Bitcoin Warning As Serious Security Vulnerabilities Uncovered

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Bitcoin developers have been trying to make the world’s most popular cryptocurrency more useful for payments, with the somewhat controversial Lightning Network one of the most popular projects.

However, serious security vulnerabilities have this week been discovered on the bitcoin Lightning Network, which could result in users losing their bitcoin if nodes are not upgraded.

"Security issues have been found in various lightning projects which could cause loss of funds," wrote software developer, Rusty Russell, who authored the majority part of Bitcoin’s Lightning Network protocol specification, in a post shared via a Lightning Network mailing list. "Full details will be released in 4 weeks, please upgrade well before then."

The specifics of the vulnerability will be disclosed on 27 September, a common software security practise to both prevent bug exploitation and give developers time to patch problems.

The vulnerability appears to be related to the lightning-ready bitcoin wallet Eclair, which Russell also advised users to update.

The Lightning Network, first proposed by Thaddeus Dryja and Joseph Poon&nbsp;in a 2015 white paper, creates a layer on top of the bitcoin blockchain, where transactions can be passed back and forth&nbsp;before being added to the underlying blockchain.&nbsp;

This should mean bitcoin transaction speeds are increased while costs are significantly reduced.

There are now a few different Lightning-ready wallets available, as well as companies that are able to process them on behalf of merchants.

However, low user numbers mean bitcoin lightning nodes currently lose money when they process transactions, according to recent reports.

When sending a Lightning payment, two parties deposit the funds at one bitcoin address, a so-called channel, in which they can exchange funds a limitless number of times.

This maintains bitcoin’s security but means small, regular payments don’t need to be added to the underlying blockchain until the channel is closed.

Questions have been raised&nbsp;about what Lightning Network adoption will mean for the bitcoin price, with much of the price dependent on transaction fees picked up by miners.

Most are though confident that with increased bitcoin adoption the price will continue to rise.

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Bitcoin developers have been trying to make the world’s most popular cryptocurrency more useful for payments, with the somewhat controversial Lightning Network one of the most popular projects.

However, serious security vulnerabilities have this week been discovered on the bitcoin Lightning Network, which could result in users losing their bitcoin if nodes are not upgraded.

Bitcoin’s Lightning Network is designed to make small transactions cheaper and quicker, though critics say it is too clunky for mainstream use.

LightRocket via Getty Images

“Security issues have been found in various lightning projects which could cause loss of funds,” wrote software developer, Rusty Russell, who authored the majority part of Bitcoin’s Lightning Network protocol specification, in a post shared via a Lightning Network mailing list. “Full details will be released in 4 weeks, please upgrade well before then.”

The specifics of the vulnerability will be disclosed on 27 September, a common software security practise to both prevent bug exploitation and give developers time to patch problems.

The vulnerability appears to be related to the lightning-ready bitcoin wallet Eclair, which Russell also advised users to update.

The Lightning Network, first proposed by Thaddeus Dryja and Joseph Poon in a 2015 white paper, creates a layer on top of the bitcoin blockchain, where transactions can be passed back and forth before being added to the underlying blockchain. 

This should mean bitcoin transaction speeds are increased while costs are significantly reduced.

There are now a few different Lightning-ready wallets available, as well as companies that are able to process them on behalf of merchants.

However, low user numbers mean bitcoin lightning nodes currently lose money when they process transactions, according to recent reports.

When sending a Lightning payment, two parties deposit the funds at one bitcoin address, a so-called channel, in which they can exchange funds a limitless number of times.

This maintains bitcoin’s security but means small, regular payments don’t need to be added to the underlying blockchain until the channel is closed.

The bitcoin price has surged this year as some of the world’s biggest technology companies eye bitcoin and cryptocurrencies as potential future revenue drivers.

Coindesk

Questions have been raised about what Lightning Network adoption will mean for the bitcoin price, with much of the price dependent on transaction fees picked up by miners.

Most are though confident that with increased bitcoin adoption the price will continue to rise.