Enabling Third Layer Bitcoin Applications Using Lightning Network

Authors

Ahmet Kurt, Florida International UniversityFollow

Document Type

Dissertation

Degree

Doctor of Philosophy (PhD)

Major/Program

Electrical and Computer Engineering

First Advisor's Name

Kemal Akkaya

First Advisor's Committee Title

Committee Chair

Second Advisor's Name

A. Selcuk Uluagac

Second Advisor's Committee Title

Committee Member

Third Advisor's Name

Alexander Perez-Pons

Third Advisor's Committee Title

Committee Member

Fourth Advisor's Name

Mohammad Ashiqur Rahman

Fourth Advisor's Committee Title

Committee Member

Fifth Advisor's Name

Hemang Subramanian

Fifth Advisor's Committee Title

Committee Member

Keywords

Bitcoin, Lightning Network, Payment Channel Networks, Layer-2, Blockchain, IoT, Payments, Botnets, Threshold Cryptography, Mesh Networks

Date of Defense

6-27-2023

Abstract

When Bitcoin was introduced in 2009, it created a big sensation in the world as it was first of its kind. Since then, a lot of different cryptocurrencies were proposed. Today, cryptocurrencies can be used to pay for goods and services similar to using cash or credit cards. However, none of them could replace or supersede Bitcoin in usage or market capitalization. Current market conditions still imply that it will stay the same way. However, Bitcoin suffers from very low transaction per second (TPS) which limits its usability on large scale. There have been numerous proposals to increase its scalability such as block size increase, Schnorr signatures, side chains and layer-2 networks. Among all, layer-2 networks is by far the most promising solution as shown with the success of the Lightning Network (LN) which grew exponentially over the years reaching 16,000 public nodes worldwide.

LN was implemented in 2017 with the aim of decreasing the load on the Bitcoin blockchain by facilitating the transactions on its decentralized network which enables almost free and instant Bitcoin payments. It works by processing the payments off-chain meaning payments are not recorded on the Bitcoin blockchain. In order to transact on LN, users need to open at least one LN channel to one of the nodes in the network in advance and put some funds in the channel. Emergence of LN opened new doors to many potential novel applications that can utilize its infrastructure. Indeed, LN's underlying network offers a perfectly covert communication medium to enable security and privacy by default. This creates opportunities for the sake of good and bad. This dissertation aims to demonstrate both types of applications that can rely on or exploit LN, which are referred to as third-layer applications assuming that Bitcoin is the first and LN is the second layer.

Specifically, we first introduce a malicious use case of LN where a botmaster can control a botnet utilizing LN as the command and control (C&C) channel. In our design, we show that, unlike traditional or Bitcoin-based botnets, it is very hard to stop a botnet on LN due to LN's existing security and anonymity features. In our second work, we propose a secure and lightweight protocol to enable resource constrained IoT devices to use LN. With this protocol, IoT devices can send and receive LN payments by just involving in cryptographic signing operations. We implement this protocol by integrating it into LN's code and demonstrate that IoT devices can use it with minimal overhead to performance metrics. Finally, as a third work, we investigate fully offline Bitcoin payments which is of great need for communities that temporarily do not have access to the Internet. This usually happens when there is a natural disaster or a big scale power outage. We demonstrate that wireless mesh networks are a perfect venue to realize these offline payments without needing any extra infrastructure or protocol changes to LN or Bitcoin. We provide proof of concept implementations and ways to scale it to networks with much more people.

Identifier

FIDC010974

ORCID

https://orcid.org/0000-0002-7175-1739

Previously Published In

A. Kurt, E. Erdin, K. Akkaya, A. S. Uluagac, M. Cebe, (2023). D-LNBot: A Scalable, Cost-Free and Covert Hybrid Botnet on Bitcoin's Lightning Network, in IEEE Transactions on Dependable and Secure Computing, 1-18.

A. Kurt, K. Akkaya, S. Yilmaz, S. Mercan, O. Shlomovits, E. Erdin, (2023). LNGate²: Secure Bidirectional IoT Micro-payments using Bitcoin's Lightning Network and Threshold Cryptography, in arXiv preprint arXiv:2206.02248, 1-17.

A. Kurt, A. Sahin, R. Harrilal-Parchment, K. Akkaya, (2023). LNMesh: Who Said You need Internet to send Bitcoin? Offline Lightning Network Payments using Community Wireless Mesh Networks, in Proceedings of 2023 IEEE 24rd International Symposium on a World of Wireless, Mobile and Multimedia Networks (WoWMoM), 1-10.

S. Mercan, A. Kurt, E. Erdin, K. Akkaya, (2022). Cryptocurrency Solutions to Enable Micro-payments in Consumer IoT, in IEEE Consumer Electronics Magazine, 11(2):97-103.

A. Kurt, S. Mercan, O. Shlomovits, E. Erdin, K. Akkaya, (2021). LNGate: Powering IoT with Next Generation Lightning Micro-payments using Threshold Cryptography, in Proceedings of the 14th ACM Conference on Security and Privacy in Wireless and Mobile Networks (WiSec '21), 117-128.

A. Kurt, E. Erdin, M. Cebe, K. Akkaya, A. S. Uluagac, (2020). LNBot: A Covert Hybrid Botnet on Bitcoin Lightning Network for Fun and Profit, in Proceedings of 25th European Symposium on Research in Computer Security (ESORICS 2020), 734-755.

Creative Commons License

This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Recommended Citation

Kurt, Ahmet, "Enabling Third Layer Bitcoin Applications Using Lightning Network" (2023). FIU Electronic Theses and Dissertations. 5137.
https://digitalcommons.fiu.edu/etd/5137