Amler, Hendrik (2018) Evaluation of Payment Channel Networks for Micropayments. Masters thesis, Hochschule Darmstadt.
![[img]](http://blossom.informatik.uni-rostock.de/style/images/fileicons/text.png) |
Text
Amler - 2018 - Evaluation of Payment Channel Networks for Micropa.pdf Restricted to Registered users only Download (842kB) |
Abstract
Since the release of the Bitcoin paper ”Bitcoin: A peer-to-peer electronic cash system” by Satoshi Nakamoto in 2008, blockchain technology has evolved, adoption is increasing at a steady rate and new applications for blockchain are discovered every day. The increased attention for Bitcoin is causing bottlenecks during peak hours with long waiting times and high transaction fees. When compared to the payment service provider Paypal, Bitcoin can only process a fraction of the transactions volume in a given time window. A number of solutions have been proposed to solve the scalability problem such as altering the consensus algorithm, using multiple interconnected blockchains or doing off-chain transactions. Payment channel networks, such as the Lightning network, promise to increase transaction volume, lower transaction fees and increase transaction processing speed by limiting the use of the blockchain. If users are cooperative, transactions can be processed off-chain. The blockchain acts as a mediator and is only used in case of disputes between users. This thesis gives a broad overview of proposed scaling solutions. Payment channel networks are analyzed and compared against each other. The Lightning network and its Request for Comments (RFC) are explored in depth. To investigate practical aspects of payment channel networks, a simulation framework called Virtual Lightning Lab (VLL) was developed. VLL simulates a Lightning network with one of the implementation of the Lightning protocol and measures different metrics such as transaction error rate or latency. A number of variables such as the network topology, or transaction size can be adjusted to simulate different scenarios. Simulations of the Lightning network with VLL show vastly improved performance in terms of transaction volume, latency and costs compared to traditional on-chain Bitcoin transactions. Compared to the payment service provider PayPal, simulations show that the transaction cost is 6000 times lower for microtransactions while achieving similar latency. Using a more decentralized network topology for the autopilot feature of Lightning is highly recommended. Simulations show high error rates up to 70% for the currently used Barabási-Albert algorithm on failure of a central hub node. Adding an extra step to increase the clustering coefficient or using a small world network model can achieve low error rates as low as 5% in the same scenario. Flaws in the current Lightning protocol can prevent the Lightning network from becoming practical for every day use. The petty attack, allows an adversary to delay transactions up to hours or even days. Future work includes extending simulations to analyze, for example, liquidity changes within the network and implementation improvements to the Virtual Lightning Lab.
| Item Type: | Thesis (Masters) |
|---|---|
| Subjects: | Main Topics > Bitcoin Main Topics > Blockchain Projects > BloSSom 2019 Main Topics > Crypto Currency |
| Divisions: | Computer Science |
| Depositing User: | Unnamed user with email richard.dabels@uni-rostock.de |
| Date Deposited: | 09 Sep 2019 15:26 |
| Last Modified: | 09 Sep 2019 15:26 |
| URI: | http://blossom.informatik.uni-rostock.de/id/eprint/116 |
Actions (login required)
 |
View Item |
