the proposed framework. Finally, a financial and scalability evaluation of the proposed framework is presented.

A percolation model for the emergence of the Bitcoin Lightning Network

The Lightning Network is a so-called second-layer technology built on top of the Bitcoin blockchain to provide “off-chain” fast payment channels between users, which means that not all transactions are settled and stored on the main blockchain. In this paper, we model the emergence of the Lightning Network as a (bond) percolation process and we explore how the distributional properties of the volume and size of transactions per user may impact its feasibility. The agents are all able to reciprocally transfer Bitcoins using the main blockchain and also – if economically convenient – to open a channel on the Lightning Network and transact “off chain”. We base our approach on fitness-dependent network models: as in real life, a Lightning channel is opened with a probability that depends on the “fitness” of the concurring nodes, which in turn depends on wealth and volume of transactions. The emergence of a connected component is studied numerically and analytically as a function of the parameters, and the phase transition separating regions in the phase space where the Lightning Network is sustainable or not is elucidated. We characterize the phase diagram determining the minimal volume of transactions that would make the Lightning Network sustainable for a given level of fees or, alternatively, the maximal cost the Lightning ecosystem may impose for a given average volume of transactions. The model includes parameters that could be in principle estimated from publicly available data once the evolution of the Lighting Network will have reached a stationary operable state, and is fairly robust against different choices of the distributions of parameters and fitness kernels.

A Percolation Model for the Emergence of the Bitcoin Lightning Network

The Lightning Network is a so-called second-layer technology built on top of the Bitcoin blockchain to provide off-chain fast payment channels between users, which means that not all transactions are settled and stored on the main blockchain. In this paper, we model the emergence of the Lightning Network as a (bond) percolation process and we explore how the distributional properties of the volume and size of transactions per user may impact its feasibility. The agents are all able to reciprocally transfer Bitcoins using the main blockchain and also - if economically convenient - to open a channel on the Lightning Network and transact off chain. We base our approach on fitness-dependent network models: as in real life, a Lightning channel is opened with a probability that depends on the of the concurring nodes, which in turn depends on wealth and volume of transactions. The emergence of a connected component is studied numerically and analytically as a function of the parameters, and the phase transition separating regions in the phase space where the Lightning Network is sustainable or not is elucidated. We characterize the phase diagram determining the minimal volume of transactions that would make the Lightning Network sustainable for a given level of fees or, alternatively, the maximal cost the Lightning ecosystem may impose for a given average volume of transactions. The model includes parameters that could be in principle estimated from publicly available data once the evolution of the Lighting Network will have reached a stationary operable state, and is fairly robust against different choices of the distributions of parameters and fitness kernels.