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What is Mimblewimble and how does it work?

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What is Mimblewimble and how does it work?

What is Mimblewimble? 

Mimblewimble is a privacy-oriented decentralized protocol that uses a novel way of structuring and storing transactions on the blockchain. It was designed and introduced by an anonymous developer who went by the name Tom Elvis Jedusor, who was a French counterpart for “Voldemort” in mid-2016.

How does Mimblewimble work?

Taking its name from the Harry Potter books series’ well-known tongue tying spell that ties the victim’s tongue to prevent it from revealing specific information, Mimblewimble protocol literally works like a spell. It provides a framework for a blockchain that offers a new realm of potential in terms of scalability, fungibility, privacy and crypto anonymity, as the protocol allows cryptocurrency information to remain completely anonymous.

Mimblewimble transactions’ complete anonymity feature stands in contrast to the pseudonymity of Bitcoin (BTC) and other cryptocurrencies where usually three secrets are revealed: the sender’s address, the amount of crypto sent and the receiver’s address. Mimblewimble does not reveal any of the three secrets or information.

Mimblewimble’s cryptographic approach

Mimblewimble’s cryptographic approach is named Elliptic Curve Cryptography (ECC). ECC allows Mimblewimble to fulfill the two major requirements of verifying the correct transaction amount and parties involved without publicly revealing any information.

ECC is based on discrete logarithms, which makes equations on the blockchain much more complicated to work out. Basically, logarithms are the opposite of multiplications which are much easier to perform compared to factorization. The term discrete refers to a branch of mathematics that revolves around a set of discrete mathematical values and covers such topics as probability and set theory. Therefore, implementing ECC Mimblewimble strengthens security.

Moreover, Mimblewimble combines cryptographic protocols such as Confidential Transactions (CTs), CoinJoin, Dandelion, and Cut-Through to achieve a higher level of security and anonymity. In general, these protocols help conceal transaction information.

Thus, the Confidential Transactions protocol, which is also used in other privacy coins like Monero, conceals the value of a transaction on Mimblewimble. The CoinJoin protocol makes it nearly impossible to trace the trail of transactions. Thanks to it, public addresses of transactions can be hidden by combining payments from various senders under a single transaction.

By implementing the Dandelion protocol, the identity of both the sender and receiver can be concealed and remain private. The Cut-Through protocol creates small transaction blocks by aggregating multiple transactions into a single set to allow scalability. Due to the Cut-Through, information from the blockchain can be easily removed without risking the security.

What are Mimblewimble’s main features?

When talking about Mimblewimble protocol, it is always said that it embraces three distinct characteristics making it unique compared to other blockchains.

First of all, it is anonymous. Unlike the majority of other blockchain systems which are mainly pseudonymous, as they have traceable public addresses that determine the sender and receiver of any given transaction, transaction history on Mimblewimble can’t be tracked. Thanks to the protocol design, it becomes extremely difficult to bypass the anonymity of a user.

The second feature is fungibility. Mimblewimble’s difficult-to-trace assets makes it more fungible compared with other blockchains, since users can exchange any cryptocurrency on the platform without the risk of loss or possibility of the cryptocurrency being “tainted” via illegal activities bearing less value.

Third feature is scalability. According to the blockchain basics, each node adds information regarding the transaction to the ledger to increase block size. Large block sizes cause scalability issues that refer to the limited capability of the blockchain network to handle large amounts of transaction data in a short span of time. By implementing CoinJoin and Cut-Through to eliminate unnecessary transaction information and reduce block sizes, Mimblewimble achieves superior scalability due to compact blockchain size.

Who uses Mimblewimble?

There are several crypto projects which choose to deploy Mimblewimble because of its robust security, privacy and scalability.

Thus, Mimblewimble’s native cryptocurrency, MimbleWimble Coin (MWC), or “the technologically superior ghost money,” as the Mimblewimble developers describes it, uses the protocol.

The first to theorize the use of Mimblewimble in 2016 was the team behind a privacy-preserving digital currency named Grin (GRIN). Grin’s lightweight open source project’s developers had laid the groundwork for the project to be created on Mimblewimble, but had only launched based on Mimblewimble implementation in January 2019.

Another scalable, fungible and confidential cryptocurrency based on the Mimblewimble implementation is Beam (BEAM), which runs on the same core principles as Grin including complete control over users’ privacy. It is worth noting. however, that Beam has a confidential decentralized finance (DeFi) ecosystem of decentralized applications (DApps) for a wide range of use cases.

Some mainstream cryptocurrencies are also on track to deploying Mimblewimble to give more privacy and fungibility to its blockchains. Therefore, the team behind Litecoin (LTC), a decentralized cryptocurrency network that utilizes similar protocols like Bitcoin, is planning to activate Mimblewimble on the LTC mainnet at the end of 2021 if miners and node operators signal their support.

Finally, popular privacy coins such as Monero (XMR) and Zcash (ZEC) could potentially benefit Mimblewimble. However, none have decided to merge with the protocol so far, as it may be too complex and difficult a task.

Where to buy and sell a Mimblewimble coin?

Currently, MimbleWimble Coin is traded on several exchanges including Bitforex, Hotbit, TradeOgre, Whitebit and a few others. The key ones are Bitforex and Hotbit and account for the highest percent of the overall cryptocurrency trading volume. More detailed information on MWC trading can be found on the price-tracking websites for cryptocurrencies such as CoinMarketCap or CoinGecko.

How do you mine a Mimblewimble coin?

Mimblewimble is based on the proof-of-work (PoW) concept that became widely adopted following the introduction of the Bitcoin blockchain in 2008. PoW describes a decentralized consensus mechanism that requires a not-insignificant but the feasible amount of effort from members of a network in order to expend effort solving an arbitrary mathematical puzzle to prevent frivolous or malicious uses of computing power. Due to PoW, crypto transactions can be processed peer-to-peer (P2P) securely without the need for a trusted third party.

Mimblewimble is considered to be a different implementation of a PoW blockchain that allows for increased privacy and better network scalability. PoW decentralized consensus is connected to cryptocurrency mining or crypto mining, which is a mechanism of validating transactions in the blockchain and a process of creating (or mining) new tokens by solving complex mathematical tasks. In the case of Mimblewimble blockchain, it is the process of mining Mimblewimble coin (MWC), its native cryptocurrency.

A crypto miner guarantees the validity of the data and updates the blockchain database with a cryptocurrency transaction every time it is validated and completed. The mining method itself involves participating in a block containing information about transactions and requires solving complex mathematical puzzles with cryptographic hash functions. The first miner who solves it is compensated for making the transaction and receives small amounts of crypto.

On top of that, a cryptocurrency miner needs a machine with special advanced hardware to counter other miners. Usually, cryptocurrency can be mined with a central processing unit (CPU), graphics processing unit (GPU) and an application-specific integrated circuit (ASIC) with different algorithms available. Mimblewimble coin mining is available on two algorithms: Cuckarood29 and cuckAToo31. The block time is 60 seconds and the block reward is 0.6 MWC.

There are several mining pools available. The biggest and the most popular one has about 10 thousand active users. It is available in many languages and has a user-friendly design. In general, if you are interested in mining MWC in the pool, you need to complete a few steps.

Firstly, you need to download mining software, a required version of the GPU Miner. Secondly, after your mining equipment is ready, you need to get the official MimbleWimble Coin desktop wallet. It is available on MacOS, Linux and Windows. It is worth noting that in order to receive payouts from the pool, your local MWC wallet must be always online. If you do not want to do it, it is better to use an address on the exchange on which MWC is already listed.

Finally, you can edit the BAT file. If you want, you can specify the name of the rig as you want it to be shown in the miner’s statistics page or leave this line empty.

Mimblewimble vs Monero

Historically, Monero is a privacy-focused and decentralized cryptocurrency that has the highest market capitalization out of all privacy coins. Launched in 2014 as a fork of Bytecoin, Monero is like “money” in Esperanto, an auxiliary language intended for international use. The project goal is to allow transactions on the blockchain to take place privately and anonymously.

Monero is based on PoW. On top of that, the project implements the CryptoNight protocol that is using Ring Signatures to hide the ledger of transactions. This also means it is impossible to know the total of XMR held by a particular user.

By using Ring Confidential Transactions which are a combination of Confidential Transactions, Ring Signatures and Stealth Addresses, Monero enables information confidentiality. Thus, confidential transactions help to hide the transferred amounts. Ring signatures add at least six “decoy” coins to each transaction, looking the same as the actual ones spent in the transaction.

Therefore, it makes it impossible to trace senders and receivers, as the details about them and the amount of crypto being transferred are obscured. However, the use of Ring Signatures creates some notable drawbacks. For instance, due to Ring Signatures, additional data is attached to each transaction that significantly increases the size of the blocks. Monero blockchain size is large and it will continue to grow with wider adoption, hurting usability.

In comparison with Monero, Mimblewimble is a very elegant protocol that allows for both anonymity and scalability. Privacy in Mimblewimble is enabled by default since the transferred amounts, senders and receivers are hidden using Confidential Transactions. In addition, the Mimblewimble Cut-Through mechanism keeps the blockchain size small.

Thus, in comparison with Monero, Mimblewimble achieves excellent confidentiality and scalability. Some visible drawbacks of the Mimblewimble protocol. Obviously, Mimblewimble protocol does have promising novel features that aim to overcome the security, privacy and scalability issues that blockchain technology has.

Although, Mimblewimble has a couple of cons from the design perspective. First, it has a lower transaction speed due to the data size because of the implementation of Confidential Transactions. Second, the Mimblewimble protocol is potentially vulnerable to quantum computer attacks. While holding great promise in many areas, quantum computing poses a potentially significant threat to cybersecurity, undermining current encryption methods.

Quantum computers will be able to solve complex puzzles and figure out the algorithms behind encryption keys that protect user’s data and the blockchain infrastructure as a whole. Mimblewimble is reliant on digital signatures, so if such attacks happen, blockchain transactions can be simply de-anonymized.

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Finance Committee Approves Legislation Delaying Crypto Tax in South Korea

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Finance Committee Approves Legislation Delaying Crypto Tax in South Korea

Finance Committee Approves Legislation Delaying Crypto Tax in South Korea

Changes meant to postpone the introduction of a tax on virtual assets such as cryptocurrencies in South Korea have been approved by an important parliamentary committee. The draft legislation seeks to delay Seoul’s plan to impose a 20-percent levy on gains from crypto transactions.

Ahead of Election, Major Parties Support Tax Break for Crypto Investors in South Korea

South Korean parliament is taking steps to suspend a planned tax on profits from digital asset investments for another year. The move has been supported by the ruling Democratic Party, despite disagreements with the government itself, as well as the leading opposition People Power Party.

The amendments, which also envisage the increase of an exemption on capital gains tax for real estate sales amid rising property prices, are viewed by Korean politicians as a popular proposition ahead of the upcoming presidential election in March next year, the Korea Joongang Daily noted in a report.

The Strategy and Finance Committee at the National Assembly passed the changes to the respective provisions during a meeting on Tuesday. The voting followed the approval of the revisions by its subcommittee on taxation during a session on Monday.

Authorities Need More Time to Set Up Taxation System for Crypto Assets

The two Korean parties have agreed to postpone the adoption of a 20% tax on annual profits from virtual asset investments exceeding 2.5 million won ($2,102). The government planned to introduce the tax on Jan. 1, 2022, but the recent voting indicates the tax is likely to be suspended until 2023.

The Democratic Party has been pushing for the delay as investments in cryptocurrencies have become quite popular with young voters who also find it very hard to save enough money for a home amid skyrocketing property prices. The party also hopes that the raising of the capital gains tax exemption for single residence owners who sell from a price of 900 million to 1.2 billion won ($1 million), will help to increase the availability of homes on the market.

DP representatives have argued that Korean tax authorities need more time to establish a proper tax system for virtual asset investing. However, Finance Minister Hong Nam-ki opposed the delay, stating that “The government is ready to immediately tax virtual assets.” He nevertheless noted that the executive power will comply with any decision by the parliament, which is expected to vote on the amendments in early December.

Do you think South Korean lawmakers will support the proposed amendments concerning crypto taxation? Tell us in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Jack Dorsey Resigning as CEO of Twitter Is Bullish for Crypto, Says Fundstrat

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Jack Dorsey Resigning as CEO of Twitter Is Bullish for Crypto, Says Fundstrat

Jack Dorsey Resigns as CEO of Twitter — Fundstrat Says Bullish for Crypto

Twitter now has a new chief executive officer after Jack Dorsey resigned Monday. Dorsey, who is still the CEO of Square Inc., previously said that he wants to focus on bitcoin. Fundstrat Global Advisors’ managing director and head of research explained why Dorsey’s departure from Twitter is bullish for crypto.

Twitter Has New CEO: Jack Dorsey Steps Down

Jack Dorsey announced Monday that he has resigned from Twitter. In his letter to the Twitter team, the former CEO explained that it was his decision to leave. Parag Agrawal, who served as Twitter’s chief technology officer, is the new CEO. Dorsey is still the CEO of Square Inc., which is currently working on several bitcoin projects.

Tom Lee, managing partner and head of research at Fundstrat Global Advisors, believes that Dorsey’s resignation from Twitter is bullish for the crypto market. In an interview with CNBC Monday, he was asked what Dorsey’s exit from Twitter means for the bitcoin and cryptocurrency ecosystem.

Responding to the question, “Is it bullish for crypto?” Lee affirmed:

Yes, it’s bullish for crypto.

“One thing to keep in mind is that crypto is the intersection of financial services and technology. That’s literally 60% of the economy. Really, financial services is the other half of GDP, so it’s a huge market,” he elaborated. “And there isn’t enough capital allocated towards crypto innovation, so it takes people like Jack Dorsey to really marshal focus and I don’t think the space is overinvested yet.”

Lee added that it is still the earliest days for the crypto space, not only for projects like Bitcoin and Ethereum but also “the amount of crypto equities and businesses built around crypto.”

Earlier this month, Twitter set up a dedicated team to focus on cryptocurrency and decentralized apps.

Dorsey said at the Bitcoin 2021 Conference in June, “If I were not at Square or Twitter, I would be working on bitcoin.” The former Twitter CEO emphasized, “If [bitcoin] needed more help than Square or Twitter, I would leave them for bitcoin,” noting:

I don’t think there is anything more important in my lifetime to work on.

His other company, Square, is “focused on helping bitcoin reach a mainstream audience while at the same time strengthening the network and ecosystem,” Dorsey said during Square’s Q3 earnings call early this month. “Our focus is on helping bitcoin to become the native currency for the Internet … We have a number of initiatives toward that goal. Cash App is just one.”

Do you think Jack Dorsey resigning from Twitter is bullish for bitcoin and crypto? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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RChain and Hoo: The Arrow Has Already Been on the String

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RChain and Hoo: The Arrow Has Already Been on the String

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On November 27th, 2021, RChain‘s founder Greg Meredith and blockchain scientist Atticbee were invited as guests to an AMA hosted by the Hoo Exchange. Hoo is a Dubai based innovation driven crypto exchange and has their in-house developed public chain, HSC, built for the global cryptocurrency market. In this session, Greg Meredith and Atticbee shared the latest developments in RChain and remarkable ideas about the future of the blockchain and metaverse.

RChain and Hoo: The Arrow Has Already Been on the String

RChain and Hoo: The Arrow Has Already Been on the String

Built as A Coordination Technology, Instead of Payment Platform

According to Greg, RChain focuses on blockchain as a coordination technology to provide a means for global coordination as conditions get more and more severe due to climate change. RChain is designed as a scalable global computer and storage mechanism, rather than a payments system. It is impossible to build a general purpose computer out of a cash register, while to build a cash register out of a general purpose computer is like a walk in the park.

This is the first blockchain that scales linearly. This means that as you add nodes/hardware it gets faster, not slower. The current test data shows that the testnet gets roughly 1,000 tps per node per CPU. So a network of 10 nodes with 10 CPUs each gets 10,000 tps. 20 nodes with 20 CPUs each gets 20,000 tps, etc. Data can be realistically stored, updated, and searched on-chain.

RChain’s smart contract language Rholang, is a concurrent transactional query language, reconciling the best of SQL and NoSQL. It means one can write sophisticated queries to search stored data, which distinguishes itself from systems like IPFS. Smart contracts can be statically checked for concurrency and security errors. So, errors like what caused the DAO bug will be caught at compile time not in deployment. Imagine what would have happened to Ethereum if they had been running at 40K tps when the DAO bug was exploited.

Synergy Between Metaverse and RChain

In the AMA Greg explained his long involvement in the metaverse area. He worked directly with the pioneers of VR/AR, was hired at the research lab where Kim Fairchild did SemNet, by Kim Fairchild himself. He also was the one who suggested to Alan Wexelblat the title Software.

However Greg expressed his concerns about our real world. Yes, the metaverse is hot, but planet Earth is even hotter. In fact, in as little as a decade we are likely to see more than 1.5C temperature rise making the tropical zone uninhabitable, with wet bulb conditions — where the humidity and temperature are so high your sweat cannot cool you off — making it so that people will not even know that they are dying of heat exposure. Unfortunately, about 40% of the world’s population lives in the tropical zone. So, in as little as 10 years, 2.8B people are going to become climate migrants. Unfortunately, those 2.8B people will not be able to move into the metaverse. It won’t be any cooler for the servers running the simulations.

Atticbee later commented that this question needs to be answered: what is the role of blockchain in the metaverse? If metaverse only uses blockchain to trade game props, virtual real estates etc as NFTs, then the current technology may be good enough, at least if the transaction volume is low. However if Metaverse tries to simulate the real world, and uses blockchain as the trustable computing layer, RChain’s computing model is much closer to how the real universe works than the state machine used by virtually all other projects. As Greg Meredith said before, evolution has already picked out the best concurrent computing model, and the sequential Turing machine is never the chosen one.

Also the underlying blockchain technology and the upper layer metaverse will mutually stimulate and evolve. Just like in history – when we only had steam engines, we could only build trains and ships. After we created the combustion engine, we could do cars, airplanes etc. Every tech breakthrough will open new doors for tomorrow’s world. With RChain’s concurrent computing, seamless sharding and on-chain storage, Metaverse will be reshaped by RChain’s breakthrough technology.

Click to Play VS Click to Pay

When asked about RChain’s plan for ecosystem development, Greg answered that RChain focuses on a transaction volume driven route.RChain is looking at applications, such as self-sovereign data, online advertising and sponsorship, and social networks that generate large transaction volumes. The economic argument is simple. Currently, proof-of-work miners are making millions per day. What would make them want to switch proof of stake validators? If you lower transaction costs, you are just going to cut into their profits. If you cut transaction costs by a factor of 100, but raise transaction volume by a factor of 1,000, then they stand to make 10X, and at a fraction of their power consumption. Now, you have a real argument for them to move to proof-of-stake.

Once you understand that transaction volume is where the action is, then you just have to look at the Internet. How many times do you click to pay versus click to “Play”? That is, how many times do you click to post on Instagram or Twitter or WeChat versus to pay a bill or a vendor? How many times do you click to stream on YouTube or Spotify versus to pay someone with PayPal, Venmo or WeChat? It’s hundreds (if not thousands) to one. All the transaction volume is in click to “Play”.

And wherever you play, there are ads. In fact, online advertising is the largest economy in the world. It’s bigger than oil. So, RChain wants to help people make lots and lots of decentralized clicks to play DApps: social networks, streaming services, logistics services, data services, etc. And it wants to stream sponsored content through those decentralized services, but do so in a way that it eliminates surveillance capitalism. It also wants people to have a say as to whether their data is sold and if it is sold and get a cut of the profits.

Migration From Other Public Chains’ Ecosystems to RChain

RChain’s sharding solution allows other chains to be mounted as shards. This means that smart contracts can be written as if other chains were just RChain resources. In this case, for the RChain side, there is a very easy migration.

The biggest stumbling block to migration is the mismatch in the computational model. RChain operates concurrently while most other blockchains operate sequentially. This means other chains cannot handle RChain’s execution demands. RChain execution requests to other chains will queue up and queue up as they process them one at a time.

Of course, going the other way is simple, but it means that RChain has to slow down to match the sequential semantics of the other chains.

Toward a Leaderless Global Computer

RChain has been in mainnet for just under 2 years. Last year it released a major feature: the last finalized state, which means that new validators can synchronize to the chain without having to go all the way back to the genesis block. This year it is releasing a major performance improvement called block merge, that gives the linear scaling. It’s the culmination of Greg’s research of architecture and mathematics in the last 30 years, some of the work can go back to Microsoft’s BizTalk Process Orchestration that Greg worked on 20 years ago.

As Atticbee explained, there exists the following relationships btw “traditional computer” and the blockchain “global computer”:

  • Traditional Computer : Blockchain computer.
  • Multithreading : concurrency of block merge.
  • Multiprocess : sharding (composability).
  • Firewall : on-chain formal verification (behavior type system).

All these 3 parts are necessary for a truly useful global computer. And the computational layer should be carefully chosen so that all these parts can be supported, it means the chosen computational model should support concurrency, composability and a behavior type system.

RChain and Hoo: The Arrow Has Already Been on the String

Figure: Computational Model Comparisons

Unfortunately that leaves very few choices. From the above table, only Pi or Rho-Calculus can provide all the required features. Rho-Calculus is the upgraded version of Pi-Calculus. With reflection with much more expressive power. It is the first process of calculus suitable as a smart contract language. And Greg Meredith is the founder of Rho-Calculus.

RChain and Hoo: The Arrow Has Already Been on the String

Figure: The Knowledge Graph of RChain

With the coming “block merge” milestone the multi-threading/concurrency capability will be demonstrated. After that RChain will have a “seamless” sharding solution that makes many shards “look and feel” like one. Finally in the Venus milestone, a behavior type system will be implemented to allow thousands of contracts to safely cooperate with each other. Above that it will be possible to add a smart contract orchestration layer like a decentralized Kubernetes. Without a carefully chosen computational model, all these are impossible and the platform will be locked in as a payment solution, rather than a global computer that can handle a global scale, all-in-one computing infrastructure to serve Web 3.0.


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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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