Lightning Coin Network requiem

Recent research has been published regarding some shocking flaws within the Lightning Network, which is the second layer protocol created on BTC. BTC to address the inherent weaknesses of the smaller block BTC network based on its practicality being employed as a cash-based and micropayments systems.

The study that was published by researchers at the University of Illinois revealed two important attack vulnerabilities that are prevalent in the system. They could be exploited to annoy users by blocking them from their funds or even steal them in full.

The Lightning Network (LN) was created in the year the year 2016 as an alternative for Bitcoin scale for people who were against returning the protocol back to its original status of having a limitless block size. For those who believed that keeping the block size limit to 1MB was crucial to preserve the decentralization that the Bitcoin protocol had, it was a welcomed alternative. LN provided a scaling solution that would instead move 90% of transactions off-chainand to the Layer 2 protocol that didn’t require the transaction ledger to be used as the base in the event that an initial set-up of “coin lockup” transactions were done in advance, through what they called the payment channels.

Similar to the way you have to fill up your debit card via transfer to banks or charge you Starbucks coffee card prior to when you can use it to make an purchase, it is necessary to make sure to lock the BTC into channels prior to making use of it through LN. However, unlike your debit card and Starbucks cards, LN can be a bit more complex. This is because the channels are bidirectional. This means that while you can transfer your money into an account that you are able to utilize indefinitely. In the future you’ll need to establish a channel with a particular counterpart, firm, or even a person.

In our scenario it’s like using your Starbucks card using Starbucks however, it is not an debit card. Why? Your debit card is able to pay for any business who takes VISAor Mastercard..

Your Starbucks card is only able to purchase coffee from Starbucks. The difference lies in the range of options which is available to you based on the person you choose to create channels for payment with. Since LN allows payment channels to be linked together, an user Alice that has an account that has been opened by Bob and has opened a channel with Charlie is in a position to pay Charlie through Bob effortlessly. It is at least theoretically. But the reality doesn’t always work as predicted in the theory.

What occurs is that Person A who has $100 locked into channels could be able purchase a coffee from Starbucks via LN and Person B with $100 locked in channels might not, depending on whom they have channels that have been opened and the channel’s liquidity (which is an elaborate way of describing the extent to which they are net creditors or creditors of the channels they are on). Let’s just say that LN isn’t a straightforward protocol. It comes with layers and layers of complexity, penalties for violating the status of the channels, route connecting channels as well as routing fees. It’s all for the problem of settling a straightforward Bitcoin transactions within this chain. It comes with an artificial block size limit. It allows only those who can afford premium fees to make use of bitcoin directly.

The two types of the Lightning Network Exploitation

The most common form is grieving attacks. In essence, it is a form or cyber vandalism.

The study reveals that because of the historic congested nature of a block size-limited BTC, the back-up in unprocessed transactions from the main chain permits the possibility of a deliberate attack on denial-of-funds on LN known as a ‘zombie attack. It is simply that attackers can open several channels, and wait for an event of high traffic in the BTC network, and later change to their LN nodes to not respond.

If their channels contain many of the major LN payment methods which could block several LN users from being able access or transfer BTC. The only way to stop such an attack is for users to attempt to shut down their inactive channels that are on the BTC network. If the the attack occurs in a time of high congestion the addition of thousands of LN users trying to shut down their channels simultaneously could only exacerbate the problem, leading to an unintended feedback loop which could lead to delays of up 500 blocks or even days, with fees soaring.

Only those who are wealthy enough to pay upwards of $50 in transaction fees to be processed at such a way, which is not an equitable system of monetary exchange for the poor and certainly not the micropayment system that was envisioned by Satoshi Nakamoto in his Bitcoin White Paper. The negative feedback result (where it is the reaction to an attack is a result of making the situation more difficult) is a part of a block size-limited BTC protocol. LN makes the problem more complex by adding more back pressure during times of network congestion that is high.

The second attack is the one that is more concerning.

It’s not just vandalism, or inconvenience, researchers have modeled the number of nodes needed in order to collaborate effectively to take money during instances of historic congestion within the BTC network, based on the current configuration that is the LN network. (Spoiler warning: there are only 30). This attack is a kind of double spend attack that occurs when attackers on LN willfully attempt to release incorrect closing channel transactions on the main chain to their advantage.

In this case, for instance, if the channel was originally a balance of 5-5 for Bob and Alice this means that they both contributed 5 of their own cash to the channel, however due to some transactions, the channel now has the most recent condition of 10-0. This means that even though Alice is holding all of the money she needs, Bob could still try to make a close attempt using the state 5-5, the state that was initially set. This could be discovered by something called “Watchtowers that are community-run programs that monitor the network for fraudulent transactions. They also issue a ‘punishment’ transaction that would punish Bob for his attempts to take five coins from Alice.

But, as the report suggests, it’s possible that the concerted floods of several of attacks, which occurred during times of congestion on BTC networks made it possible to foresee the sanction transactions and thus double the amount of coins spent on the main BTC network provided you paid a sufficiently high amount to ensure that BTC miners prioritize the fraudulent channel closing transactions. BTC miners prioritize those fraudulent channel closing transactions. The fact is, the BTC miners aren’t aware of what constitutes a fraudulent or outdated LN channel transaction from legitimate one. This is the fundamental issue with the separation of the security model of transactions into payment channels that are long-lived using LN.

If you are concerned about this If this is the case, then you should. LN is hailed by many as the next big thing in BTC. However, research is now catching up with intuition. Of course, a lot of people were warned about the possibility of problems with LN’s security framework LN at the time it was first introduced, myself as well. However, regardless of whether it was due to being practical, or was well-funded it is clear that the LN experiment would eventually be investigated due to the fact that the false belief persists until today that Bitcoin is not able to handle infinite block sizes because it will fall apart under the pressure of its own successes. BSV has proved this idea totally false.