Scalable funding of Bitcoin micropayment channel networks
The Bitcoin network has scalability problems. To increase its transaction rate and speed, micropayment channel networks have been proposed; however, these require to lock funds into specific channels. Moreover, the available space in the blockchain does not allow scaling to a worldwide payment syste...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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The Royal Society
2018-01-01
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| Series: | Royal Society Open Science |
| Subjects: | |
| Online Access: | https://royalsocietypublishing.org/doi/pdf/10.1098/rsos.180089 |
| _version_ | 1818348038017515520 |
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| author | Conrad Burchert Christian Decker Roger Wattenhofer |
| author_facet | Conrad Burchert Christian Decker Roger Wattenhofer |
| author_sort | Conrad Burchert |
| collection | DOAJ |
| description | The Bitcoin network has scalability problems. To increase its transaction rate and speed, micropayment channel networks have been proposed; however, these require to lock funds into specific channels. Moreover, the available space in the blockchain does not allow scaling to a worldwide payment system. We propose a new layer that sits in between the blockchain and the payment channels. The new layer addresses the scalability problem by enabling trustless off-blockchain channel funding. It consists of shared accounts of groups of nodes that flexibly create one-to-one channels for the payment network. The new system allows rapid changes of the allocation of funds to channels and reduces the cost of opening new channels. Instead of one blockchain transaction per channel, each user only needs one transaction to enter a group of nodes—within the group the user can create arbitrarily many channels. For a group of 20 users with 100 intra-group channels, the cost of the blockchain transactions is reduced by 90% compared to 100 regular micropayment channels opened on the blockchain. This can be increased further to 96% if Bitcoin introduces Schnorr signatures with signature aggregation. |
| first_indexed | 2024-12-13T17:43:42Z |
| format | Article |
| id | doaj.art-39e059f7493041ed8b6bb6e47c5887a4 |
| institution | Directory Open Access Journal |
| issn | 2054-5703 |
| language | English |
| last_indexed | 2024-12-13T17:43:42Z |
| publishDate | 2018-01-01 |
| publisher | The Royal Society |
| record_format | Article |
| series | Royal Society Open Science |
| spelling | doaj.art-39e059f7493041ed8b6bb6e47c5887a42022-12-21T23:36:39ZengThe Royal SocietyRoyal Society Open Science2054-57032018-01-015810.1098/rsos.180089180089Scalable funding of Bitcoin micropayment channel networksConrad BurchertChristian DeckerRoger WattenhoferThe Bitcoin network has scalability problems. To increase its transaction rate and speed, micropayment channel networks have been proposed; however, these require to lock funds into specific channels. Moreover, the available space in the blockchain does not allow scaling to a worldwide payment system. We propose a new layer that sits in between the blockchain and the payment channels. The new layer addresses the scalability problem by enabling trustless off-blockchain channel funding. It consists of shared accounts of groups of nodes that flexibly create one-to-one channels for the payment network. The new system allows rapid changes of the allocation of funds to channels and reduces the cost of opening new channels. Instead of one blockchain transaction per channel, each user only needs one transaction to enter a group of nodes—within the group the user can create arbitrarily many channels. For a group of 20 users with 100 intra-group channels, the cost of the blockchain transactions is reduced by 90% compared to 100 regular micropayment channels opened on the blockchain. This can be increased further to 96% if Bitcoin introduces Schnorr signatures with signature aggregation.https://royalsocietypublishing.org/doi/pdf/10.1098/rsos.180089bitcoinlightning networkmicropayment channel networks |
| spellingShingle | Conrad Burchert Christian Decker Roger Wattenhofer Scalable funding of Bitcoin micropayment channel networks Royal Society Open Science bitcoin lightning network micropayment channel networks |
| title | Scalable funding of Bitcoin micropayment channel networks |
| title_full | Scalable funding of Bitcoin micropayment channel networks |
| title_fullStr | Scalable funding of Bitcoin micropayment channel networks |
| title_full_unstemmed | Scalable funding of Bitcoin micropayment channel networks |
| title_short | Scalable funding of Bitcoin micropayment channel networks |
| title_sort | scalable funding of bitcoin micropayment channel networks |
| topic | bitcoin lightning network micropayment channel networks |
| url | https://royalsocietypublishing.org/doi/pdf/10.1098/rsos.180089 |
| work_keys_str_mv | AT conradburchert scalablefundingofbitcoinmicropaymentchannelnetworks AT christiandecker scalablefundingofbitcoinmicropaymentchannelnetworks AT rogerwattenhofer scalablefundingofbitcoinmicropaymentchannelnetworks |