In the cryptocurrency industry, it’s difficult to ensure blockchain privacy and fungibility without compromising on bandwidth. Privacy-enhancing upgrades such as zk-SNARKs and so-called “confidential” transactions tend to reduce bandwidth and increase costs. Mimblewimble, an alternative blockchain, promises to solve these problems. Since its inception in 2016, developers and researchers from various blockchain projects have participated in the development of Mimblewimble.
What Is Mimblewimble (MW)?
Named after a tongue-tying curse in the Harry Potter series, Mimblewimble is a blockchain protocol that allows cryptocurrency transactions to remain anonymous. By keeping addresses and transactions confidential and minimizing block space, opaque (fully private) yet verifiable transactions can be created. Mimblewimble makes use of confidential transactions (CTs) and one-way aggregate signatures (OWAS) to create a system with better privacy and greater scalability than protocols like Bitcoin. CTs let users hide transaction amounts so that only the sender and recipient know how much has been sent.
Originally proposed as a sidechain or “soft fork” for Bitcoin, Mimblewimble currently serves as the base layer of new cryptocurrencies that have created blockchains, such as Grin, Beam and MimbleWimbleCoin (MWC).
With Mimblewimble, it’s possible to sign and validate transactions without having to validate each historical transaction, or include the inputs of a transaction in the hash of a new one. This drastically reduces the overall size of its blockchain.
How Does Mimblewimble Work?
Mimblewimble could potentially transform the current blockchain transaction model. The Mimblewimble network enables a compact history to be downloaded, synchronized, and even checked. Cryptocurrencies that implement Mimblewimble use Bitcoin’s unspent transaction output (UTXO) model, in which almost no information is encrypted. Since UTXO is always assigned to an address, you can only process a transaction if you sign it with a private key from the originating wallet.
Mimblewimble keeps all transactions confidential. Values are homomorphically encrypted with “blind factors” — elements created by combining the private and public keys of the transaction partners. If all output values minus all input values equals zero, a transaction is valid. Transactions from two blocks can be made into one block without losing their validity.
Using a technology called Pedersen commitment, full nodes subtract the encrypted amounts on the sender side of transactions from the encrypted amounts on the recipient side. Miners can thus confirm that transactions are legitimate. Meanwhile, validators ensure that rules are followed and the number of coins in circulation is correct.
What Is a MimbleWimbleCoin (MWC)?
MimbleWimbleCoin (MWC) is a cryptocurrency native to the Mimblewimble protocol. It’s a pure proof of work-based crypto on the Mimblewimble blockchain, which boasts greater network scalability, privacy and fungibility than legacy blockchain protocols. All transactions on the base layer use Gregory Maxwell’s CoinJoin, with CTs and signature aggregation.
What Makes Mimblewimble Unique?
MW is unique for its implementation of CTs. There are no addresses on Mimblewimble. Instead, blind factors are used to connect two parties in a transaction. These factors are shared between the two parties only, and no outsider has access to them. If necessary, they can be used as proof of ownership later on.
Blind factors are used to encrypt the inputs/outputs of transactions and the private/public keys of transaction participants. The blocks only contain information about how many coins are in the remaining inputs or outputs chain. The signatures are also available to ensure validity. Individual transactions — such as “Person A sends 1 BTC to Person B” and “Person B sends 1 BTC to Person C” — can no longer be viewed after completion.
To truly understand how Mimblewimble works, let’s take a look at Bitcoin’s UTXO model.
In a typical non-cryptological transaction, if Person A gives Person B $1, the process is straightforward: Person A: −$1, Person B: +$1. With Bitcoin and other legacy blockchains, however, the process works differently, as different inputs and outputs go from the sender to the receiver.
If Person A wants to send 1 BTC to Person B, this BTC will not be deducted directly from the wallet (by Person B). Instead, the BTC network bundles several inputs from previous transactions and sends them to Person B. Therefore, a BTC transaction could look like this: Person A: – (0.25 + 0.40 + 0.15 + 0.20) BTC, Person B: + 1 BTC.
In the example above, the Bitcoin sent is composed of four different inputs. In reality, however, over 100 inputs can be used for a single transaction. The goal of the MW protocol is to eliminate all inputs and outputs and make the process more efficient, especially when large amounts of data are involved. Instead of the UTXO model, it relies on a multi-signature process. If Person A wants to send a BTC to Person B, both will need to create a multisig key to confirm the transaction.
What Can Mimblewimble Coins Be Used For?
By design, MimbleWimbleCoin is meant to obfuscate any cryptocurrency transaction in order to make it private and render it untraceable. Since the Mimblewimble blockchain is highly scalable, it improves usability and privacy for crypto users. MWC is also used to reward miners for validating transactions and keeping the network safe.
Advantages of Using Mimblewimble
Mimblewimble is highly scalable due to the cut-through technology it employs. A single block consists of hundreds of transactions, along with plenty of information that needs to be stored on the blockchain. However, these blocks can be compressed with Mimblewimble’s cut-through feature, since much of the information can be removed from blocks without risking the security of the blockchain network. Mimblewimble’s advanced scalability is achieved by reducing the weight of the blockchain through the removal of unnecessary and unused elements.
Here’s an example of how cut-through works. Say three people are involved in a transaction: Alice, Bob and Carol. Alice gives $10 to Bob, and then Bob immediately gives the $10 he’s received to Carol. Bob becomes an intermediary in this situation, and his part of the transaction won’t be visible on the blockchain.
One of the core functions of Mimblewimble is privacy. Mimblewimble also uses the principle of CoinJoin, which combines several transactions and prevents the tracking of transactions from the outside. The MW network can also be used as a sidechain solution that connects to Bitcoin.
This technology allows MW to combine multiple transactions into a single large transaction. Mimblewimble has managed to attain a level of privacy that’s unprecedented in the blockchain industry. Sent in bulk with other transactions, the value of your transaction is a mystery to network and external observers. Also, since no addresses are used, no one can associate your name with any address and use it to track your transaction activity.
Mimblewimble offers practically complete privacy without sacrificing scalability. The sender, the recipient and the value of the transaction remain confidential at all times. Typically, privacy-oriented blockchains like Monero and Zcash have much smaller block sizes and charge higher fees compared to other blockchains. This is also the case with Mimblewimble.
In economics, the term fungibility means interchangeability of the units of any asset. Generally, all cryptocurrencies are considered fungible assets. However, most cryptocurrencies tend to be sold at a discounted price, while MWC is both fungible and untraceable.
Disadvantages of Using Mimblewimble
One major disadvantage of Mimblewimble is its lack of a scripting language. This limits the functionality of any blockchain to the transfer of funds and monetary transactions. These limitations, in turn, make it extremely difficult to introduce second-layer protocols such as Lightning Network. However, some functions of scripts can be repeated on MW using multi-signatures and time-lock transactions. According to Andrew Poelstra, a Bitcoin developer, the introduction of smart contract functionality is possible through a combination of Bulletproofs protocols and Scriptless Script technologies.
Like today’s UTXO blockchains, Mimblewimble is vulnerable to quantum computing. The protocol relies on elliptic curve cryptography (ECC) to manage privacy and release new MWC. In theory, quantum computing could crack the ECC, thus undermining the entire protocol.
It’s important to note that developers will stop such attempts before they can cause harm. In addition, the consequences would affect most blockchain projects, so security measures will likely be developed in advance. According to experts like Andrew Poelstra, Mimblewimble could be upgraded by quantum computing-resistant primitives. However, further work is needed to develop quantum-stable proofs of the range.
Mimblewimble vs. Bitcoin
One difference between Bitcoin and Mimblewimble is that the latter supports private transactions. With Bitcoin, all transactions are made public: users can check input and output values, and verify if a particular transaction is valid via BTC explorers. When using Mimblewimble, however, all values are encrypted homomorphically with blind factors.
A second difference between Mimblewimble and Bitcoin is the data size of their blockchains relative to the cut-through function. Unlike Bitcoin and other PoW blockchains, the Mimblewimble blockchain contains only essential information. Thus, it’s smaller than Bitcoin’s and requires fewer computing resources.
Finally, Mimblewimble’s cores support updatable transaction summaries. Such a mechanism differs from that of Bitcoin, where nodes store and verify each signature of a transaction, starting with the genesis block.
How Much Does a MimbleWimbleCoin Cost?
As of this writing, MWC is trading at $4.02 with a The market capitalization (or market cap) of a cryptocurrency is a measurement of its market value. In other words, it... of around $43 million. There are about 157 million MWC in circulation against a maximum supply of 20 million.
Source: CoinMarketCap | MimbleWimbleCoin
How Can I Mine MimbleWimbleCoins?
MimbleWimbleCoin mining is available with two algorithms, Cuckarood C29 and Cuckatoo C31. The latter previously worked on Grin and was recently switched to Cuckarood C29.
Mining MWC can be done via the popular 2Miners pool in the CIS, which has 9,000 miners and supports both solo and pool mining. To begin mining, you’ll need to get an address on the trading platform or the wallet. In the miner settings, enter your login details from the 2Miners pool. Next, install the miner itself. For example, Gminer for Nvidia/lolMiner cards is for AMD. Then, specify the .bat file and the name of the farm, e.g., rig-777.
How Can I Buy MimbleWimbleCoins?
You can buy MWC on exchanges like WhiteBIT and BitForex. All you’ll need to do is create an account and verify it before purchasing Mimblewimble tokens. You can also download a GUI Wallet from Mimblewimble’s official website to safely store your tokens.
The Future of Mimblewimble
There’s no doubt that an increasing number of crypto users are prioritizing anonymity in their transactions. Mimblewimble can be used to prevent a blockchain from revealing user information. Transactions are cryptographically encrypted and therefore cannot be uniquely assigned. In addition, the inputs and outputs in the blockchain can be cut out and deleted.
Legacy blockchain developers are still looking for ways to use Mimblewimble’s innovations without sacrificing existing UTXO structures. Should they succeed, Mimblewimble’s potential will truly become limitless.
The Bottom Line
Featuring blind factors and Pedersen schemes, Mimblewimble’s blockchain protocol is specifically designed to obfuscate transaction values. The cryptographic combination of these features ensures that only the sender and receiver in a transaction know the amounts involved. These transactions are significantly different from those made on UTXO blockchains like Bitcoin’s. All things considered, Mimblewimble currently presents one of the most innovative privacy solutions in the crypto space.