What is Mimblewimble?
Mimblewimble is a blockchain protocol that utilises a security structure that is distinct from that of the pseudonymous Bitcoin cryptocurrency to provide a completely private transaction system. There are no addresses in Mimblewimble, and all transactions are private. Its distributed ledger is also considerably concise than those of other cryptosystems.
Mimblewimble was formed by anonymous users by the name of Tom Elvis Jedusor, which is the French version of "Voldemort." Mimblewimble, according to Jedusor, is intended to provide more privacy and flexibility than Bitcoin.
How Does Mimblewimble Work?
The transaction structure of Mimblewimble is based on "confidential transactions," which were initially addressed by Dr Adam Back of Blockstream, who is also a Satoshi Nakamoto frontrunner. Other privacy coins, such as Monero, follow a similar method.
To explain further, it all starts with a private transaction wherein the amount of a specific token that a sender wants to process is encrypted using "blinding factors." Blinding factors are random values selected by the sender from which the recipient has to choose. The transaction is considered valid if the receiver selects a similar value.
Blinding factors must be selected by the sender in Mimblewimble. In this way, it serves as proof of ownership for the receiver, providing them authorisation to utilise the coins.
Gregory Maxwell from Blockstream has developed CoinJoin, a controversial cryptographic system. It allows for a "coin maker" mechanism, in which payments from several senders are merged into a single transaction, making it almost difficult for outsiders to track the chain of transactions.
In Mimblewimble, we observe this as a block with various inputs, listed outputs, and signature data. CoinJoin also assists the development of a compact blockchain by removing the need for any transaction data other than inputs and outputs to be stored.
Bitcoin's nodes, on the other side, have to download the entire blockchain, including transaction history, which is then evaluated by the network to ensure its validity.
Cut-through is yet another feature of the Mimblewimble protocol. It operates by combining the inputs and outputs of all recorded transactions to create smaller blocks. Previous records are used as inputs to assist new transactions in this process.
Here's an example of a transaction with several inputs and outputs to help you understand.
X sends 1 BTC to Y (This shows a single input to transact with Y, it results in a single output)
Y sends 1 BTC to Z (This features a single input to transact with Z, it results in a single output)
Mimblewimble merges these transactions into a single input and output for each of them. The ownership of assets is verified and approved using transaction kernels. The public key, mining fee, and signature are all stored in this kernel.
However, the node does not necessarily have to use Mimblewimble's cut-through feature.Though the transaction is kept in the ledger, it will take up considerably more space.
When compared to other blockchain networks, Mimblewimble has three major distinctions-
There is always a public address in Bitcoin that can be traced to identify the sender and receiver of any specific transaction, especially if their addresses are associated with their real-world identities. As a result, Bitcoin is a pseudonym.
There are no transaction histories that can be tracked with Mimblewimble. Without addresses accessible to other parties, it becomes extremely hard to overcome the anonymity of anyone who uses the protocol to execute a transaction.
Mimblewimble, like other privacy currencies, has higher fungibility than Bitcoin. This is because any coin may be exchanged on its platform without risking a loss. Other coins can be "tainted," specifically if they are linked to illegal activities. Although some people tolerate contaminated assets, they may begin to lose value in some situations. Mimblewimble's ability to track contributes to its Interchangeability.
Mimblewimble is more flexible than other blockchains since its block sizes are substantially smaller than Bitcoin's. This is the same issue that previously separated the Bitcoin community in an attempt to solve the scaling problem, resulting in the controversial Bitcoin Cash (BCH) hard fork, which intended to change the block size limit.
Mimblewimble's solution of CoinJoin and cut-through, on the other side, have accomplished this without the drawbacks of a large block size restriction.
1. Longer transaction throughput
Due to the size of the data, systems that facilitate confidential transaction implementations have slower transaction speeds.
2. Dependency on digital signatures
As Mimblewimble depends on digital signatures, it is susceptible to attacks carried out by quantum computers.
Future of Mimblewimble
Mimblewimble is a massive step ahead in the protection of confidentiality and security, which is probably what most previous cryptocurrencies were designed for. The Mimblewimble protocol is significantly easier to adopt than various other blockchain systems now available since it does not suffer from traceability or a complex validation procedure.
Grin and Beam adopted the Mimblewimble protocol for their implementations for a variety of reasons. Both cryptocurrencies lack addresses, transaction amounts, and a complete history of all transactions.
These are generally the concerns that people have while considering using cryptocurrencies. Mimblewimble's efforts to address such requirements could assist in a higher rate of adoption.