Lightweight Virtual Payment Channels

Payment channel networks are one of the latest attempts on improving the scalability of blockchains in the number of transactions per second. Nodes within such a network can exchange funds without the necessity of interacting with the blockchain except during setup, closure or eventual dispute of their mutual channel. Payments can be executed across a path of payment channel using hashed time lock contracts. However, for each individual payment all nodes within a path need to be interacted with it during setup, execution or tear-down phases, and therefore they need to be online. This is a limitation of payment networks especially for long payment paths. A recent proposal by Dziembowski et al. (CCS’18) that enables payments across multiple payment channel without the necessity of intermediate nodes being online is using virtual payment channel. As of now the only construction for virtual payment channel requires smart contracts as those implemented on the Ethereum blockchain. Our work proposes a construction for virtual payment channel without requiring smart contracts, but instead it is built upon only time locks and threshold signatures. This enables implementation of virtual payment channel on a larger range of blockchain implementations such as Bitcoin.