Bitcoin Optech: Lightning Node Payments

The Bitcoin Optech newsletter provides readers with a top-level summary of the most important technical news happening in Bitcoin, along with resources that help them learn more. To help our readers stay up-to-date with Bitcoin, we're republishing the latest issue of this newsletter below. Remember to subscribe to receive this content straight to your inbox.

This week’s newsletter describes a proposal to allow LN nodes to receive payments without keeping their private keys online all the time. Also included are our regular sections with the summary of a Bitcoin Core PR Review Club meeting, announcements of new software releases and release candidates, and descriptions of notable changes to popular Bitcoin infrastructure software.

News

• Receiving LN payments with a mostly offline private key: in 2019, developer ZmnSCPxj proposed^[2] an alternative way to encapsulate pending LN payments (HTLCs^[3]) that would reduce the amount of network bandwidth and latency required to accept a payment. More recently, Lloyd Fournier suggested the idea could also be used to allow a node to accept multiple incoming LN payments without keeping its private keys online. The idea does have some downsides:

The node would still need its private keys to send a penalty transaction if necessary.The more payments the node received without using its private key, the more onchain fees would need to be paid if the channel was unilaterally closed.The receiving node would lose privacy—its immediate peer would be able to determine that it was the ultimate receiver of a payment and not just a