What is Mimblewimble?

Introduction

Mimblewimble is a kind of groundbreaking privacy-focused blockchain protocol that revolutionizes privacy and scalability. Unlike conventional blockchains, it offers a more compact implementation via cryptographic protocols, concealing transaction details, and eliminating unnecessary transaction data. Mimblewimble’s smaller block size enables scalability, and its non-traceable addresses ensure anonymity.

In this article, we aim to explore the potentials, and technical intricacies associated with Mimblewimble as a cutting-edge privacy-centric blockchain and highlight the path it forges toward a more secure, private, and scalable blockchain.

What is Mimblewimble?

Mimblewimble blockchain is a privacy-focused protocol that allows for a completely private transaction offering robust privacy, security, and scalability features with a distinctive approach to storing and organizing transactions within the blockchain network.

Unlike conventional blockchains, like Bitcoin, Mimblewimble aims to revolutionize privacy and scalability. It achieves this by offering a more compact implementation via cryptographic protocols like Confidential Transactions (CTs), Cut-Through, and CoinJoin, which eliminate unnecessary transaction data and reduce block sizes, thus, simplifying the processes of downloading, synchronizing, and verifying transactions.

In addition, the Mimblewimble blockchain conceals the transaction details, that is the transaction value and the public address of both the sender and the receiver. It operates without identifiable and reusable addresses, ensuring complete confidentiality in transactions. Mimblewimble prompts true anonymity by obscuring transaction inputs and outputs. This means that all transactions look like random data to a third party, however, the transaction data is only visible (or understandable) to their respective participants.

Moreover, Mimblewimble blockchain data or block size is quite small when compared to Bitcoin, which enables scalability. Also, the addresses involved in the transaction can’t be traced, thus, ensuring anonymity and data safety. Mimblewimble founder, Tom Elvis Jedusor, believes that the protocol has the potential to significantly uplift the privacy as well as the scalability of the Bitcoin blockchain—as a sidechain solution similar to lightning network. Currently, it has been integrated with Litecoin.

History of Mimblewimble

Mimblewimble protocol is a blockchain technology named after a Harry Potter spell that ties the tongue of a victim to keep them from revealing secrets or reciting a counterspell.

In July 2016, an anonymous Bitcoin developer with the pseudonym, Tom Elvis Jedusor which translates to Lord Voldemort in French—the fictional character from the famous Harry Potter storybook—mysteriously dropped a hint about the creation of Mimblewimble in a Bitcoin research chat channel.

Similar to the launch of Bitcoin, Tom Elvis anonymously introduced this cutting-edge blockchain designed to substantially enhance the privacy, scalability, anonymity, and fungibility conditions of cryptocurrency tokens.

Differences between Bitcoin and Mimblewimble

With the Bitcoin blockchain, all transaction data is stored in a block that is publicly accessible. This means users can check input and output values and verify the validity of specific transactions through Bitcoin explorers, such as Blockchain Block Explorer, and BlockCypher. Consequently, anyone can verify its public history, right from the genesis block. On the other hand, a Mimblewimble blockchain retains essential information while facilitating more private transactions.

Within the Mimblewimble framework, all values undergo homomorphic encryption with blind factors. The protocol validators ensure there are no irregular activities (such as double spending) and maintain the accuracy of the circulating coin amounts.

Another distinction between Mimblewimble and Bitcoin lies in the relative data size of their blockchains. Unlike Bitcoin and other blockchains, Mimblewimble removes unnecessary transaction data, retaining only essential information. Consequently, its size is smaller than that of Bitcoin, demanding fewer computing resources.

Aside from that, Mimblewimble’s core facilitates updatable transaction summaries. This mechanism contrasts with Bitcoin, where nodes store and verify every transaction’s signature, from the genesis block onwards.

Finally, Mimblewimble eliminates the Bitcoin scripting system, a set of instructions defining transaction structures. This removal enhances the privacy and scalability of Mimblewimble blockchains. It enhances privacy by completely preventing address tracing and improves scalability due to reduced blockchain data size.

Here is a table summarizing the key differences between Mimblewimble and Bitcoin:

How Does Mimblewimble Work?

Mimblewimble Consensus Mechanism

Mimblewimble blockchain uses the PoW (proof-of-work) consensus mechanism as Bitcoin, to mine its native cryptocurrency, Mimblewimble Coin (MWC), and employs two unique algorithms: Cuckarood29 and cuckAToo31, with a 60-second block time and a block reward of 0.6 MWC. This is quite different from Bitcoin which operates using the same consensus model but uses the SHA-256 algorithm with a block and transaction timeout of 20 minutes and 2 minutes respectively. Essentially, the Mimblewimble consensus mechanism offers enhanced privacy and superior network scalability.

Mimblewimble’s Underlying Cryptographic Protocols

Mimblewimble uses Confidential Transactions protocols (CTs)—a privacy-enhancing technique—to obfuscate the amount and type of assets transferred visible only to participants using cryptography to encrypt the transaction details. CTs are used to further enhance the privacy of transactions by making it impossible to see how much cryptocurrency is being transferred.

CoinJoin is also a privacy-enhancing technique that combines multiple transactions into a single transaction, making it nearly difficult to trace the origin or movement of funds. In Mimblewimble, CoinJoin is used to obscure the sender and receiver of each transaction, further enhancing the privacy of the blockchain.

Additionally, Cut-Through is a scalability and data compression technique that reduces the block size by removing redundant transaction data from the blockchain. This allows Mimblewimble to record one transaction data that’s input and output pair, thus, reducing the size of transaction blocks by combining multiple transactions into a single unit. This helps to keep the block sizes small and more efficient without compromising security.

Dandelion helps to protect the privacy of transactions by obfuscating the source of transactions. This is done by randomly choosing the order in which transactions are relayed through the network. In the context of Mimblewimble, Dandelion is used to further protect the identities of senders and receivers.

Practical Applications of Mimblewimble Cryptographic Protocols

Let’s delve into the practical applications of Mimblewimble’s underlying cryptographic protocols discussed above:

Confidential Transactions Protocol (CTs)

Suppose Alice sends 1 BTC to Bob. In a traditional blockchain, the transaction value (1 BTC) would be publicly visible. However, with CTs, the transaction value remains confidential, preventing anyone from ascertaining the amount transferred. This feature enhances financial privacy and hinders transaction analysis.

CoinJoin

Imagine Alice, Bob, and Charlie want to send separate transactions to Tom. Instead of broadcasting each transaction individually, they utilize CoinJoin to combine their payments into a single transaction. This amalgamation of transactions obscures the direct link between each sender and receiver, making it challenging to trace the origin of the funds.

Cut-Through Protocol

Consider a scenario where Alice sends 1 BTC to Bob and Bob immediately forwards the same amount to Charlie. In a conventional blockchain, these transactions would be recorded separately, bloating the blockchain size. Cut-Through protocol optimizes this process by combining the two transactions into a single unit, reducing the overall blockchain size and enhancing scalability.

Dandelion Protocol

When Alice sends 1 BTC to Bob, the transaction is relayed through multiple nodes in the Mimblewimble network. The Dandelion protocol cleverly obfuscates the transaction’s origin by randomly choosing the order in which the transaction is relayed. This randomization makes it difficult to pinpoint the actual sender and receiver, safeguarding their identities.

Overall, Mimblewimble’s integration of these cryptographic protocols effectively enhances privacy, anonymity, and scalability, making it a compelling solution for blockchain-based applications that prioritize confidentiality and transaction efficiency.

What is Mimblewimble Coin (MWC)?

Source: Mimblewimble

MWC is the native token of the Mimblewimble protocol, referred to as “the technologically superior ghost money” by the Mimblewimble team. Its goal is to surpass and outperform most conventional cryptocurrencies in the market, by creating a scarce, scalable, privacy-oriented, and fungible coin.

Launched in November 2019 with a total supply of 20,000,000, the Mimblewimble development team aims to push technological and economic boundaries to maximize the advantages of the blockchain with its native token as a key driver. They have achieved milestones like a functional GUI (graphical user interface) wallet and devised a secure method for offline cold storage of MWC. Additionally, they successfully executed an MWC/BTC atomic swap and are exploring the potential creation of a mobile node (a network’s intersection point).

Tips on Mining Mimblewimble Coin

Here are vital suggestions for mining Mimblewimble Coin:

1. Utilize a powerful computer: The greater your computer’s processing power, the more Mimblewimble coins you can mine. ASICS is highly recommended.
2. Join a sizable mining pool: Larger mining pools often offer increased profitability.
3. Exercise patience: Mining cryptocurrency requires investing time, huge resources, and effort, hence a great amount of patience is required.

Overall, mining Mimblewimble coins can be a lucrative way to earn from the crypto space, however, it’s a competitive endeavor. Thus, an increase in participation means heightened mining difficulty.

Projects Building on Mimblewimble

There are notably two projects currently building on the Mimblewimble blockchain: Grin and Beam.

Grin

Source: Grin Protocol

Grin is a privacy-focused cryptocurrency that promises to make transactions confidential, untraceable, and secure on the Mimblewimble blockchain.

Grin is the first Mimblewimble project launched on January 15, 2019. According to its creators, Grin boasts of a high level of anonymity and decentralization, owing to its network operating within the Mimblewimble blockchain. This prevents the protocol from disclosing user data.

Additionally, Grin (GRIN) is highly scalable, immutable, and fungible as a digital currency and possesses strong privacy features. Its long-term goal is to become a privacy-preserving and censorship-resistant digital currency that is actively used and spent.

As outlined on Grin’s official website, the project emphasizes an anonymous and accessible blockchain, facilitating electronic transactions for everyone, free from restrictions and censorship. Similar to most blockchains, Grin coins are generated as rewards for participants engaged in the mining process, with an emission rate of 1 GRIN per second.

Beam

Source: Beam

Beam is a privacy-oriented Mimblewimble protocol that aims to address the confidentiality and scalability challenges often experienced when performing crypto transactions by protecting users’ data, increasing anonymity, and concealing blockchain transactions. The Beam mainnet was launched on January 3, 2019, operating under principles akin to Grin.

As outlined in its white paper, the Beam protocol focuses on a user-centric approach, meaning users have complete autonomy over their data and privacy. Additionally, Mimblewimble provides users with the ability to select the amount of information they wish to share with other parties on the blockchain.

Recently, the project introduced a confidential DeFi ecosystem where users can perform financial transactions such as bridging, swapping, and lending of digital assets; allowing users to contribute to its development by participating in governance and voting, provided they hold the BEAM token.

Advantages of Mimblewimble

Mimblewimble blockchain offers several advantages that set it apart within the realm of blockchain technology. Here are a few of them:

Enhanced Privacy Features

Mimblewimble’s core strength lies in its robust privacy features. It obscures transaction details such as values and sender-receiver addresses, ensuring complete confidentiality. By leveraging cryptographic techniques like Confidential Transactions (CTs) and obscuring inputs and outputs, it achieves a high level of transactional privacy, making transactions appear as random data to external observers while retaining visibility for transacting parties.

Increased Security through Confidentiality

The protocol’s focus on privacy inherently enhances security. Concealing sensitive transaction information mitigates the risk of exposing transactional data to malicious actors, reducing the chances of potential attacks or exploitation.

Anonymity

In contrast to most other blockchains, notably Bitcoin and Ethereum, which primarily operate pseudonymously, using public addresses that can potentially be traced to determine the sender and receiver especially if their wallet addresses are linked to real-world identities. Mimblewimble enables true anonymity by obscuring transaction inputs and outputs, ensuring user identities remain confidential.

Fungibility

Mimblewimble’s privacy features promote fungibility by making all coins indistinguishable and interchangeable. This fosters greater fungibility compared to some other transparent blockchains where coins’ transaction history can affect their value or acceptance.

Scalability

Mimblewimble achieves high scalability through its implementation of a cut-through feature that compresses transaction data and ultimately the block size by removing substantial amounts of “unnecessary” or unused data without compromising network security resulting in smaller blocks. This efficient data structure enables faster validation and verification processes, contributing to improved scalability as the network grows.

Disadvantages of Mimblewimble

While Mimblewimble offers significant advantages in terms of privacy, scalability, fungibility, and anonymity, it also presents certain drawbacks that need to be considered:

Vulnerability to Quantum Computing Attacks

Mimblewimble’s reliance on digital signatures makes it susceptible to potential attacks from quantum computers. Quantum computers could “theoretically” break the cryptographic algorithms used in Mimblewimble, compromising the security of the network.

Limited Smart Contract Functionality

Mimblewimble’s design prioritizes privacy and scalability, but this comes at the cost of smart contract functionality. It lacks support for complex smart contracts, unlike other blockchains like Ethereum, limiting its use cases in DApps that rely heavily on smart contracts for execution.

Reduced Traceability Poses Regulatory Challenges

While Mimblewimble ensures strong privacy by obscuring transaction details, including sender-receiver information and transaction values, this feature can pose challenges in terms of regulatory compliance. Reduced traceability might conflict with regulatory requirements in certain jurisdictions that mandate transparent transactions for anti-money laundering (AML) and Know Your Customer (KYC) purposes.

Limited Adoption and Maturity

Mimblewimble is a relatively new technology, and its adoption is still limited compared to established blockchains like Bitcoin and Ethereum. This means that there is less developer support and fewer applications built on Mimblewimble, which could hinder its wider adoption.

Complexity of Implementation

The Mimblewimble protocol is more complex than traditional blockchains, which could make it more difficult for developers to implement and maintain. This complexity could also lead to potential security vulnerabilities if not carefully implemented.

Despite these drawbacks, Mimblewimble remains a promising technology with the potential to address some of the key challenges faced by existing blockchains. As the technology matures and adoption increases, these drawbacks may be mitigated, making Mimblewimble a more compelling choice for privacy-minded users.

Conclusion

The launch of Mimblewimble represents a significant milestone in the evolution of blockchain technology as it offers a way to add transactions on the blockchain without revealing the addresses or the transaction value. This is in variance to what is obtainable with Bitcoin and other public cryptocurrencies, as transaction details on these chains are transparent and verifiable.

Despite Mimblewimble’s promising advantages such as enhanced privacy, scalability, anonymity, and fungibility, it faces challenges like susceptibility to quantum computing attacks, limited smart contract functionality, and regulatory compliance complexities. However, as Mimblewimble matures and garners wider adoption, measures that mitigate quantum attacks would be on the front burner as well as enabling smart contract functionality, among others.