Bitcoin Payment-channels for Resource Limited IoT Devices

TL;DR

This paper introduces a lightweight, secure bidirectional Bitcoin payment channel protocol tailored for resource-limited IoT devices, enabling blockchain interactions without full blockchain access or trusted third parties.

Contribution

It presents a novel, secure, and fair protocol for Bitcoin payment channels suitable for IoT devices, avoiding blockchain view requirements and trusted third parties.

Findings

Protocol is secure and crypto-economically fair.

Enables IoT devices to open and maintain payment channels.

Formulated as a game with equilibrium when protocols are followed.

Abstract

Resource-constrained devices are unable to maintain a full copy of the Bitcoin Blockchain in memory. This paper proposes a bidirectional payment channel framework for IoT devices. This framework utilizes Bitcoin Lightning-Network-like payment channels with low processing and storage requirements. This protocol enables IoT devices to open and maintain payment channels with traditional Bitcoin nodes without a view of the blockchain. Unlike existing solutions, it does not require a trusted third party to interact with the blockchain nor does it burden the peer-to-peer network in the way SPV clients do. The contribution of this paper includes a secure and crypto-economically fair protocol for bidirectional Bitcoin payment channels. In addition, we demonstrate the security and fairness of the protocol by formulating it as a game in which the equilibrium is reached when all players follow the protocol.