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MIMBLEWIMBLE Our definitive guide to Mimblewimble

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CONTENTS

MIMBLEWIMBLE EXPLAINED 3Verifying transactions 3Reducing the size of blockchains 3Scalability 4Grin 4

AN OVERVIEW OF BEAM PRIVACY COINS 5Confidential transactions 5Transaction cut-through 5Decentralisation plans 6Acknowledged flaws 6

WHY ARE MORE CRYPTOCURRENCIES ADOPTING MIMBLEWIMBLE TECHNOLOGY? 7The key points 7Monero and scalability 7Litecoin and privacy 7Why Mimblewimble? 7

CONCLUSION 8

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Mimblewimble technology is incredibly complex. In this article, we will break down the basics of the technology and its applications.

Verifying transactionsMimblewimble looks to verify transactions by ensuring that the sum of a transaction’s output, minus the sum of the input, equals zero. This is achieved by utilising Confidential Transactions that prove the creation of new funds.

This concept of validating transactions without knowing the values is reminiscent of zero-knowledge proofs in Zcash and RingCTs in Monero.

One important aspect of Mimblewimble is that it does not use addresses. Instead, two wallets communicate with each other to exchange data.

Only the participants will be able to read the data, and the information is not reusable by outside parties (the two parties do not even need to be online at the same time).

Reducing the size of blockchainsOne of the reasons why Mimblewimble is increasingly promising for the crypto community is its pledge to reduce the size of blockchains.

Mimblewimble looks to accomplish this by aggregating all transactions into a single transaction with the inputs and outputs mixed together. As such, if someone were to view a block of transactions, it would provide them with inconsequential information – there are no insights into a sole transaction.

Therefore, nodes verify the legitimacy of a transaction without revealing any values or information associated with the transaction.

MIMBLEWIMBLE EXPLAINEDTom Elvis Jedusor created Mimblewimble to provide solutions to both privacy and scalability issues in cryptocurrency. Mimblewimble is named after a spell from Harry Potter that prevents people from spilling secrets.

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ScalabilityMimblewimble’s approach to solving scalability is more direct than previous Layer 2 solutions. Layer 2 solutions are used to scale blockchain transaction capacity while still retaining the benefits of a decentralised and distributed protocol. It is commonly thought that solving the issue of scalability will help blockchain technology’s adoption into the mainstream.

For context, a popular Layer 2 solution is the Lightning Network (LN). The LN is a payment protocol that operates on top of cryptocurrencies, like Bitcoin. It provides faster transactions between nodes and is dubbed as the solution to Bitcoin’s scaling issues.

The LN works by opening a payment channel to the relevant base blockchain (Layer 1). This is then followed by any number of Lightning transactions that update the distribution of the channel’s funds without broadcasting to the blockchain. This is optionally followed by closing the payment channel and broadcasting the final version of the transaction to distribute the channel’s funds.

Mimblewimble, however, seeks to eliminate old and redundant transactions on the blockchain in a bid to improve efficiency.

It removes the spent inputs on the blockchain by aggregating intermediary transactions together, thereby shrinking the size of the blockchain. This protocol employs a method called ‘cut-through.’

In a Mimblewimble block, cut-through transactions are solely represented by the transaction kernel, whilst all the outputs appear the same because they are represented by large numbers, and therefore it is not possible to differentiate.

GrinIf you take a look at Grin on GitHub, it provides an introduction to Mimblewimble. This introduction helps clarify how Mimblewimble helps reduce the size of a blockchain.

“All that needs to be checked in a block is that ownership has been proven (which comes from transaction kernels) and that the whole block did not add any money supply. Therefore, matching inputs and outputs can be eliminated, as their contribution to the overall sum cancels out. Note that all transaction structure has been eliminated and the order of inputs and outputs does not matter anymore. However, the sum of all outputs in this block, minus the inputs, is still guaranteed to be zero.”

This application is remarkable for three reasons. Firstly, it ensures that no matching input and output can be determined whilst still retaining the ability to validate transactions within a given block. Secondly, it allows for the Mimblewimble protocol to become more scalable. And thirdly, the entire chain state can be validated, much like a full node.

Grin itself is Mimblewimble’s cryptocurrency. It is coded to provide high levels of privacy, fungibility, and scalability. The token achieves this level of privacy and fungibility by excluding addresses and transaction amounts. This is done by merging the transactions, thereby removing all intermediary information. Each block of Grin also appears as one transaction. All transactions within that block are not displayed.

All the spent outputs can then be removed with no risk attached. This aids in reducing the blockchain size. As a result of the reduced blockchain size, users are free to download and verify the blockchain. It is notably faster to do this with Grin than with other tokens.

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Mimblewimble technology aims to address several key areas within the cryptosphere, including reducing the size of blockchains to improve scalability, which is a common issue in many cryptocurrency networks.

Another reason developers are attracted to the Mimblewimble protocol is their focus on privacy. To drastically enhance privacy, transactions are blended together into one. To do so, intermediary information such as addresses are removed, enabling complete fungibility.

Confidential transactionsBeam combines elements of the Mimblewimble protocol with additional features to allow ‘true’ privacy for its users. Like other cryptocurrencies, Beam has its own blockchain that

AN OVERVIEW OF BEAM PRIVACY COINSPrivacy coins offer a lot of benefits to cryptocurrency users. Here, we take a look at the Beam privacy coin, which incorporates a version of the Mimblewimble protocol.

remains decentralised and distributed.Transactions can be verified, but

Mimblewimble’s method of verification ensures that no outside observer can obtain any sensitive information about the sender or receiver, or the amount being transacted.

This method is known as ‘Confidential Transactions’ (CT). CT functions so that only the sender and receiver can know how much money is being transacted. To enable verification, there is a process known as ‘Pedersen commitment.’

This process allows others to perform the mathematical calculations on the transactions without the total being revealed.

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Decentralisation plans The Beam privacy coin is being run by a start-up company, but it has the intention of giving operational control over to a dedicated non-profit foundation in the future.

It launched on January 3rd 2019, the same day as Bitcoin’s 10th anniversary, and is expected to be governed for around two years. In doing so, it is hoped that the coin can achieve growth before being given to the non-profit foundation.

Unusually, no Initial Coin Offering (ICO) was held. In recent memory, many start-up cryptocurrencies have held an ICO to raise funds for their upcoming project. It’s believed that everyone has an equal chance to mine/invest in the project.

However, there is a founders’ reward which will see the Beam company and foundation receive 20% of all freshly minted tokens for the first five years.

Acknowledged flaws If you look at the Beam GitHub, there is a section that outlines a flaw within the system. Specifically, one malicious node could record all individual transactions. This is because the nodes receive and forward a lot of individual transactions. They are prepared by participants and then broadcast. It is important they are broadcast so the rest of the network can validate them.

However, if an attacker can see the original transaction graph, the obfuscation of all later transactions in that block no longer matters. This is not necessarily an issue that cannot be solved, as Beam have suggested remedies. But, it is important to be mindful that whilst the Beam privacy coin looks promising, it isn’t necessarily a perfect system just yet.

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The key pointsThere are three key points to remember about the Mimblewimble protocol:

�� Mimblewimble wants to answer the prevailing issue of scalability. Its answer is to reduce the size of blockchains.

�� Mimblewimble also wants elevated levels of privacy. Blending transactions, removing intermediary information, and excluding addresses altogether is how the protocol aims to achieve this.

�� Mimblewimble allows for an entire blockchain to be verified without needing access to its historical data.

Monero and scalabilityIt’s recently been reported that Monero is interested in Mimblewimble.

A tweet from lead developer Riccardo Spagni detailed how Monero “is already implementing a MimbleWimble sidechain,” known as ‘Tari.’

Tari has better transaction speeds and lower costs, but Monero still has superior privacy.

Another tweet in the same thread from Spagni details how users would utilise Tari for the greater transaction speeds and lower costs, but then “switch back to gain Monero’s greater privacy as needed.”

Another reason why Monero is looking into the Mimblewimble technology is scalability.

MoneroV is a planned fork scheduled to happen later in 2019.

The company’s roadmap states that “MoneroV plans to tackle scaling issues, which is the main source of problems in Monero, and in all cryptocurrency coins.”

Mimblewimble will assist MoneroV in its scaling endeavours by ensuring the blockchain size will be bound to the number of people using MoneroV. This is opposed to the number of transactions being made in the network.

In turn, MoneroV transaction costs will also be reduced along with the size of the blockchain.

Litecoin and privacyLitecoin creator Charlie Lee has also recently announced that the company is looking into the Mimblewimble technology.

Litecoin has also been looking at implementing CTs. Naturally, this suggests that Litecoin is looking towards improving privacy, rather than scalability.After all, Charlie Lee has stated, “now that the scaling debate is behind us, the next battleground will be on fungibility and privacy.”

According to Lee, the Litecoin developer team has been discussing how to add CTs, Bulletproofs, and Mimblewimble.

Why Mimblewimble?Mimblewimble can be used as a type of sidechain or extension block rather than the primary component of a network. If cryptocurrencies such as Litecoin and Monero adopt the technology, it enables them to incorporate Mimblewimble’s key features.

This in turn grants either increased privacy or scalability. Both of which are prominent issues in the crypto community, and Mimblewimble might just be the answer.

Mimblewimble is also a key component of two cryptocurrencies called Grin and Beam, which have both been front runners in the implementation and utilisation of the technology.

WHY ARE MORE CRYPTOCURRENCIES ADOPTING MIMBLEWIMBLE TECHNOLOGY? Recent crypto privacy news has given an indication that popular cryptocurrencies are interested in adopting Mimblewimble technology. Below, we take a look at which currencies are showing an interest and why.

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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?

CONCLUSIONMimblewimble 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.

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