PTo guarantee high levels of privacy in the transactions we carry out with cryptocurrencies a lot of crypto is required. Which in turn, demands a lot of space within a blockchain, making it heavier and less scalable. This is what happens with cryptocurrencies known as Bitcoin, Ethereum y Monero. Although the latter offers excellent levels of security, the truth is that it does so by adding extra information that is not related to transactions. Making it almost impossible to determine what the real information is from the fake.
Therefore, in 2016, a person under the pseudonym of Tom Elvis Jedusor, who, using the French name of Lord Voldermort from the Harry Potter book series, introduced a new blockchain protocol called MimbleWimble. In fact, the name MimbleWimble is also related to the Harry Potter universe as well. This is the name of a defense spell that entangles the tongue of the person who falls under its effect, thus preventing the person from saying a spell.
The development of this new protocol allows to significantly improve the privacy, scalability and fungibility conditions of cryptocurrencies. This is not the traditional model of transactions on the blockchain, but rather, a more compact implementation that makes the download, synchronization and verification processes easier.
How does it work?
A blockchain that works under the MimbleWimble protocol does not contain addresses or particular transactions of each user. But rather than groups and records in a single large transaction. Which will then be validated and verified without containing individual details.
The data as such will only be visible to its users, while a third party will only see a grouped and random set of data. So, The MimbleWimble protocol hides the fields of the transactions such as the public address of the issuer, the public address of the receiver and the amount of the operation. All these data are not registered within the blockchain as individuals. This allows the network to save significantly on storage space.
The transactions in MW come from the development of the so-called confidential transactions. These allow users to encrypt the amount of coins they are sending, hiding the information from any outside observer of the transaction. Therefore, when a transaction is verified in MW, only a list of inputs, outputs and the information of the corresponding firms is observed, without particular details.
The transactions under this scheme will be validated as long as the number of entries is equivalent to the number of exits and the difference between them is equal to zero. So the only necessary validations will be to verify that no new currencies have been created from scratch, and that the parties involved in the operation have ownership of their keys. Similarly, the entire validation process is done under the Pedersen scheme. It is aimed at verifying operations without miners having access to transaction amounts, as well as user data.
Adrián Verde talks about MimbleWimble - Startup Olé 2019
Green Adrian en Startup Olé 2019, tells us about the history of MimbleWimble and explains in simple words about this great blockchain protocol focused on privacy.
One of the most important characteristics of the MimbleWimble protocol is the well-known Cut through. This is a function that allows blocks that contain large amounts of information to be compressed and much of that information can be removed without compromising the security of the blockchain.
They also use the cryptographic function Coinjoin, which operates as a mechanism by which payments from various users are combined with each other. This in order to generate a single transaction, and make it difficult to know which payment was intended for which recipient. Thus, this information may only be known to the parties involved in the operation, but not third parties.
Dandelion, the basis of MimbleWimble's anonymity
One of the important parts of MimbleWimble is without a doubt the Dandelion protocol. This is a proposed privacy and anonymity solution Giulia Fanti. Its mission is to reduce the risks and the probability of detection of the point of origin of a transaction on a blockchain. To achieve this, the Dandelion protocol divides its privacy process into two phases:
A first phase that receives the name of Stem Phase (root phase). In this phase, the starting point of the transaction sends the transaction to a series of nodes chosen at random. In this way, every time the transaction reaches a node, said node cannot recognize if the previous one is the origin or only a repeater of that transaction. This makes it difficult to trace the origin of the transaction.
The second phase is called the Fluff Phase. At this point, the Dandelion protocol sends the transaction to all pairs, using the Gossip protocol. The Gossip protocol is an information transmitter that works similarly to how epidemics do in merely biological communities. The only difference at this point is that the Gossip protocol distributes the information among the network nodes that use the MimbleWimble protocol.
In addition to this, MimbleWimble uses a process known as "Transaction compensation". This is a trick that allows MimbleWimble to merge multiple transactions and irreversibly mix their inputs and outputs. With this, even if a node along the Stem Phase is determined as the origin of some transaction, it would not be possible to determine what inputs and outputs it has initially contained. An additional protection that guarantees that under no circumstances can it be known exactly who exactly is the author of a specific transaction.
Compared to the blockchain of other cryptocurrencies, MimbleWimble has three great benefits. Which are:
Anonymity. By not having or registering the public addresses of the issuer or receiver, it is impossible to trace the origin and destination of operations and funds. So no user will be compromised.
Scalability. Due to the little space that transactions require within the blocks of the MW blockchain, the protocol architecture is much more scalable compared to others, for example Bitcoin.
Fungibility. This characteristic refers to the ability of a currency to be exchanged for another unit without losing its value. Again, due to the lack of address registration on the MW blockchain, the origin of the coins will not be known. So they cannot be negatively labeled.
What cryptocurrencies use this protocol?
The implementation of the MW protocol has started the creation of two cryptocurrency projects, which are Beam y Grin. The first was launched in late 2018, and has private investors supporting the project. For his part, Grin It was released in mid-2019; a relatively new cryptocurrency that is supported through donations and contributions from the community of supporters.
Beam It is implemented in the C ++ programming language, and uses the consensus protocol de Proof of Work: Equihash. While Grin was developed in the Rust language and applies the Proof of Work consensus protocol: Cuckoo Cycle. It is also important to mention that these cryptocurrencies are mineable, but at the moment, resistant to mining with equipment. ASIC.
Grin and Beam compared to other cryptocurrencies like Monero, Zcash y DashThey offer faster, cheaper and truly private transactions. For example, Dash is a centralized cryptocurrency, which, while offering scalability, does not allow completely anonymous operations. Zcash transactions are slow and expensive. And Monero, as we already mentioned, adds false data to confuse and make the process of identifying real information difficult. But many researchers agree that their transactions are largely traceable.
Therefore, although Moreno, Zcash and Dash are cryptocurrencies widely used today, the truth is that their qualities could be improved with the implementation of a protocol like MimbleWimble.
In the same way, this protocol can also be implemented as a soft fork on the Bitcoin network just like it was Lightning Network. Which would greatly contribute to the scalability of the network.
How much do you know, cryptonuta?
Does the development of MimbleWimble open the doors to new privacy and scalability schemes?
MimbleWimble's ability to get rid of information from your blockchain allows it to be very light and fast. In fact, MimbleWimble is intended to be a protocol that is as simple as possible and requires few resources, allowing great scalability, while offering great security thanks to its consensus protocol.
The problem described is inherent in MimbleWimble and this means that it is difficult to solve. But in fact, the problem is widely known within the MimbleWimble development community. The attack described by DragonFly is well documented and has been widely discussed. In fact, Grin have previously recognized the ability to link results in a chain document published in November 2018. The problem back then was described as Flashlight attack o Flashlight Attack, by developer Ian Mier.
Although the attack is possible, it does not compromise the privacy of those who carry out the transactions at any time. Data such as addresses, amounts, IP address, or additional transaction data remains secure. At this point, it can be concluded that, despite the fact that the flaw exists, it does not pose a risk to users of cryptocurrencies that use the protocol.
Grin developer Daniel Lehnberg explains in greater detail everything related to this security flaw in this entry.