I'm still learning about Bitcoin lightning and learned about watchtowers. What are they doing exactly for the network and its users?
asked Nov 15, 2021 at 16:29
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1 Answer
Watchtowers are monitoring for attempted Lightning channel closes using revoked states and when they identify one they can broadcast the justice transaction claiming all (eltoo may change this in future but that is not possible under current consensus rules) the funds in the channel for the "cheated" party. This attempted closing of a channel using a revoked state may be done accidentally or maliciously. The security assumption for Lightning relies on being online 24/7 (or close to it) so that you can respond to an attempted channel close with a revoked state with your own justice transaction in a timely manner. With a watchtower (or multiple watchtowers in place) a party in a Lightning channel no longer has to be online 24/7 as they can rely on the watchtower to monitor the chain and respond if required.
answered Nov 15, 2021 at 16:51
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Of course, you're not protected if both you and your watchtower go offline for a significant period. Like with an insurance policy, if your insurer goes bankrupt you aren't covered. A watchtower's primary job is to stay online. You could have multiple watchtowers which reduces the probability of them all going offline at the same time though. Commented Nov 16, 2021 at 9:13