diff --git a/channel.py b/channel.py
index 0a6127b..fc2af5f 100644
--- a/channel.py
+++ b/channel.py
@@ -8,9 +8,9 @@
 - address -- the url of the counterparty
 
 init(conf) - Set up the database
-create(url, mymoney, theirmoney)
+create(url, my_money, their_money)
 - Open a channel with the node identified by url,
-  where you can send mymoney satoshis, and recieve theirmoney satoshis.
+  where you can send my_money satoshis, and recieve their_money satoshis.
 send(url, amount)
 - Update a channel by sending amount satoshis to the node at url.
 getbalance(url)
@@ -38,6 +38,7 @@
 from bitcoin.core.scripteval import VerifyScript, SCRIPT_VERIFY_P2SH
 from bitcoin.core.script import CScript, SignatureHash, SIGHASH_ALL
 from bitcoin.core.script import OP_CHECKMULTISIG, OP_PUBKEY
+from bitcoin.core.key import CPubKey
 from bitcoin.wallet import CBitcoinAddress
 import jsonrpcproxy
 from serverutil import api_factory
@@ -101,6 +102,8 @@ class Channel(Model):
     our_addr = Column(Base58DataType(CBitcoinAddress))
     their_balance = Column(Integer)
     their_addr = Column(Base58DataType(CBitcoinAddress))
+    their_pubkey = Column(LargeBinary)
+    my_pubkey = Column(LargeBinary)
 
     def signature(self, transaction):
         """Signature for a transaction."""
@@ -147,6 +150,14 @@ def settlement(self):
         return CMutableTransaction([CMutableTxIn(self.anchor_point)],
                                    [first, second])
 
+    def commitmentsighash(self, ours=True):
+        """Generate the sighash for the most recent comitment"""
+        commit_tx = self.commitment(ours)
+        # should just be one anchor redeem -- redeem script the same for everyone
+        sighash = SignatureHash(CScript(self.anchor_redeem),
+                                commit_tx, 0, SIGHASH_ALL)
+        return sighash
+
 def select_coins(amount):
     """Get a txin set and change to spend amount."""
     coins = g.bit.listunspent()
@@ -175,55 +186,69 @@ def get_pubkey():
 
 def update_db(address, amount, sig):
     """Update the db for a payment."""
-    channel = Channel.query.get(address)
+    channel = Channel.query.get(address) # address is lightning address, address is primary key
+    # need to make sure we update balances prior to checking signatures
+    # (so that we get the right sighash)
     channel.our_balance += amount
     channel.their_balance -= amount
+    # make sure we have a valid signature from our counterparty before updating accounts
+    verify_commitment_signature(CPubKey(channel.their_pubkey),
+                                channel.commitmentsighash(), sig)
     channel.their_sig = sig
     database.session.commit()
-    return channel.signature(channel.commitment())
+    return channel.signature(channel.commitment()) # this is our signature of the comittment
 
-def create(url, mymoney, theirmoney, fees=10000):
+def create(their_url, my_money, their_money, fees=10000):
     """Open a payment channel.
 
     After this method returns, a payment channel will have been established
-    with the node identified by url, in which you can send mymoney satoshis
-    and recieve theirmoney satoshis. Any blockchain fees involved in the
+    with the node identified by their_url, in which you can send my_money satoshis
+    and recieve their_money satoshis. Any blockchain fees involved in the
     setup and teardown of the channel should be collected at this time.
     """
-    bob = jsonrpcproxy.Proxy(url+'channel/')
+    bob = jsonrpcproxy.Proxy(their_url+'channel/')
+    # g.logger.debug("### creating channel with bob: " + their_url + "channel/")
     # Choose inputs and change output
-    coins, change = select_coins(mymoney + 2 * fees)
-    pubkey = get_pubkey()
+    my_coins, my_change = select_coins(my_money + 2 * fees)
+    my_pubkey = get_pubkey()
     my_out_addr = g.bit.getnewaddress()
     # Tell Bob we want to open a channel
-    transaction, redeem, their_out_addr = bob.open_channel(
-        g.addr, theirmoney, mymoney, fees,
-        coins, change,
-        pubkey, my_out_addr)
+    transaction, redeem, their_out_addr, their_pubkey = bob.open_channel(
+        g.addr, their_money, my_money, fees,
+        my_coins, my_change,
+        my_pubkey, my_out_addr)
     # Sign and send the anchor
     transaction = g.bit.signrawtransaction(transaction)
+
     assert transaction['complete']
     transaction = transaction['tx']
     g.bit.sendrawtransaction(transaction)
     # Set up the channel in the DB
-    channel = Channel(address=url,
+    channel = Channel(address=their_url,
                       anchor_point=COutPoint(transaction.GetHash(), 0),
                       anchor_index=1,
                       their_sig=b'',
                       anchor_redeem=redeem,
-                      our_balance=mymoney,
+                      our_balance=my_money,
                       our_addr=my_out_addr,
-                      their_balance=theirmoney,
+                      their_balance=their_money,
                       their_addr=their_out_addr,
+                      their_pubkey=their_pubkey,
+                      my_pubkey=my_pubkey,
                      )
     # Exchange signatures for the inital commitment transaction
-    channel.their_sig = \
-        bob.update_anchor(g.addr, transaction.GetHash(),
-                          channel.signature(channel.commitment()))
+    # get the hash of everything including scripsigs (which are nullified in sighash)
+    # g.addr (our lightning addr), transaction.GetHash() (the TXID)
+    their_sig = bob.update_anchor(g.addr, transaction.GetHash(),
+                                  channel.signature(channel.commitment()), my_pubkey)
+    # Verify Bob's signature
+    verify_commitment_signature(CPubKey(their_pubkey),
+                                channel.commitmentsighash(), their_sig)
+    channel.their_sig = their_sig
     database.session.add(channel)
     database.session.commit()
     # Event: channel opened
-    CHANNEL_OPENED.send('channel', address=url)
+    CHANNEL_OPENED.send('channel', address=their_url)
 
 def send(url, amount):
     """Send coin in the channel.
@@ -265,6 +290,16 @@ def close(url):
     database.session.delete(channel)
     database.session.commit()
 
+def verify_commitment_signature(pubkey, sighash, signature):
+    """Verify that an updated commitment has been signed by our counterpaty"""
+    # recovered_pubkey = CPubKey.recover_compact(sighash, signature) # need updated bitcoin lib
+    pubkey = CPubKey(pubkey)
+    if not pubkey.verify(sighash, signature):
+        raise Exception("invalid comitment signature for transaction: " + str(sighash))
+    else:
+        # g.logger.debug("comitment signature verified for comitment with sighash: " + str(sighash))
+        return True
+
 @REMOTE
 def info():
     """Get bitcoind info."""
@@ -276,14 +311,15 @@ def get_address():
     return str(g.bit.getnewaddress())
 
 @REMOTE
-def open_channel(address, mymoney, theirmoney, fees, their_coins, their_change, their_pubkey, their_out_addr): # pylint: disable=too-many-arguments, line-too-long
+def open_channel(address, my_money, their_money, fees, their_coins, their_change, their_pubkey, their_out_addr): # pylint: disable=too-many-arguments, line-too-long, too-many-locals
     """Open a payment channel."""
     # Get inputs and change output
-    coins, change = select_coins(mymoney + 2 * fees)
+    coins, change = select_coins(my_money + 2 * fees)
     # Make the anchor script
-    anchor_output_script = anchor_script(get_pubkey(), their_pubkey)
+    my_pubkey = get_pubkey()
+    anchor_output_script = anchor_script(my_pubkey, their_pubkey)
     # Construct the anchor utxo
-    payment = CMutableTxOut(mymoney + theirmoney + 2 * fees,
+    payment = CMutableTxOut(my_money + their_money + 2 * fees,
                             anchor_output_script.to_p2sh_scriptPubKey())
     # Anchor tx
     transaction = CMutableTransaction(
@@ -292,28 +328,32 @@ def open_channel(address, mymoney, theirmoney, fees, their_coins, their_change,
     # Half-sign
     transaction = g.bit.signrawtransaction(transaction)['tx']
     # Create channel in DB
-    our_addr = g.bit.getnewaddress()
+    our_btc_addr = g.bit.getnewaddress()
     channel = Channel(address=address,
                       anchor_point=COutPoint(transaction.GetHash(), 0),
                       anchor_index=0,
                       their_sig=b'',
                       anchor_redeem=anchor_output_script,
-                      our_balance=mymoney,
-                      our_addr=our_addr,
-                      their_balance=theirmoney,
+                      our_balance=my_money,
+                      our_addr=our_btc_addr,
+                      their_balance=their_money,
                       their_addr=their_out_addr,
+                      my_pubkey=my_pubkey,
+                      their_pubkey=their_pubkey,
                      )
     database.session.add(channel)
     database.session.commit()
     # Event: channel opened
     CHANNEL_OPENED.send('channel', address=address)
-    return (transaction, anchor_output_script, our_addr)
+    return (transaction, anchor_output_script, our_btc_addr, my_pubkey)
 
 @REMOTE
-def update_anchor(address, new_anchor, their_sig):
+def update_anchor(their_lightning_address, new_anchor, their_sig, their_pubkey):
     """Update the anchor txid after both have signed."""
-    channel = Channel.query.get(address)
+    channel = Channel.query.get(their_lightning_address)
+    # COoutPoint = The combination of a transaction hash and an index n into its vout ['hash', 'n']
     channel.anchor_point = COutPoint(new_anchor, channel.anchor_point.n)
+    verify_commitment_signature(their_pubkey, channel.commitmentsighash(), their_sig)
     channel.their_sig = their_sig
     database.session.commit()
     return channel.signature(channel.commitment())
@@ -323,6 +363,7 @@ def propose_update(address, amount):
     """Sign commitment transactions."""
     channel = Channel.query.get(address)
     assert amount > 0
+    # need to decrement to generate commitment
     channel.our_balance += amount
     channel.their_balance -= amount
     # don't persist yet
diff --git a/lightningd.py b/lightningd.py
index 068d05e..be6d91a 100755
--- a/lightningd.py
+++ b/lightningd.py
@@ -16,6 +16,7 @@
 Flag options can be turned off by prefixing with 'no' (Ex: -nodaemon).
 """
 
+import logging
 import argparse
 import config
 import os
@@ -108,5 +109,11 @@ def add_switch(name):
     app.register_blueprint(lightning.API)
     app.register_blueprint(local.API)
 
+    handler = logging.StreamHandler()
+    handler.setLevel(logging.DEBUG)
+    app.logger.addHandler(handler)
+    app.logger.setLevel(logging.DEBUG)
+    # app.logger.debug("i'm logging!")
+
     app.run(port=port, debug=conf.getboolean('debug'), use_reloader=False,
             processes=3)
diff --git a/test/test_integration.py b/test/test_integration.py
index a3d2628..fee762e 100644
--- a/test/test_integration.py
+++ b/test/test_integration.py
@@ -39,7 +39,14 @@ def test_setup(self):
     def test_basic(self):
         """Test basic operation of a payment channel."""
         # Open a channel between Alice and Bob
-        self.alice.lit.create(self.bob.lurl, 50000000, 25000000)
+        self.alice.lit.create(self.bob.lurl, 50000000, 25000000)         
+
+        # try: 
+        #     self.alice.lit.create(self.bob.lurl, 50000000, 25000000)    
+        # finally: 
+        #     self.alice.lightning.print_log()
+        #     self.bob.lightning.print_log()            
+
         self.propagate()
         # There are some fees associated with opening a channel
         afee = 50000000 - self.alice.bit.getbalance()
@@ -49,8 +56,10 @@ def test_basic(self):
         # (Balance) Alice: 0.50 BTC, Bob: 0.25 BTC
         self.assertEqual(self.alice.lit.getbalance(self.bob.lurl), 50000000)
         self.assertEqual(self.bob.lit.getbalance(self.alice.lurl), 25000000)
+        
         # Bob sends Alice 0.05 BTC
         self.bob.lit.send(self.alice.lurl, 5000000)
+        
         # (Balance) Alice: 0.55 BTC, Bob: 0.20 BTC
         self.assertEqual(self.alice.lit.getbalance(self.bob.lurl), 55000000)
         self.assertEqual(self.bob.lit.getbalance(self.alice.lurl), 20000000)