Is MimbleWimble the Magic Solution to Bitcoin’s Privacy Problem?

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Here’s a hypothetical situation for you, say we live in a world where everyone pays with bitcoin and enjoys total financial freedom. You, as the owner of the company “Alpha”, send 10 BTC to the company “Beta”. Then, the next day, FBI representatives come to your office and drag you to prison because the bitcoin you paid with belonged to Mt.Gox, Ross Ulbricht, or some other famous crypto-criminal.

Transparency is one of Bitcoin’s main advantages and at the same time, one of its biggest flaws. Anyone can trace back the path of a coin, and you should be ready to embrace the consequences if you get your funds from some out-law sources.

To by-pass this trait of Bitcoin, several technologies were developed and successfully deployed by Monero, Zcash, and some other blockchain projects. One such technology is MimbleWimble.

What is MimbleWimble?

MimbleWimble is a protocol that provides privacy and scalability to any blockchain. The name comes from a popular book series about Harry Potter. The word itself is a magic spell that the heroes used to tongue-tie their opponents.

It is not the only reference to this famous fantasy world. In addition, the anonym who invented this technology represented it under the nickname of Tom Elvis Jedusor, which is the French interpretation of Lord Voldemort. It was first introduced by an unknown user in the IRC channel #bitcoin-wizards in 2016:

MW introduction

The message can be found in the archive of this thread
The document sent by the user named “majorplayer” described a totally new approach towards the Bitcoin network, offering a solution both to the privacy and scalability. This document happened to catch the attention of Andrew Poelstra, a researcher form Blockstream. He was impressed by the anonym’s suggestions and has introduced his own position paper based on his ideas.

How MimbleWimble Ensures Privacy

When you send bitcoins to someone else, no real money is transferred from one wallet to another. The only thing that happens in reality is the appearance of 2 new lines on the public ledger confirming that the balances of 2 wallets have changed by the same amount.

Bitcoin Transaction

Blockchain.com: for every transaction on the Bitcoin network, everyone can see who sent how much money to whom and when it happened

Technologies such as Ring Signature and zk-SNARKS implemented by the privacy coins Monero and Zcash don’t offer any radical changes to Bitcoin’s network. Ring Signature requires every transaction to be signed by a group of users, which makes it impossible to track who actually conducted the verification. Zcash allows its users to simply encrypt their transactions making them impossible to trace.

MimbleWimble offers a completely new approach toward money transfers. It allows for the disguising of transactions with the help of the so-called “blinding factor”. This technology allows for the blinding of the network by multiplying the amount you send by a big random number.

In addition, the project utilizes the technology CoinJoin that combines all the transactions into one big pool for confirmation. The input and output can still be verified and, at the same time, it’s impossible to see the participants of every given transaction. This makes the whole superstructure of blocks excessive and solves the problem of Bitcoin’s scalability – or at least that’s the idea on paper.

MimbleWimble Use Cases

Grin and Beam were the first two projects to make use of the MimbleWimble technology. Although both of these projects rely on the same privacy and scalability principles, they are still very different. Grin is a result of an open-source community effort while Beam is a commercial product.

They were accompanied by big hype which is particularly suspicious in the conditions of this everlasting crypto winter. Those who managed to get some coins at the pre-sale stage and exited after the listing made good profits. However, soon after achieving the peak, the bubble burst, and now both coins are trading at a very humble price.

Grin

CoinMarketCap: Grin price spikes after the project’s launch and dies down just as quickly

Does MimbleWimble Make Magic Happen?

The technology called MimbleWimble has excellent potential. It may even be considered as Bitcoin 2.0 by some, as it bears the same level of decentralization and offers private and fast transactions. The current overall market downtrend has cooled the market’s curiosity. Yet, once the new crypto spring comes into force, we may yet hear a lot about this magical spell – so make sure you keep one eye on MibleWimble in the near future.

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