# Evaluating Methods for the Identification of Off-Chain Transactions in the Lightning Network
## 3 State of the Art in Off-Chain Transactions Analysis  
The existing research regarding blockchain transaction analysis does not consider the off-chain transactions and Lightning network since most of the research was done before the inception of the LN. Some of the approaches and methods can nevertheless be relevant for off-chain tx analysis. The fact that the blockchain is a public distributed data structure containing all transactions done by every Bitcoin user means that it is theoretically plausible to track all users and all transactions. Analyzing the blockchain should provide us with all records of all transactions related to a given single individual; this will include the amount sent and received, the time and date this was done, and which addresses these transactions were going to or coming from. The addresses are encoded public key hashes, and keys can be generated at will, so users are free to use new addresses whenever they want. For improved privacy, it is considered best practice to generate a new address for each transaction. Doing that results in transactions between different addresses each time. We will refer interchangeably to keys and addresses since an address is just a hashed and base48 encoded public key. The practice of not reusing keys means there is no longer a 1-to-1 mapping between users and keys. This use of new keys for each transaction gives the users Pseudonymity, which is defined by [PERSON] and [PERSON] [PERSON] and [PERSON] (2014) as: \"Pseudonymity is the use of pseudonyms as IDs.\". They also define pseudonymity in relation to linkability, which depending on the context has different levels of anonymity. The relevant aspect for us is the transaction pseudonym. Each transaction will have a different pseudonym that is used and this makes different transaction pseudonyms hard to link. The transaction pseudonyms are exactly the mechanism that the Bitcoin system uses to provide privacy for its users. Having a new pseudonym for each transaction makes it difficult for observers to link the activity of users. Linkability, therefore, is defined as the ability to find a relationship between two items in a system. With respect to key reuse, a key is obviously related to itself, but there is also be the relationship between the transactions the keys are used in, allowing us to also link the transactions based on this. According to [PERSON] and [PERSON] unlinkability is one of three main concepts of anonymity and privacy. The other is anonymity, which is defined as such: \"Anonymity is the state of being not identifiable within a set of subjects, the anonymity set.\" [PERSON] and [PERSON] (2014), and unobservability which means that no message is any different from random noise, i.e., encryption. The latter is not applicable to the Bitcoin system as it is an open system with a public record of messages (TXs) which is observable to the same degree by every participant. The system is also not anonymous as the subjects are distinguished by their keys. Pseudonymity and unlinkability are the two privacy concepts used to avoid full transparency of activity within the system. [PERSON] (2019) suggests two privacy notions adapted to Bitcoin: activity unlinkability and user profile indistinguishability. The former refers to the inability of an observer to link keys or transactions belonging to a single user of their choosing, and therefore revealing all the user's activities. This is a more specified unlinkability notion describing the lack of relationship between keys and transactions for a single user. User profile indistinguishability provides stronger privacy guarantees. A user profile can consist of keys or transactions which are linked, meaning they are discovered as belonging to the same user. User profile indistinguishability means that an observer should not be able to link keys or transactions to the right user, and thus to construct correct user profiles.