Privacy-Utility Tradeoffs in Routing Cryptocurrency over Payment Channel Networks

Abstract

As the adoption of cryptocurrencies grows to unprecedented levels, the scalability of blockchain technologies has become increasingly important. A major open question is whether cryptocurrencies are fundamentally able to support as much traffic as traditional, centralized solutions. One prominent approach for improving the scalability of blockchains is payment channel networks (PCNs) [1]. Instead of committing every transaction to the blockchain, a separate overlay network (called a PCN) is maintained. Each node represents a user, and each edge (or payment channel) represents pre-allocated funds that can be efficiently transacted between the two endpoints under a mutual agreement. Users can transact with each other by relaying payments over a sequence of channels.