Watchtower

A watchtower is a service that surveils a particular Lightning channel to guard against fraud. Watchtowers allow Lightning users to have a semi-trusted third party watch over their channel to prevent double spends.

Because the Lightning Network uses unconfirmed transactions to transfer funds, the double spend problem is not completely eliminated. A dishonest member of a Lightning channel can broadcast an older unconfirmed transaction and attempt to nullify previous Lightning payments, stealing money from their counterparty.

The Lightning Network has implemented a solution to this problem by allowing the victim of such a double spend to exact revenge on the attacker and reclaim the entire balance of the channel, including any bitcoin that the attacker might have legitimately owned before the attack. The reclamation procedure is called a justice transaction.

Justice transactions are only possible within a certain time period after the initial attack, and since most users are not constantly watching their Lightning wallets, executing a justice transaction in a timely manner is not always possible. Watchtowers allow users to outsource the execution of justice transactions, so that even if they are not watching their wallet, or their Lightning node is offline, they will not miss the window for the justice transaction.