Mimblewimble is a decentralized protocol built on the blockchain using a novel way of storing and structuring transactions for maximum privacy. The platform is built with a unique and huge security framework that works without reckoning with addresses.
Mimblewimble got its name from a famous spell used in the Harry Potter Series that ties the victim’s tongue, preventing them from divulging certain information.
Despite perplexing the crypto industry, the possibilities embedded in Mimblewimble in terms of scalability and anonymity in the crypto space are very huge. Up till now, there is no clear consensus between developers and researchers on how to optimally utilize the platform. Many opined that merging Bitcoin Protocol with Mimblewimble is a difficult task to achieve.
However, not only is the name picked from the Harry Potter series but the developer who chose to remain anonymous chose his pseudonym from the characters in the series, “Tom Elvis Jedusor,” who is an accomplice with “Voldemort.”
How does Mimblewimble Works?
Just like the spell in the book series, Mimblewimble is a protocol that helps users attain optimum privacy by helping them withhold some information. Because the protocol helps keep some cryptocurrency information anonymous, it has become a framework for blockchains that has potential in fungibility, scalability, crypto anonymity, and privacy.
Compared with the pseudonymity built into Bitcoin and other cryptos, Mimblewimble has shown more appreciable features for crypto anonymity. In the former, information like the amount of crypto sent, the address of the receiver, and the sender’s address cannot but be revealed, but with Mimblewimble, these details are kept.
The transaction structure of Mimblewimble is built on the “confidential transactions framework” which was first discussed by the frontrunner of Satoshi Nakamoto, Dr. Adam Back. This method is also employed by other privacy coins like XMR (Monero).
To put it in perspective, the privacy system is built on encryption through binding factors. Binding factors is a term for random values shown to both the sender and receiver to validate a transaction and the transaction becomes valid when the two-party select the same value.
With Mimblewimble, the binding factors chosen by the sender function as proof of ownership for the receiver.
The Approach of Mimblewimble to Cryptography
The cryptographic approach of Mimblewimble is named ECC – Elliptic Curve Cryptography. The Elliptic Curve Cryptography allows the protocol to satisfy the major requirements of the transaction verification including details like the amount and the parties involved without revealing any of the information publicly.
The Elliptic Curve Cryptography is built on discrete logarithms that make equations on the blockchain network more complicated to solve. Mathematically, multiplications and logarithms are opposite terms. While multiplications can be performed easily with factorization, it is not so with logarithms. However, adding the term discrete speaks of a branch of mathematics that handles mathematical operations with discrete values under which topics like Set Theory and probability exist. This simply means the security with ECC Mimblewimble is heightened.
Beyond the ECC, Mimblewimble also combines other cryptographic frameworks like Confidential Transactions, Cut-Through, Dandelion, and Coinjoin to increase the level of anonymity and security available on the protocol. While these frameworks conceal information, combining them on Mimblewimble means heightened privacy.
Confidential Transactions Framework, which is employed by some privacy tokens like Monero (XMR), is used on Mimblewimble to hide the value of the transaction. The CoinJoin framework, however, is used to reduce the possibility of tracing the trail of transactions. The protocols combine payments from different senders in a singular transaction before execution which helps hide the trail of the initial transactions initiated from the various senders.
With the Dandelion cryptographic framework employed on Mimblewimble, the identity of the receiver and sender are preserved and concealed. Also, through the Cut-Through framework, scalability is achieved by creating small transaction blocks that aggregate multiple transactions in a single set. With Cut-Through, the information of a particular transaction can be removed easily without increasing the security risk.
The Main Features on Mimblewimble
Three features make the Mimblewimble protocol distinct and unique from the other blockchains.
- Anonymity
The first feature of all is anonymity. With the design of the Mimblewimble protocol, it is impossible for any third party to trace the history and details of any given transaction on the protocol without which the identity of the users can be traced.
This is unlike other blockchain systems where the public addresses of the sender and the receiver of any given transaction can be traced, especially when those addresses are linked to their identity in the real world.
- Fungibility
Compared to Bitcoin and other blockchain systems, Mimblewimble is more fungible, thanks to its difficult-to-trace feature. This means that users can exchange their crypto through the protocol without bearing the risk of losing their asset or having it tainted through illegal activities which reduce the value.
- Scalability
The third distinct feature of Mimblewimble is its Scalability. Referencing the basic knowledge of blockchain, each node adds more information about the transaction to the ledger which in turn increases the size of the block. However, as the size of the blocks are increasing, the tendency of the network to have an issue with scalability also increases, and this limits the capability of the network to handle a large amount of data over a short time.
Because Mimblewimble uses the Cut-Through and CoinJoin framework, every unnecessary transaction information is therefore eliminated to maintain reduced block sizes.
The Users of the Mimblewimble Protocol
The robust features on Mimblewimble – mainly scalability, privacy, and security, have seen some major crypto projects deploy the protocol. Of course, the protocol has its native crypto called Mimblewimble Coin (MWC), a token dubbed “the technological ghost money” by the protocol developers.
The first team to adopt the use of the Mimblewimble protocol, in theory, was the team of developers behind the digital currency built for preserving privacy in 2016 named GRIN. The developers of the lightweight open-source project have laid the foundation and the groundwork for the project to be established on Mimblewimble but only launched fully on the protocol in January 2019.
Another project that implements the Mimblewimble protocol is the Beam project (BEAM) built as a fungible, scalable, and confidential crypto. The core principles of the Beam Project are quite similar to the Grin project including the complete privacy autonomy yielded to the users. Also, Beam has a wide range of decentralized applications (DApps) built on the Decentralized Finance (DeFi) ecosystem with various use cases.
There are other mainstream cryptocurrencies that are considering implementing the Mimblewimble protocol to ensure more fungibility and privacy on their blockchains. An example is Litecoin, decentralized crypto that uses the same protocols like Bitcoin. The dev team of the crypto network has made it known that a signal from the node operators and miners could see the network implement Mimblewimble on their mainnet by 2021.
The lineup of other crypto projects that could implement the Mimblewimble protocol includes privacy coins like ZCash (ZEC) and Monero (XMR). But so far, none of them has merged with the protocol as it may be quite difficult as it seems.
The Mimblewimble Coin
The Mimblewimble Coin (MWC) is a secure, scalable, untraceable, and private digital currency that uses its parent protocol, Mimblewimble. The price of the coin at the time of this writing is about $4.02 but it is deemed volatile based on its instability. Also currently, the market capitalization of the token is around $43 million.
While the maximum supply of the token in circulation is 20 million, the MWC in circulation currently is about 157 million.
How to mine the Mimblewimble Coin
The Mimblewimble coin uses the Proof-of-Work mechanism which was adopted widely since it was introduced with Bitcoin in 2018. The Proof-of-Work (PoW) describes a consensus mechanism that uses a huge amount of effort in solving arbitrary mathematical puzzles to prevent malicious and frivolous users from using the computing power. Noteworthy to mention that the proof-of-work consensus mechanism allows secured peer-to-peer crypto transactions without depending on any third party.
In terms of crypto mining, the PoW consensus mechanism is one that validates transactions in a blockchain or creates (mines) new tokens by solving arbitrary complex mathematical tasks. This is the same process employed by the Mimblewimble blockchain to mine its native coin, Mimblewimble Coin (MWC). Also, of all blockchains that implemented the PoW consensus mechanism, Mimblewimble is one that allows for better scalability and heightened privacy.
Basically, the role of a crypto miner is to guarantee the validity of transaction data and to update the database of the blockchain with a crypto transaction each time it is completed and validated. The method of mining itself involves the handling block that contains transaction data and it requires solving complex mathematical tasks with what is called cryptographic hash functions. A miner, however, earns his incentives and compensation (which is a small amount of the crypto) for being the first person to solve the mathematical puzzles.
Outside that, a crypto miner needs a specialized machine with some advanced hardware to oust other miners. On usual occasions, the type of mining hardware ranges from a graphics processing unit (GPU), central processing unit (CPU), and an application-specific integrated circuit (ASIC) with some other different algorithms.
For the Mimblewimble coin, the two algorithms available for mining are the cuckAToo31 and Cuckarood29 and the block reward is 0.6 MWC while the block time is 60 seconds.
Also, like other blockchains, there are few mining pools for miners, and the most popular and the biggest of them, 2 miners, has about 10 thousand active miners. The design is quite user-friendly and it has many languages supported. To mine MWC through a mining pool; all you just need to do is to tick the following requirements.
First of all, you need to download the mining software that is required by the version of the Graphics Processing Unit Miner (example; Gminer for Nvidia cards and lolMiner for AMD). The next step will be to download the official MWC desktop wallet which is available on both the Windows, Linux, and macOS Operating systems. Something worth noting is that to receive payouts from the mining pool, your wallet for MWC must always be online otherwise, you can use an MWC address from an exchange that has the coin listed on it.
An optional step you might want to consider is to edit the BAT file to a specific name of the rig you will want to display on the statistics page of miners.
Where to Buy and Sell the Mimblewimble Coin?
There are some exchanges that have the Mimblewimble coin listed for trading. Examples are Hotbit, Bitforex, Whitebit, TradeOrge, and several others. The most popular of them is Hotbit and Bitforex based on the percentage of account trading the coin and the overall trading volume of the cryptocurrency.
Other details about the Mimblewimble coin are listed on crypto-tracking websites like CoinGecko and CoinMarketCap.
Comparing Privacy Coins: Mimblewimble (MWC) and Monero (XMR)
From history, the biggest privacy coin based on market capitalization is the decentralized privacy-focused Monero coin (XMR). Being a fork of Bytecoin launched in 2014, Monero is a term translated as “money” in Esperanto, a language being considered for international usage. The goal of the project is to allow private and anonymous transactions on the blockchain.
Just like Mimblewimble Coin, Monero is built on the proof-of-work consensus mechanism and beyond that, the project employed the CryptoNight Protocol that uses Ring Signatures to hide the track of transactions. By implication, it is impossible to track the total amount of Monero a particular person is holding.
Monero allows more confidentiality of information using the Ring Confidential Transactions which combines such frameworks as Stealth Addresses and Ring Signatures. This Confidential Transactions framework, also allows the blockchain to hide the amount transferred and the Ring Signatures add nothing less than six decoy tokens to each transaction made to make it look like the actual ones spent during the transaction.
However, there are some downsides to the Ring Signatures implementation. One of them is the additional data in each transaction that make the size of the blocks significantly higher. This has led to an increased size of the Monero blockchain which will only increase with increased adoption and hence hurt the usability.
Comparing Mimblewimble to Monero, the MWC protocol allows scalability and anonymity. For Mimblewimble, privacy is enabled by default as the Confidential Transactions hides the sender, receivers, and the amount involved in the transaction. At the same them, the Cut-Through protocol implemented by the blockchain ensures that the blockchain maintains its modest size.
Also, in comparing the Monero Blockchain and Mimblewimble protocol, despite the excellent scalability and confidentiality embedded in the Mimblewimble protocol, it obviously doesn’t have any novel features that ensure proud features like privacy, scalability, and security.
While it is easier to think the design of the Mimblewimble is perfect, it is essential that this guide cover the imperfections in the design. First of all, the transaction speed of the protocol is quite lower due to the size of transaction data on the blockchain because of the Confidential Transactions implemented. Another downside of the protocol is its vulnerability to quantum computer attacks. Despite the promises that the protocol holds, the threat quantum computing poses on cybersecurity is potentially significant as the current encryption methods are undermined.
The Future of Mimblewimble
With the huge step Mimblewimble has taken towards privacy and anonymity, it is obvious that more projects will be interested in implementing the protocol since it doesn’t have such defects as difficult validation processes and traceability. These are part of the reasons projects like Beam and Grin have implemented the Mimblewimble protocol. Currently, every transaction through the project doesn’t keep a transaction history nor does it feature transactions amounts and addresses.
On many occasions, people are always concerned in people’s minds as to the use of cryptocurrencies, and the Mimblewimble protocol has put a huge effort in helping them meet those needs to ensure greater adoption.
Another thing that can add to the huge adoption of the Mimblewimble protocol is the implementation of the Mimblewimble features without forsaking the existing UTXO structures. It has been proven that if the legacy blockchain developers should succeed in this research, the potential of the Mimblewimble protocol will be limitless.
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