A Heuristic-Based Private Bitcoin Payment Network Formation Using Off-Chain Links

While Bitcoin dominates the market for cryptocurrencies, its use in micropayments is still a challenge due to its long transaction validation times and high fees. Recently, the concept of off-chain payments is introduced that led to the idea of establishing a payment network called Lightning Network (LN). Off-chain links provide the ability to do transactions without writing to Blockchain. However, LN's design still favors fees and is creating hub nodes that defeat the purpose of Blockchain. In addition, it is still not reliable as not all the transactions are guaranteed to be transmitted to their destinations. If current retailers would like to use it, these problems might hinder its adoption. To address this issue, in this paper, we advocate creating a private payment network among a given set of retailers that will serve their business needs, just like the idea of private Blockchains. The goal is to build a pure peer-to-peer topology that will eliminate the need for relays and increase the robustness of payments. Using off-chain links as edges and retailers as nodes, the problem is formulated as a multi-flow commodity problem where transactions represent the commodities from various sources to destinations. As the multi-flow commodity problem is NP-Complete, we propose a heuristic approach that utilizes Dijkstra's shortest path algorithm in a dynamic way by updating the edge weights when new payment paths are to be found. The order of transactions is randomized to provide fairness among the retailers. The evaluations indicate that the proposed heuristic comes close to an optimal solution while providing scalability and user privacy.