What is Mimblewimble and how does it work?
What is Mimblewimble?
Mimblewimble is a privacy-oriented decentralized protocol that uses a novel way of structuring and storing transactions on the blockchain. It was designed and introduced by an anonymous developer who went by the name Tom Elvis Jedusor, who was a French counterpart for “Voldemort” in mid-2016.
How does Mimblewimble work?
Taking its name from the Harry Potter books series’ well-known tongue tying spell that ties the victim’s tongue to prevent it from revealing specific information, Mimblewimble protocol literally works like a spell. It provides a framework for a blockchain that offers a new realm of potential in terms of scalability, fungibility, privacy and crypto anonymity, as the protocol allows cryptocurrency information to remain completely anonymous.
Mimblewimble transactions’ complete anonymity feature stands in contrast to the pseudonymity of Bitcoin (BTC) and other cryptocurrencies where usually three secrets are revealed: the sender’s address, the amount of crypto sent and the receiver’s address. Mimblewimble does not reveal any of the three secrets or information.
Mimblewimble’s cryptographic approach
Mimblewimble’s cryptographic approach is named Elliptic Curve Cryptography (ECC). ECC allows Mimblewimble to fulfill the two major requirements of verifying the correct transaction amount and parties involved without publicly revealing any information.
ECC is based on discrete logarithms, which makes equations on the blockchain much more complicated to work out. Basically, logarithms are the opposite of multiplications which are much easier to perform compared to factorization. The term discrete refers to a branch of mathematics that revolves around a set of discrete mathematical values and covers such topics as probability and set theory. Therefore, implementing ECC Mimblewimble strengthens security.
Moreover, Mimblewimble combines cryptographic protocols such as Confidential Transactions (CTs), CoinJoin, Dandelion, and Cut-Through to achieve a higher level of security and anonymity. In general, these protocols help conceal transaction information.
Thus, the Confidential Transactions protocol, which is also used in other privacy coins like Monero, conceals the value of a transaction on Mimblewimble. The CoinJoin protocol makes it nearly impossible to trace the trail of transactions. Thanks to it, public addresses of transactions can be hidden by combining payments from various senders under a single transaction.
By implementing the Dandelion protocol, the identity of both the sender and receiver can be concealed and remain private. The Cut-Through protocol creates small transaction blocks by aggregating multiple transactions into a single set to allow scalability. Due to the Cut-Through, information from the blockchain can be easily removed without risking the security.
What are Mimblewimble’s main features?
When talking about Mimblewimble protocol, it is always said that it embraces three distinct characteristics making it unique compared to other blockchains.
First of all, it is anonymous. Unlike the majority of other blockchain systems which are mainly pseudonymous, as they have traceable public addresses that determine the sender and receiver of any given transaction, transaction history on Mimblewimble can’t be tracked. Thanks to the protocol design, it becomes extremely difficult to bypass the anonymity of a user.
The second feature is fungibility. Mimblewimble’s difficult-to-trace assets makes it more fungible compared with other blockchains, since users can exchange any cryptocurrency on the platform without the risk of loss or possibility of the cryptocurrency being “tainted” via illegal activities bearing less value.
Third feature is scalability. According to the blockchain basics, each node adds information regarding the transaction to the ledger to increase block size. Large block sizes cause scalability issues that refer to the limited capability of the blockchain network to handle large amounts of transaction data in a short span of time. By implementing CoinJoin and Cut-Through to eliminate unnecessary transaction information and reduce block sizes, Mimblewimble achieves superior scalability due to compact blockchain size.
Who uses Mimblewimble?
There are several crypto projects which choose to deploy Mimblewimble because of its robust security, privacy and scalability.
Thus, Mimblewimble’s native cryptocurrency, MimbleWimble Coin (MWC), or “the technologically superior ghost money,” as the Mimblewimble developers describes it, uses the protocol.
The first to theorize the use of Mimblewimble in 2016 was the team behind a privacy-preserving digital currency named Grin (GRIN). Grin’s lightweight open source project’s developers had laid the groundwork for the project to be created on Mimblewimble, but had only launched based on Mimblewimble implementation in January 2019.
Another scalable, fungible and confidential cryptocurrency based on the Mimblewimble implementation is Beam (BEAM), which runs on the same core principles as Grin including complete control over users’ privacy. It is worth noting. however, that Beam has a confidential decentralized finance (DeFi) ecosystem of decentralized applications (DApps) for a wide range of use cases.
Some mainstream cryptocurrencies are also on track to deploying Mimblewimble to give more privacy and fungibility to its blockchains. Therefore, the team behind Litecoin (LTC), a decentralized cryptocurrency network that utilizes similar protocols like Bitcoin, is planning to activate Mimblewimble on the LTC mainnet at the end of 2021 if miners and node operators signal their support.
Finally, popular privacy coins such as Monero (XMR) and Zcash (ZEC) could potentially benefit Mimblewimble. However, none have decided to merge with the protocol so far, as it may be too complex and difficult a task.
Where to buy and sell a Mimblewimble coin?
Currently, MimbleWimble Coin is traded on several exchanges including Bitforex, Hotbit, TradeOgre, Whitebit and a few others. The key ones are Bitforex and Hotbit and account for the highest percent of the overall cryptocurrency trading volume. More detailed information on MWC trading can be found on the price-tracking websites for cryptocurrencies such as CoinMarketCap or CoinGecko.
How do you mine a Mimblewimble coin?
Mimblewimble is based on the proof-of-work (PoW) concept that became widely adopted following the introduction of the Bitcoin blockchain in 2008. PoW describes a decentralized consensus mechanism that requires a not-insignificant but the feasible amount of effort from members of a network in order to expend effort solving an arbitrary mathematical puzzle to prevent frivolous or malicious uses of computing power. Due to PoW, crypto transactions can be processed peer-to-peer (P2P) securely without the need for a trusted third party.
Mimblewimble is considered to be a different implementation of a PoW blockchain that allows for increased privacy and better network scalability. PoW decentralized consensus is connected to cryptocurrency mining or crypto mining, which is a mechanism of validating transactions in the blockchain and a process of creating (or mining) new tokens by solving complex mathematical tasks. In the case of Mimblewimble blockchain, it is the process of mining Mimblewimble coin (MWC), its native cryptocurrency.
A crypto miner guarantees the validity of the data and updates the blockchain database with a cryptocurrency transaction every time it is validated and completed. The mining method itself involves participating in a block containing information about transactions and requires solving complex mathematical puzzles with cryptographic hash functions. The first miner who solves it is compensated for making the transaction and receives small amounts of crypto.
On top of that, a cryptocurrency miner needs a machine with special advanced hardware to counter other miners. Usually, cryptocurrency can be mined with a central processing unit (CPU), graphics processing unit (GPU) and an application-specific integrated circuit (ASIC) with different algorithms available. Mimblewimble coin mining is available on two algorithms: Cuckarood29 and cuckAToo31. The block time is 60 seconds and the block reward is 0.6 MWC.
There are several mining pools available. The biggest and the most popular one has about 10 thousand active users. It is available in many languages and has a user-friendly design. In general, if you are interested in mining MWC in the pool, you need to complete a few steps.
Firstly, you need to download mining software, a required version of the GPU Miner. Secondly, after your mining equipment is ready, you need to get the official MimbleWimble Coin desktop wallet. It is available on MacOS, Linux and Windows. It is worth noting that in order to receive payouts from the pool, your local MWC wallet must be always online. If you do not want to do it, it is better to use an address on the exchange on which MWC is already listed.
Finally, you can edit the BAT file. If you want, you can specify the name of the rig as you want it to be shown in the miner’s statistics page or leave this line empty.
Mimblewimble vs Monero
Historically, Monero is a privacy-focused and decentralized cryptocurrency that has the highest market capitalization out of all privacy coins. Launched in 2014 as a fork of Bytecoin, Monero is like “money” in Esperanto, an auxiliary language intended for international use. The project goal is to allow transactions on the blockchain to take place privately and anonymously.
Monero is based on PoW. On top of that, the project implements the CryptoNight protocol that is using Ring Signatures to hide the ledger of transactions. This also means it is impossible to know the total of XMR held by a particular user.
By using Ring Confidential Transactions which are a combination of Confidential Transactions, Ring Signatures and Stealth Addresses, Monero enables information confidentiality. Thus, confidential transactions help to hide the transferred amounts. Ring signatures add at least six “decoy” coins to each transaction, looking the same as the actual ones spent in the transaction.
Therefore, it makes it impossible to trace senders and receivers, as the details about them and the amount of crypto being transferred are obscured. However, the use of Ring Signatures creates some notable drawbacks. For instance, due to Ring Signatures, additional data is attached to each transaction that significantly increases the size of the blocks. Monero blockchain size is large and it will continue to grow with wider adoption, hurting usability.
In comparison with Monero, Mimblewimble is a very elegant protocol that allows for both anonymity and scalability. Privacy in Mimblewimble is enabled by default since the transferred amounts, senders and receivers are hidden using Confidential Transactions. In addition, the Mimblewimble Cut-Through mechanism keeps the blockchain size small.
Thus, in comparison with Monero, Mimblewimble achieves excellent confidentiality and scalability. Some visible drawbacks of the Mimblewimble protocol. Obviously, Mimblewimble protocol does have promising novel features that aim to overcome the security, privacy and scalability issues that blockchain technology has.
Although, Mimblewimble has a couple of cons from the design perspective. First, it has a lower transaction speed due to the data size because of the implementation of Confidential Transactions. Second, the Mimblewimble protocol is potentially vulnerable to quantum computer attacks. While holding great promise in many areas, quantum computing poses a potentially significant threat to cybersecurity, undermining current encryption methods.
Quantum computers will be able to solve complex puzzles and figure out the algorithms behind encryption keys that protect user’s data and the blockchain infrastructure as a whole. Mimblewimble is reliant on digital signatures, so if such attacks happen, blockchain transactions can be simply de-anonymized.