Lightning Network users’ privacy might be in danger

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys… read more.
on Apr 21, 2020
Updated: Apr 28, 2020
  • Two reports published earlier this year revealed that Bitcoin's Lightning Network is not private.
  • Researchers managed to uncover Lightning Network balances, identify users, and track the funds that were sent.
  • This only works for public channels, but earlier reports show that over 70% of all channels remain public.

Bitcoin’s Lightning network allegedly has a major privacy flaw, as revealed by the new research. Due to the flaw, users’ Bitcoin payments, as well as their other financial information, could get exposed and rob them of anonymity.

The privacy of BTC Lightning Network can be compromised

The Lightning Network has been in the works for years now, ever since its proposal back in 2016. It came as a way of helping the Bitcoin scale and improving its speed and privacy. It also promised to reduce the cost of transactions, improve anonymity, and alike.

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It can do all of this by broadcasting transactions off the Bitcoin blockchain. The concept intrigued many, and people were willing to wait for years for the promised solution to arrive. When it finally arrived, it was still not perfect, although it certainly did seem promising.

Now, however, two separate academic papers compromised its trustworthiness. The first of the two papers came out in March, while the second one arrived in April of this year. Both papers show that simple hacking attacks could reveal the Lightning Network’s balances. More than that, the authors of the first paper, from the University College London, unraveled parties and pathways of hidden payments.

Ania Piotrowska, the University’s cryptography researcher, reported that “The gap between the potential privacy properties of the Lightning Network and the actual ones is large. As it is designed right now, the Lightning Network opens the door for various attacks.” The other party that participated in this March study is the University of Illinois.

Researchers tested their suspicions by conducting attacks on public channels. They noted that Nodes of the Lightning Network act as software gateways that allow users to exchange BTC. To do this they use payment channels, that the researchers targeted.

The majority of LN channels are public

The researchers targeted only public channels, but even so, around 72.2% of them are completely public. This was previously revealed by another report published by BitMEX in January 2020.

Researchers conducted their attacks in December 2019, as well as in January and February of 2020. They targeted the test network, as well as the main network, to determine balances. In the end, they managed to access balances of 619 test network channels, as well as 678 main network channels.

Researchers then pieced together changes in balances collected from the first two attacks. This allowed them to construct snapshots of the Lightning Network during the third one. They also identified senders and receivers, revealing their public keys and other information.

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