Enabling Micro-payments on IoT Devices using Bitcoin Lightning Network

TL;DR

This paper presents a protocol that enables resource-constrained IoT devices to securely participate in Bitcoin Lightning Network transactions via a gateway, facilitating micro-payments with minimal resource requirements.

Contribution

It introduces a novel protocol that allows IoT devices to securely engage in LN operations through a gateway using 3-of-3 multisignature channels, overcoming resource limitations.

Findings

Protocol is feasible on Raspberry Pi for toll payments

Ensures security through cryptographic signatures

Demonstrates practical implementation and security

Abstract

Lightning Network (LN) addresses the scalability problem of Bitcoin by leveraging off-chain transactions. Nevertheless, it is not possible to run LN on resource-constrained IoT devices due to its storage, memory, and processing requirements. Therefore, in this paper, we propose an efficient and secure protocol that enables an IoT device to use LN's functions through a gateway LN node. The idea is to involve the IoT device in LN operations with its digital signature by replacing original 2-of-2 multisignature channels with 3-of-3 multisignature channels. Our protocol enforces the LN gateway to request the IoT device's cryptographic signature for all operations on the channel. We evaluated the proposed protocol by implementing it on a Raspberry Pi for a toll payment scenario and demonstrated its feasibility and security.