The successful amalgamation of cryptocurrency and consumer Internet-of-Things (IoT) devices can pave the way for novel applications in machine-to-machine economy. However, the lack of scalability and heavy resource requirements of initial blockchain designs hinder the integration, and it is unclear how consumer devices will be adopting cryptocurrency. Therefore, in this article, we critically review the existing integration approaches and cryptocurrency designs that strive to enable micropayments among consumer devices. We identify and discuss solutions under three main categories; direct integration, payment channel network, and new cryptocurrency design. The first approach utilizes a full node to interact with the payment system. Offline channel payment is suggested as a second-layer solution to solve the scalability issue and enable instant payment with low fee. New designs converge to semicentralized scheme and focus on lightweight consensus protocol that does not require high computation power. We evaluate the pros and cons of each of these approaches and then point out future research challenges. Our goal is to help researchers and practitioners to better focus their efforts to facilitate micropayment adoptions.

Mass penetration and market dominance of Electric Vehicles (EVs) are expected in the upcoming years. Due to their frequent charging needs, not only public and private charging stations are being built, but also V2V charging options are considered. This forms a charging network with various suppliers and EV customers which can communicate to schedule charging operations. While an app can be designed to develop matching algorithms for charging schedules, the system also needs a convenient payment method that will enable privacy-preserving transactions among the suppliers and EVs. In this paper, we adopt a Bitcoin-based payment system for the EV charging network payments. However, Bitcoin has a transaction fee which would be comparable to the price of the charging service most of the time and thus may not be attractive to users. High transaction fees can be eliminated by building a payment network in parallel to main ledger, with permission and signatures. In this paper, we design and implement such a network among charging stations and mobile EVs with flow, connectivity and fairness constraints, and demonstrate results for the feasibility of the scheme under different circumstances. More specifically, we propose a payment network optimization model for determining payment channels among charging stations. We present numerical results on the characteristics of the network model by using realistic use cases.

Bitcoin has emerged as a revolutionary payment system with its decentralized ledger concept; however it has significant problems such as high transaction fees and low throughput. Lightning Network (LN), which was introduced much later, solves most of these problems with an innovative concept called off-chain payments. With this advancement, Bitcoin has become an attractive venue to perform micro-payments which can also be adopted in many IoT applications (e.g., toll payments). Nevertheless, it is not feasible to host LN and Bitcoin on IoT devices due to the storage, memory, and processing restrictions. Therefore, in this paper, we propose a secure and efficient protocol that enables an IoT device to use LN's functions through an untrusted gateway node. Through this gateway which hosts the LN and Bitcoin nodes, the IoT device can open & close LN channels and send & receive LN payments. This delegation approach is powered by a threshold cryptography based scheme that requires the IoT device and the LN gateway to jointly perform all LN operations. Specifically, we propose thresholdizing LN's Bitcoin public and private keys as well as its public and private keys for the new channel states (i.e., commitment points). We prove with a game theoretical security analysis that the IoT device is secure against collusion attacks. We implemented the proposed protocol by changing LN's source code and thoroughly evaluated its performance using several Raspberry Pis. Our evaluation results show that the protocol; is fast, does not bring extra cost overhead, can be run on low data rate wireless networks, is scalable and has negligible energy consumption overhead. To the best of our knowledge, this is the first work that implemented threshold cryptography in LN.

While various covert botnets were proposed in the past, they still lack complete anonymization for their servers/botmasters or suffer from slow communication between the botmaster and the bots. In this paper, we first propose a new generation hybrid botnet that covertly and efficiently communicates over Bitcoin Lightning Network (LN), called LNBot. Exploiting various anonymity features of LN, we show the feasibility of a scalable two-layer botnet which completely anonymizes the identity of the botmaster. In the first layer, the botmaster anonymously sends the commands to the command and control (C&C) servers through regular LN payments. Specifically, LNBot allows botmaster's commands to be sent in the form of surreptitious multi-hop LN payments, where the commands are either encoded with the payments or attached to the payments to provide covert communications. In the second layer, C&C servers further relay those commands to the bots in their mini-botnets to launch any type of attacks to victim machines. We further improve on this design by introducing D-LNBot; a distributed version of LNBot that generates its C&C servers by infecting users on the Internet and forms the C&C connections by opening channels to the existing nodes on LN. In contrary to the LNBot, the whole botnet formation phase is distributed and the botmaster is never involved in the process. By utilizing Bitcoin's Testnet and the new message attachment feature of LN, we show that D-LNBot can be run for free and commands are propagated faster to all the C&C servers compared to LNBot. We presented proof-of-concept implementations for both LNBot and D-LNBot on the actual LN and extensively analyzed their delay and cost performance. Finally, we also provide and discuss a list of potential countermeasures to detect LNBot and D-LNBot activities and minimize their impacts.

Bitcoin has emerged as a revolutionary payment system with its decentralized ledger concept; however it has significant problems such as high transaction fees and low throughput. Lightning Network (LN), which was introduced much later, solves most of these problems with an innovative concept called off-chain payments. With this advancement, Bitcoin has become an attractive venue to perform micro-payments which can also be adopted in many IoT applications (e.g., toll payments). Nevertheless, it is not feasible to host LN and Bitcoin on IoT devices due to the storage, memory, and processing restrictions. Therefore, in this paper, we propose a secure and efficient protocol that enables an IoT device to use LN's functions through an untrusted gateway node. Through this gateway which hosts the LN and Bitcoin nodes, the IoT device can open & close LN channels and send & receive LN payments. This delegation approach is powered by a threshold cryptography based scheme that requires the IoT device and the LN gateway to jointly perform all LN operations. Specifically, we propose thresholdizing LN's Bitcoin public and private keys as well as its public and private keys for the new channel states (i.e., commitment points). We prove with a game theoretical security analysis that the IoT device is secure against collusion attacks. We implemented the proposed protocol by changing LN's source code and thoroughly evaluated its performance using several Raspberry Pis. Our evaluation results show that the protocol; is fast, does not bring extra cost overhead, can be run on low data rate wireless networks, is scalable and has negligible energy consumption overhead. To the best of our knowledge, this is the first work that implemented threshold cryptography in LN.