title: Advancing payment channel networks for next generation monetary system infrastructures
Creators: name: De Silva, Anupa Shyamlal
Publisher: name: University of Galway
Year: 2025
Subjects: subject: payment channel networks
subject: blockchain
subject: bitcoin
subject: future payments
subject: supply chain
subject: micropayments
subject: metaverse
subject: stablecoin
subject: CBDC
subject: card payments
subject: digital payments
subject: cryptocurrency
subject: Data Science
subject: Engineering

description: In the aftermath of the 2008 global economic downturn, the emergence of Bitcoin as a disruptive force in the financial sector posed a significant challenge to traditional centralised financial systems. Nonetheless, both conventional and decentralised financial systems harbour inherent limitations that necessitate attention in preparation for the future. The clash between centralised governing bodies and decentralised payment systems spurred the emergence of a new concept known as Central Bank Digital Currency (CBDC), envisioned as a prospective future standard. While the current focus has predominantly dwelled on the adverse repercussions of CBDC's digitisation on existing financial systems, the impact on individuals' financial autonomy and adaptability to evolving monetary requirements constitute a crucial focal point for designing a futuristic monetary framework. This thesis identifies payment channel networks (PCNs) as a potential candidate as an infrastructure for a next-generation monetary system and lays the groundwork for its development. We commence by identifying issues with the current monetary landscape and the future monetary requirements based on the influence of technological advancements in various domains. In addressing these challenges, PCN possesses inherent scalability and security, with areas that require refinement. The thesis proposes enhancements to PCNs in two directions: facilitating payment intermediaries and enhancing user experience, where we develop innovative methods to make intermediaries more profitable and subsidised while boosting user confidence and convenience. This involves creating novel fee mechanisms and node subsidisation to benefit intermediaries, as well as designing stablecoins and card payment systems to improve the end-user experience. The efficiency and security of these methods are theoretically and empirically demonstrated with extensive simulations. These strategies elevate the potential of PCNs to serve as a comprehensive monetary infrastructure, effectively mitigating existing shortcomings. We also manifest how PCNs align with future monetary requirements in various contexts, such as micropayments, machine-to-machine (M2M) payments, the Metaverse, and mass customisation, especially in application areas such as future supply chains. Finally, we conceptualise a PCN-based monetary system that is not only resilient and future-ready but also deeply people-centric in its design, providing cash-like functionality. With its robust and stable currency, this monetary system is designed to put the user at the forefront, aiming to advance the financial landscape and establish the foundation for a better future.