Introduction
Mimblewimble is a protocol, much like Bitcoin, that contains improved privacy features derived from multiple technologies. Key components in Mimblewimble are:
(a) Elliptic curve cryptography (ECC) which enables Private-Public key encryption – a way to prove you know something without revealing the content of the encrypted information.
(b) Confidential transactions which allow for public verification of the transaction without revealing any significant details such as amounts or addresses.
(c) CoinJoins built through a mechanism that enables transactions from multiple senders to be batched into a single transaction.
(d) Dandelion, an improved gossip protocol network that contains increased privacy working mechanics. It uses hops in between nodes before publicising the transaction to the neighbouring nodes.
In the end, any technology represents a means to an end. Mimblewimble’s purpose is to allow value to be transferred and stored in a decentralised manner, privately and without intermediaries.
A brief history of Mimblewimble
Mimblewimble is gaining popularity with cryptocurrency enthusiasts including Bitcoin-core developers Andreas Antonopolous and Jimmy Song. Mimblewimble is becoming a serious side-chain protocol by improving on Bitcoin’s privacy features.
The initial Mimblewimble whitepaper was drafted by Tom Jedusor in 2016, with clear references to Greg Maxwell’s work on confidential transactions and CoinJoin. It also references a paper posted anonymously in 2013 which introduces one-way aggregate signatures – a functionality which obscures inputs and outputs.
The first Mimblewimble implementation, BEAM, was fully released on January 3 and is now live and can be mined. This means anyone can join to support the network. In order to do so, you will need GPU processor and the ability to set up a node.
So where did Mimblewimble start? The first Grin testnet was launched in November 2017 and the project is fully live. The Grin repository is currently maintained by anonymous developers and doesn’t have a clear business model just yet, whilst BEAM is a much more hierarchical and organised structure. Both are aiming to achieve the same goal, which is to provide a live and functional network for Mimblewimble.
The blueprint of privacy
The purpose Mimblewimble serves is to improve users’ privacy. It also allows for close-to-infinite scalability. It does so by combining a number of technologies.
Firstly, both Mimblewimble implementations chose to use an ASIC resistant algorithm such as Cuckoo Cycle (in Grin) or Equihash Pow (BEAM) to promote a higher degree of decentralisation, while adopting a secure model (a: ECC).
Secondly, when a transaction is broadcast, it will hop to a number of other neighbouring nodes before being broadcast to the entire network (d: Dandelion). It is difficult to find the originator of these hops as each one brings an additional node that would need to be inspected. This is an almost impossible task to accomplish with a set of 3 to 4 hops per transaction.
The Mimblewimble blockchain is bound to the number of users using the network, not to the number of transactions, so you can already imagine the impact on scaling the network. Nodes only need to register block headers for current UTXOs (unspent transactions), not for the entire chain. Plus, this means there are no addresses nor transactions.
How does Mimblewimble actually work?
The validation of Mimblewimble transactions relies on two basic properties:
- Verification of zero sums. The sum of outputs minus inputs always equals zero, proving that the transaction did not create new funds without revealing the actual amounts.
- Possession of private keys. Like with most other cryptocurrencies, ownership of transaction outputs is guaranteed by the possession of ECC private keys. However, the proof that an entity owns those private keys is not achieved by directly signing the transaction.
Simply put, because there are no amounts as the sum of the inputs and outputs is zero, and because users don’t need to sign any transaction with their private keys, there is no need for actual addresses.
What matters, in the end, are or unspent transactions (UTXOs).
A final look at Mimblewimble
Mimblewimble has the potential to significantly reduce both transaction costs and blockchain size. Where other Blockchains necessarily would have to grow over time, the required MimbleWimble dataset doesn’t, which would solve the scaling problem.
From a technological point-of-view, Mimblewimble is a rather intriguing protocol that could offset a new wave of blockchain development. If Grin (and now BEAM) can prove this consensus mechanics properly works without addresses, amounts and signatures, we could finally have a serious contender to the King (and to privacy coins).
Its advantages when compared to Bitcoin are:
- Extremely good scalability as the great majority of transaction data can be eliminated over time, without compromising security.
- Increased privacy by mixing and removing transaction data.
- Faster node sync up time, as the nodes would connect with the rest of the network very efficiently.
Let’s see what the future holds for both Grin and BEAM; will this novel technology do serious damages to prominent privacy coins like Monero, Zcash or Monaco?
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.