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Fraud-Fighting 'Watchtowers' Are Coming With the Next Big Lightning Release -

So-called lightning network “watchtowers” — a much-anticipated next step for securing the network — are coming soon.

Watchtowers have long been considered a missing piece of bitcoin’s lightning layer, as they’re crucial for squashing fraud on the experimental, off-chain network that could make bitcoin payments faster and more scalable. With version 0.7 of the LND software release coming at an undisclosed date in June, Lightning Labs is launching the most complete build of a network watchtower to date.

When someone uses lightning, it’s necessary for someone using it to remain online to make sure their “counterparty” isn’t trying to steal those funds. But this is obviously a UX nightmare; for example, customers don’t have to monitor their Wells Fargo accounts every day to ensure that they’re not being defrauded.

The watchtower “watches” for old “states” to be broadcast. In other words, if a bad actor tries to broadcast an old transaction — giving themselves extra money — the watchtower responds by punishing that bad actor.

Thus, watchtowers outsource this anti-fraud functionality so users don’t have to do perform this kind of monitoring themselves.

Lightning Labs head of cryptographic engineering Conner Fromknecht has been the driving force behind this implementation, even giving a talk on the design decisions (like how they made decisions to preserve privacy) of the implementations at a virtual lightning conference in April. Lightning Labs CTO Olaoluwa Osuntokun and others on the team have collaborated with him design decisions over the past year.

As Osuntokun explained to CoinDesk:

“A big factor also [in my opinion] is that now we have a direct deterrence in place against any possible breach attempts, now that the tower code is out there in the open, an attacker now has a very strong disincentive against attempting an attack since it’s very possible that the potential victim has a tower watching their ba...
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