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Understanding the lightning network capability to route payments

Šatcs, D. (2020) Understanding the lightning network capability to route payments.

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Abstract:The Bitcoin adoption as a digital currency had been rising and reached its peak in 2017 when the network was processing half a million transactions daily. Such unprecedented load uncovered flaws in the way Bitcoin scales and a new solution was necessary. Bitcoin Lightning Network was proposed in 2016 and is aimed at fixing Bitcoin scalability problems by implementing second-layer payment channels on top of the blockchain. To avoid creating a channel between each pair of nodes, a routing algorithm had been introduced that could send payments via multiple hops to the destination. In this paper, experiments are carried out to understand how well the Lightning Network can route payments 2 years after its launch. Unlike other works, active probing is used, which reflects the real state of the network better in contrast to an analysis of static network snapshots. An experiment is performed by sending test payments of various volumes to every node in the network. Errors are analysed and separated into connectivity related and channel capacity related. Both Tor and IP based Lightning nodes are used as entry points and outcomes are compared. The results help to understand how well the nodes are connected and how likely the payments of various volumes are to succeed.
Item Type:Essay (Bachelor)
Faculty:EEMCS: Electrical Engineering, Mathematics and Computer Science
Subject:54 computer science
Programme:Computer Science BSc (56964)
Link to this item:http://purl.utwente.nl/essays/82015
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