# Evaluating Methods for the Identification of Off-Chain Transactions in the Lightning Network
## 3 State of the Art in Off-Chain Transactions Analysis
This was done in the study by [PERSON] et al. [5], where they participated in mining pools, withdrew and deposited funds on exchanges or wallet services, used Bitcoin gambling sites, and purchased goods from vendors. By doing this they were able to collect keys related to the different services and entities they did transactions with. This shows that engaging with other entities or users multiple times will allow us to link the keys used in those transactions. An important remark about this, done both by [PERSON] et al. [5], and [PERSON] and [PERSON] [4], is that a big entity in the network which does transactions with many other separable users will have greater opportunity to identify or track users, because they can use their central position to link keys. Such an entity could be a big exchange where people trade other currencies for Bitcoin, for example, or a large online wallet provider. [PERSON] et al. [17], discuss privacy in relation to Bitcoin scaling solutions and point to several problems with blockchain analysis. One central issue is the increasing size of the blockchain as it constantly grows. [PERSON] et al. state that at the time of writing that paper, the blockchain was 72 GB. [PERSON] et al. also point out that the linking heuristics used in previous studies are no longer applicable for off-chain transactions facilitated by networks such as the LN. This is simply because the transactions will not be recorded on the blockchain. [PERSON] et al. suggests that using payment channel networks will increase the privacy of users with regards to blockchain analysis, but that the existing methods may be adapted to analyze the payment channels in a network such as the LN. It has been suggested that identifying funding transactions on the blockchain can imply the network topology [18] of the LN. This is because all channels in the LN must be anchored in the blockchain with a funding transaction signed by both parties in the channel. If one were able to identify funding transactions on the blockchain, and had some way of linking channels (represented on the blockchain as funding transactions) to each other, it would reveal how the LN is structured as the linked channels would form the same network as the LN. This possibility is also mentioned in the LN paper itself [2] were they state that by monitoring the blockchain for funding transactions, a routing map of the LN can be theoretically built. Similarly, by linking the funding transaction and closing transaction of a channel, we get closed channels, so linking it with other channels would give us the structure of the LN in a previous state. [PERSON] et al. [17] suggest that the typology of the LN will affect privacy. They propose that a possible typology for the LN is one where there are some highly connected core nodes that have big capacity channels with each other, while the end users connect to one of these when they want to do transactions. In contrast to the Bitcoin network which is a decentralizedp2p network, the LN with this topology will exhibit properties of a centralized system. The number of core nodes and how many connections they have will of course play a big role in the degree of centralization. As a countermeasure, onion routing has been proposed and is being implemented for LN. With this, in the payment path, a node will only know where it received the payment from and where the funds were forwarded. It cannot know the actual source and destination. The recent paper by [PERSON] et al. identifies some privacy notions specifically for payment channel networks [PERSON] _et al._ (2016). The two notions are value privacy and relationship anonymity. Value privacy is that users outside the payment path cannot learn the value of the payment. A payment path is the route the payment travels inside the network. The notion is specified to only be off-path meaning it only considers nodes that are outside the path, so the nodes in the path will learn the value. Relationship anonymity is a more general anonymity concept which relates to likability.