Author: Billy Tetrud 2021-07-06 01:34:53
Published on: 2021-07-06T01:34:53+00:00
In a conversation between e and ZmnSCPxj on the bitcoin-dev mailing list, they discuss the possibility of proving balances held on the Lightning Network. According to ZmnSCPxj, every channel is anchored on-chain, and the two participants in the channel can sign a plaintext containing their node pubkeys and how much each owns. However, any balance attestation is only valid at the instant it's taken and can't be used as verification that the money is still owned by the same channel partner in the next second. When asked about the possibility of custodian lightning nodes freezing a snapshot of its current state and making an atomic proof-of-reserves of all channels, ZmnSCPxj admits that he doesn't know how that would be possible. He also adds that custodian proof-of-reserves is not that popular as it only proves that the funds were owned under a particular key at some snapshot of the past, and it does not prove that the key will not get lost or lost and then salvaged by a scuba diver later.ZmnSCPxj mentions that if one party in the channel loses its key in a boating accident, the other party has every incentive to unilaterally close the channel, which reveals the exact amounts but not necessarily who owns which. If the other party uses its funds in a new proof-of-reserves, then obviously, the other output of the unilateral close was the one lost in the boating accident. The conversation concludes with ZmnSCPxj stating that perhaps the most practical problem with proving balances held on the Lightning Network is that Lightning channel states change fairly quickly, and there are possible race conditions due to network latency, where a custodian Lightning node is unable to "freeze" a snapshot of its current state and make an atomic proof-of-reserves of all channels.
Updated on: 2023-06-15T00:11:53.823130+00:00