How To Set Up A Watchtower For An Umbrel Bitcoin Lightning Node

The Lightning Network is a trustless* Layer 2 network for Bitcoin and brings forth many improvements in speed and cost of final settlement. I use an asterisk on trustless because although it is, there are a few caveats to take into consideration so that your funds are safe, aside from normal hot wallet risks. Watchtowers, which we’ll cover today, ensure that your funds are safe from malicious channel closures, which is one of the main risks of running a well-capitalized Lightning node.

Lightning channels are currently constructed through setting up a two-of-two multisig address, in which your funds are locked up with another party. Either party has the secret to revoke the multisig contract and settle up at any time, but only if both nodes are online can it be closed immediately. If your node did go offline, the other party has to either wait for you to come back online or force close the channel. Now, force closing is not always a huge concern, especially if you’re using the Lightning Network with peers that you trust already, but as the Lightning Network grows and its use cases expand, you’ll inevitably start interacting with peers whom you may not know, and so it’s important to learn to defend your node against malicious closures.



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