- Mimbleimble is a privacy-centric blockchain protocol, first proposed in 2016, by a developer known only by the pseudonym, ‘Tom Elvis Jedusor’
- Two new privacy coins named Grin and Beam, have recently launched, which both use Mimblewimble to safeguard user privacy and coin fungibility
- MimbleWimble addresses blockchain scalability by eliminating old and unnecessary transaction inputs and output from new transactions
What is Mimblewimble?
Mimblewimble is a blockchain protocol which was proposed in 2016, by an anonymous member of a Bitcoin developer chatroom. Known only by the Harry Potter inspired pseudonym Tom Elvis Jedusor, Mimblewimble’s cryptic creator posted a link to a .txt whitepaper hosted on .onion address, before disappearing back into obscurity.
Contrary to what many day-to-day Bitcoin users believe, Bitcoin transactions are not private. All Bitcoin transactions are recorded in perpetuity on the Bitcoin blockchain. This allows analysts to monitor Bitcoin wallet addresses and track lifetime transaction activity. Inevitably, this can result in the revealing of real-world user identities.
Mimblewimble (in theory) addresses transaction tracking concerns on the Bitcoin blockchain. Specifically, by implementing confidential transaction protocols proposed by former Bitcoin developer, Adam Back.
How Confidential Transactions Work
Bitcoin at present works in a similar way to a giant digital abacus. If Bitcoin wallet A wishes to send 1BTC to Bitcoin wallet B, the Bitcoin blockchain first bundles together all transaction inputs and outputs associated with wallet A.
4 transactions of 0.25BTC might have previously funded Bitcoin Wallet A. The Bitcoin blockchain, therefore, sums up all past transaction inputs (and subtracts any outputs) to ensure that wallet A does, in fact, have enough BTC available to send to wallet B.
The problem with this way of verifying transactions, rests with the fact that all inputs and outputs are publicly visible. Thankfully, confidential transactions proposed by Adam Back and others, change this.
Using Encryption to Anonymize Transaction Inputs & Outputs
Confidential transactions used in the Mimblewimble protocol, use Homomorphic Encryption to encrypt transaction amounts and all associated transaction inputs and outputs. A multi-signature key known only to transaction participants then verifies that transactions are valid. All protocols like Mimblewimble then have to do to validate the same transactions independently, is make sure that no new coins are created during the transaction process.
Mimblewimble and CoinJoin
As well as using confidential transactions to safeguard user privacy, Mimblewimble also uses a cryptographic mechanism called CoinJoin to add a second layer of anonymity.
First proposed by Bitcoin developer Gregory Maxwell, CoinJoin combines payments sent by multiple Bitcoin wallet users into a single transaction. More importantly, as well as obfuscate individual user identities, CoinJoin also reduces the total number of inputs and outputs which a blockchain has to record over time to verify new transactions.
Put simply, when payments are bundled into a single transaction (where all inputs and outputs are valid), future transactions will not need to group past input and output information into new transaction blocks. CoinJoin, therefore, increases blockchain scalability by reducing the amount of data in new transaction blocks.
New Privacy Coins Using Mimblewimble
Beam and Grin are two new privacy coins which have already adopted Mimblewimble. However, both coins have some fundamental differences. Grin uses a ‘Cuckoo-Cycle’ ASIC-resistant proof-of-work mining algorithm. Grin is also a community developed project designed to encourage coin users to use Grin, rather than use coins as a store of wealth. Beam in comparison, is a venture capital funded coin with a corporate governance structure. Beam has also launched as a GPU-mining ready coin for a limited period of 12-months. (After which Beam may become ASIC-resistant.) Beam coins are also designed to be used as a store of wealth. However, a January 21st improper block generation bug and stoppage of the Beam blockchain, has already soured some investor expectations.