June 16, 2021

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LNGate: Powering IoT with Next Generation Lightning Micro-payments using Threshold Cryptography. (arXiv:2105.08902v2 [cs.CR] UPDATED)

Bitcoin has emerged as a revolutionary payment system with its decentralized
ledger concept however it has significant problems such as high transaction
fees and long confirmation times. Lightning Network (LN), which was introduced
much later, solves most of these problems with an innovative concept called
off-chain payments. With this advancement, Bitcoin has become an attractive
venue to perform micro-payments which can also be adopted in many IoT
applications (e.g. toll payments). Nevertheless, it is not feasible to host LN
and Bitcoin on IoT devices due to the storage, memory, and processing
requirements. Therefore, in this paper, we propose an efficient and secure
protocol that enables an IoT device to use LN through an untrusted gateway
node. The gateway hosts LN and Bitcoin nodes and can open & close LN channels,
send LN payments on behalf of the IoT device. This delegation approach is
powered by a (2,2)-threshold scheme that requires the IoT device and the LN
gateway to jointly perform all LN operations which in turn secures both
parties’ funds. Specifically, we propose to thresholdize LN’s Bitcoin public
and private keys as well as its commitment points. With these and several other
protocol level changes, IoT device is protected against revoked state
broadcast, collusion, and ransom attacks. We implemented the proposed protocol
by changing LN’s source code and thoroughly evaluated its performance using a
Raspberry Pi. Our evaluation results show that computational and communication
delays associated with the protocol are negligible. To the best of our
knowledge, this is the first work that implemented threshold cryptography in
LN.