Wallet Balances On Lightning BTC Network Aren’t Private: Report

According to a new report, wallet balances on the lighting bitcoin network are not private and are easy to deanonymize, which apparently is not a bad thing. Let’s see why in the following lightning bitcoin news.

The Lightning Network which is the second-layer technology stack built on top of the bitcoin network is seen as the transaction speed and anonymity upgrade for Bitcoin. It helps instant settlement instead of having to wait hours for confirmation. On the privacy side, payments are settled peer to peer with the actors on the secondary network and the transactions are not settled on Bitcoin’s primary network and are not publicly stored. This provides users with the perception that the lighting can make Bitcoin more private too.

However, according to the latest researches, the wallet balances on the lighting network have some exploitable privacy gaps which are actually used to improve the protocol. The research was published in a digital archive of computer science research at Cornell University and was overseen by Alex Biryukov who is a professor of the University of Luxembourg and Mariusz Nowostawski who is a professor at the University of Luxembourg Ph.D. candidate. Sergei Tikhomirov was focused on security and privacy aspects of crypto while Rene Pickhardt was the final member of the team and a Ph.D. candidate at the University of Science and Technology of Norway.

They claim that the wallet balances are not private by ‘’probing channel balances.’’ A user can send payments over the lightning bitcoin network directly or with a routed payment.  To unmask the balances, the research team probed lightning network channels on the Bitcoin testnet and sent payments to different actors on the network. Sergei Tikhomirov explained:

 “We send payments of different sizes and determine the distribution of funds in each channel. Say, there is a channel between Alice and Bob. Alice has 3 coins, and Bob has 7. Mallory doesn’t know this balance, she only knows that they have 10 coins in total capacity. First, Mallory sends a payment of 5 coins. This doesn’t go through, because Alice doesn’t have enough coins on her side. From that, Mallory concludes that Alice has between 0 and 5 coins. Then, Mallory sends 2.5 coins, and now the payment goes through. From that, Mallory concludes that Alice has between 2.5 and 5 coins. Repeating this process, Mallory discovers Alice’s balance (and Bob’s balance as well, as they sum up to a known value) with a high accuracy.”