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A paper entitled: "Privacy in Bitcoin Transactions: New Challenges from Blockchain Scalability Solutions" has tried to investigate privacy issues of the Bitcoin influenced by the solutions for scalability of transaction throughput such that off-chain payment channels.

In this paper, we read:

"Mixing services as described so far can be applied to standard bitcoin addresses and transactions but when off-chain payment channels are used, such mixing techniques cannot be applied in the same form. In off-chain payments, on one hand, users may be more restricted on the number of payment channels that they create (due to fee costs) but on the other hand, payments are processed with multiple hops through different Payment Service Providers, and such hops could remain secret since they take place in the off-chain payment network and there is no need to store them. So the natural idea to detach the link between source and destination in this scenario is to perform payments through secret multiple hop routes."

Of course, there is no need to store the intermediary hopes between source and destination. However,

(1) What happens if those Payment Service Providers decide to reveal the information of the payment ? (if they are able to do ?)

(2) How to perform payments through secret multiple hop routes ? Does it mean that we need to trust the intermediary hopes to keep them secret ?

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In lightning network payments are onion routed. The only thing a PSV could reveal is the previous and next hop, but they can not know the origin or the destination. They know it came from Alice, and went to Bob, but they do not know where Alice may have gotten it from, or where Bob may send it to.

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  • So, do you mean onion routing in LN is mandatory? And does onion routing mean TOR network? If so, does it mean using TOR network in LN is mandatory? I also appreciate if you could share a reference/document explaining this process in more details. Thank you.
    – Questioner
    Feb 15, 2019 at 14:47
  • Yes, it is built into the spec, tor uses onion, but tor is not mandatory for lightning. github.com/lightningnetwork/lightning-rfc/blob/master/…
    – 404 not found
    Feb 15, 2019 at 15:20
  • And concerning my second question: Is it onion routing which ensures performing payments through secret multiple hop routes ? Or we need to do something else to make the hopes secret ? Thank you
    – Questioner
    Feb 18, 2019 at 9:43

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