New form of 51% attack via lightning's revocation system possible?

Posted by Anthony Towns

Mar 13, 2018/18:30 UTC

The Lightning Network has been identified as vulnerable to a 51% hashing attack that could potentially steal more Bitcoin than double spending. This attack would involve the attacker setting up a channel with an entity that is funding it with 100% on their side, then routing 5 BTC from another channel through the second and saving the state that they own all 5 BTC in the victim channel. The attacker would then route 5 BTC through the first channel, causing their balance to return to 10 BTC while the victim's 5 BTC is still held by the attacker. The attacker would then use 51% hashing power to mine a secret chain that uses the saved state to close the victim channel and claim the funds. In this way, the attacker can collect old states worth many multiples of up to 10 BTC and mine them at once. This attack vector only allows a 51% miner to steal funds from channels they participate in, so creating channels with identifiable entities with whom you have an existing relationship is a defense against this attack. The attack also becomes less likely if hash rate is very decentralized. However, the attacker could run for a decade on stable payment channels storing old state and then cash in all those old transactions which cannot be revoked. It is unlikely that many channels will stay open for a decade, but this attack highlights the need for security measures in the Lightning Network.

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