Towards Scalable and Secure IoTs Transactions: A New Bi-directional Payment Channel Without Third-Party Monitoring

Blockchain has been extensively deployed in the Internet-of-Things (IoTs) to address the proliferation of IoT devices and ensure secure and scalable transactions. However, conventional blockchain-based payment schemes for IoTs, such as bi-directional payment channels, can potentially lead to system failures or financial losses due to factors like system downtime and insufficient throughput. Consequently, current schemes face significant challenges in terms of security and scalability. To protect honest node users from financial losses caused by malicious node users posting outdated transactions, trusted third parties are employed to monitor channels and penalize malicious actors when necessary. This approach is commonly used in bi-directional payment channels. Nevertheless, these trusted third parties require constant online presence, rely on collateral incentives, and lack certain payment privacy. To address these concerns, we propose a novel bi-directional payment channel protocol that eliminates the need for third-party monitoring and associated collateral costs while maintaining a constant penalty overhead. This indirectly enhances the throughput of the payment channel. Channel users utilize adaptor signatures in conjunction with the implementation of an absolute time lock, enabling users to come online at a predetermined time to verify the transaction. Upon implementation on the Bitcoin test network, our design scheme demonstrates significant improvements over the Lightning Network channel model in various aspects, including computational overhead and throughput. Particularly, our scheme can reduce computational cost by approximately twenty percent compared to the Lightning Network Channel. These advantages become more pronounced as the number of transactions increases.