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A dialogue partner of mine claimed that Lightning Network is vulnerable to sybil attacks. He stated that LN needed explicit identities in order to support the "routing" which would cause ending up with whitelists.

Is Lightning Network vulnerable to sybil attacks?

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Not true.

You have funds locked into a multisig wallet with party A, B and C. There's nothing to Sybil there: the funds have been transferred and only you and them have keys.

Then you want to transfer money to G. None of your parties has a direct link to G, but C has links to D, E and F. And G is advertised as having a link to D. So C relays your money to D and D relays it to G.

How do you know it's actually G and not some fake G? Because you have out-of-band communication with G, because G is the restaurant you are standing in right now or G is the webshop you are trying to pay. A secret token is exchanged directly between you and the real G, which makes sure we're talking to the correct wallets and any relay transactions can only be redeemed with the knowledge of the secret token.

The example above is simplified of course. In practice the goal is to have more hops between you and G, both because finding a shorter route might be hard/impossible, but also for privacy reasons (it uses Tor like routing and encryption to hide identities and IP addresses).

  • What if G is in coordination with fake G to deceive you? /s – PyRulez May 17 '16 at 3:47

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