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Towards Bitcoin Payment Networks

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Information Security and Privacy (ACISP 2016)

Part of the book series: Lecture Notes in Computer Science ((LNSC,volume 9722))

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Abstract

Bitcoin as deployed today does not scale. Scalability research has focused on two directions: (1) redesigning the Blockchain protocol, and (2) facilitating ‘off-chain transactions’ and only consulting the Blockchain if an adjudicator is required. In this paper we focus on the latter and provide an overview of Bitcoin payment networks. These consist of two components: payment channels to facilitate off-chain transactions between two parties, and the capability to fairly exchange bitcoins across multiple channels. We compare Duplex Micropayment Channels and Lightning Channels, before discussing Hashed Time-Locked Contracts which enable Bitcoin-based payment networks. Finally, we highlight challenges for route discovery in these networks.

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Notes

  1. 1.

    The nLockTime field of the transaction.

  2. 2.

    The output’s script contains the OP_CHECKLOCKTIMEVERIFY opcode.

  3. 3.

    The output’s script contains the OP_CHECKSEQUENCEVERIFY opcode.

  4. 4.

    The sender must have a different Bitcoin address for each condition in the HTLC output, otherwise the receiver can use the signature to satisfy either condition.

  5. 5.

    A wallet is frequently accessed and potentially connected to the internet.

References

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Acknowledgements

We thank Christian Decker, Joseph Poon and Rusty Russell for reviewing this paper. We also thank the participants of the lightning-dev mailing list for their insightful discussions. This work is supported in part by the European Research Council (ERC) Starting Grant (No. 306994) and the German Bundesministerium für Bildung und Forschung (BMBF) under grant agreement No. 13N13505.

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Authors and Affiliations

  1. School of Computing Science, Newcastle University, Newcastle upon Tyne, UK

    Patrick McCorry, Siamak F. Shahandasti & Feng Hao

  2. Department of Information Systems, University of Münster, Münster, Germany

    Malte Möser

Authors
  1. Patrick McCorry
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  2. Malte Möser
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  3. Siamak F. Shahandasti
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  4. Feng Hao
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Corresponding author

Correspondence to Patrick McCorry .

Editor information

Editors and Affiliations

  1. Monash University, Melbourne, Victoria, Australia

    Joseph K. Liu

  2. Monash University, Melbourne, Victoria, Australia

    Ron Steinfeld

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McCorry, P., Möser, M., Shahandasti, S.F., Hao, F. (2016). Towards Bitcoin Payment Networks. In: Liu, J., Steinfeld, R. (eds) Information Security and Privacy. ACISP 2016. Lecture Notes in Computer Science(), vol 9722. Springer, Cham. https://doi.org/10.1007/978-3-319-40253-6_4

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  • DOI: https://doi.org/10.1007/978-3-319-40253-6_4

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-40252-9

  • Online ISBN: 978-3-319-40253-6

  • eBook Packages: Computer ScienceComputer Science (R0)

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