How safe is the Bitcoin Lightning Network?

Researchers from the University of Illinois studied the potential vulnerabilities of the Bitcoin Lightning Network.

Researchers from the University of Illinois studied the potential vulnerabilities of the Bitcoin Lightning Network. Here are the facts.

Researchers Cosimo Sguanci and Anastasios Sidiropoulos published their study on potential attack methods for the Bitcoin Lightning Network. In the research paper, they examine how attackers could exploit two vulnerabilities in the network.

The two attacks are a so-called "zombie attack" and a "massive double-spend attack." The Lightning Network enables the relatively slow Bitcoin blockchain to process payments quickly and securely. It achieves higher transaction speeds by having users on the network connect directly via payment channels.

The first and last transactions are sent to the Bitcoin blockchain. All the transactions in between are processed by the Bitcoin blockchain's Lightning network. The number of nodes matters for the health of the Lightning network.

How the attacks work?

In the "zombie attack," certain nodes are disabled, making coins in the payment channel at that moment inaccessible. In the researchers' paper, this is described as a form of vandalism.

The damage that could occur is limited. For users making legitimate payments, such an attack would be frustrating only due to higher transaction fees, but not deadly.

A "massive double-spend attack," however, might sound familiar to some readers. If an attacker can control 51% of the hashing power on a proof-of-work blockchain, they can manipulate transactions and spend money multiple times. What would be extremely costly on the Bitcoin blockchain could be easier on the Lightning network, according to the study. In principle, it would be possible to bombard the Bitcoin blockchain with fraudulent transactions.

Remember: only the first and last transaction on the Lightning network are sent to the blockchain. A collusion of larger nodes could flood the blockchain with unlimited fraudulent transactions.

If these nodes then pay higher validation costs than legitimate transactions, they could skip the queue and push fraudulent transactions. The consequences could be fatal.

The double-spend problem

When asked about it, Bitcoin Lightning developer Rene Pickhardt indicated that a few years ago he already dealt with this kind of double-spend attacks. He highlighted this in an email to other developers.

Such an attack could be even more serious on the Lightning network than on the Main Chain. As for the latter, you can only use your own funds twice. On the Lightning network, attackers could steal any amount as long as there are enough payment channels open, according to Pickhardt.

Are these attacks defensible?

The Lightning network obviously has security measures. One such safeguard is called watchtowers. They track the network status and can, with the help of honest nodes, detect dishonest transactions. These watchtowers would have to fail for such a massive double-spend attack to succeed.

The University of Illinois researchers were able to model such an attack using past congestion data on the Bitcoin blockchain. They concluded that such an attack during a stalled transaction would have devastating results.

Pickhardt stated in his original assessment that he saw no way to prevent such an attack. The researchers also summarize in their paper that the vulnerabilities remain unresolved to this day. They recommend optimizing existing security structures and strictly monitoring the mainchain's load. In another paper, a more precise model of the attacks will be explored, taking transaction costs into account.