Lightning Network Help or Hurt Bitcoin Privacy

For bitcoin customers, a lot of whom were interested in digital currency for its promise of economic sovereignty, bitcoin remains synonymous with privacy. However, the hole among the vision and the truth, wherein consumer transactions nowadays need to be posted to a globally distributed ledger, has long been one of the technology’s largest points of controversy.

Ian Miers, the co-founder of the privateness-centric digital currency zcash, stated:

“Bitcoin is Twitter for your bank account. Everything is public to everybody.”

Compounding matters is that as bitcoin customers get towards gaining an entire new manner to send transactions, powered by an innovation known as the lights network, issues are spreading that privacy could degrade from its already imperfect country. at the surface, the concept could looks promising, as Lightning payments arise off-chain, the data is not covered within the blockchain that each one nodes store. However, even as there is no Lightning ledger so to talk, payments within the scheme are broadcast throughout nodes in the network. To ensure routing is constantly available, the ones using Lightning channels want to trust different network customers to assist relay transactions.

Conceptually, this means that members within the system might pry on a transaction, or maybe probably promote that data to governments or advertisers. This is a danger this is worsened if the network becomes centralized into a hub and spoke kind structure, in which hubs are huge and frequently used entities.

Lightning Network

Ian Miers noted:

“Lightning probably won’t enhance privacy; it can make it much worse from a mean client’s attitude.”

and like many, more speculative worries surrounding the approaching tech, the danger to consumer privateness cannot be apparent till the network is deployed an uncertainty that, mixed with a wave of efforts on behalf of Lightning builders to consist of privacy features, has caused combined sentiments as to what the future of personal bitcoin transactions might be.

In line with privateness researcher Kristov Atlas, in a worst-case scenario, privacy attackers could thrive on hubs vampirically feeding off the information as he wrote in a weblog post. However, the approaching Lightning launch does have a few privacy capabilities embedded, and there is motive to believe that builders are at least making advances on the issue.

Thus far, the most advanced privacy characteristic included in Lightning is known as onion routing, and it is a part of the fundamentals of Lightning technology, a sequence of protocols that make sure the multiple iterations of Lightning can interoperate. In onion routing, payments are surpassed via a couple of channels, and just the minimal of data about that payment is exposed. As an example, upon receiving an encrypted payment, a node can just recognize where that payment came from and to what node that payment should be relayed.

In line with Olaoluwa Osuntokun, a leading figure in Lightning improvement who first cautioned the scheme at the developer mailing list, the importance of this is that nodes cannot be selective in terms of what payments they are willing to take.

Olaoluwa Osuntokun said:

“Nodes should not be capable of arbitrarily censor certain payments, or blacklist certain destinations in the channel graph.”


Frequently in comparison to the Tor network for its use of onion routing, Lightning has sometimes been celebrated as a dark net for bitcoin payments. All in all, it’s relatively untested, and could face a number of the issues native to Tor as properly.

Olaoluwa Osuntokun noted:

“Just like Tor, there exist known opportunities of timing leaks, and additionally unknown active assaults that can be viable.”

However, consistent with a few people, there is methods that onion routing could be manipulated, main to the lack of privacy, particularly in an early Lightning network. As an instance, the last node within a route, in addition to whoever sent that payment, would know the transaction data, and theoretically, nodes could collude to break privacy, piecing together every layer of the payment to create an entire picture. On top of this, there is the danger of a worldwide adversary that is capable of instant display all channels at the network, something that the modern privateness protocol does not cope with, as Olaoluwa Osuntokun cited.

Moreover, there is further defects to privateness on Lightning as well. As an instance, Lightning payments are presently given a fixed identifier this is repeated during the whole route.

Olaoluwa Osuntokun said:

“This means that if an adversary has two non-contiguous nodes at the route, then they can trivially link a payment flow.”

Furthermore, Olaoluwa Osuntokun assured that there is approaches to correct this in future. For instance, if Schnorr signatures, a scaling approach that works by aggregating public keys, are adopted into bitcoin, it might correct this problem in an easy and appealing manner, as Osuntokun noted.


Although, there is other, more heavy weight solutions including using zero-knowledge to encrypt payments. However, because this encryption tool is heavy, it’ll considerably grow the quantity of information one needs to send in order to finish a payment. In line with Olaoluwa Osuntokun, the lowest hanging fruit is to obscure this payment identifier with random numbers as the payments pass via the network. Even more speculative dangers exist as properly, but in line with Ian Miers, it’s all incredibly contingent at the structure that the Lightning network will take.

Ian Miers stated:

“Some people suppose the quantity of cash you need to lock up in a channel and the expenses of running nodes will necessarily cause centralization. After which there is really no privacy.”

Due to onion routing works by passing payments via multiple nodes, within the case of an incredibly centralized network, active nodes could have ideal visibility of the payments. However, Blocksteam engineer Christian Decker mentioned that the development groups are developing counter measures towards this danger of centralization.

Programming the system to open channels at random, Lightning tries to keep away from having hubs that may observe traffic, as Christian Decker defined, which has the introduced advantage of strengthening the network as an entire towards single points of failure. Christian Decker additionally mentioned that this randomness might be extended to how routes are shaped at the network, making payment paths much less predictable but potentiality growing expenses. Different researchers keep the danger involved in keeping a node with excessive throughput will stave off the formation of centralized hubs.

Ian Miers said:

“We will see which one really ends up happening.”


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