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Bitcoin Lightning Network

2020.06.19

The Lightning network is a layer-2 payment protocol that allows fast transactions with low rates processed off-chain. Composed currently of about 12,000 nodes, users utilizing the Lightning Network (LN) have to open “payment channels” to send and receive Bitcoin. For the processing of transactions, the network is currently using HTLCs.

The Lightning Network is one of the most promising projects in crypto space. Designed to increase the speed of transactions, the scalability and reduce network fees, the development of the Lightning Network still faces important challenges. As has now become public, the developer Nadav Kohen is working on an update to replace one of the parts of the network, the Hashed Timelock Contracts (HTLCs) by the Point Timelock Contracts (PTLCs). The upgrade could open the door to an overall improvement in network performance that finally meets the users’ expectations.

These contracts use a unified payment hash which, although they allow the network to function, present a privacy problem. This is because, as Kohen states, all payments on any given node can be tracked by its hash. Therefore, HTLCs are a component that reduces privacy on the LN and leaves the network susceptible to attacks jeopardizing users’ information and even their BTC.

Raiden consist of components that make them unprivate and unsafe. The research pointed out that most transactions on the Lightning network are not truly private because most payments are executed through single-hop paths.

Author : Reynaldo