Harry Potter fans may be familiar with the Mimblewimble curse that leaves its victims tongue-tied, but what does that have to do with cryptocurrency? Well, very little when it comes to the curse itself, but the name Mimblewimble has been repurposed for a blockchain protocol that allows for completely private transactions through a unique security mechanism.
If you need to carry out cryptocurrency transactions that are totally anonymous, Mimblewimble may be just what you need. In this AAG Academy guide, we’ll explain what Mimblewimble is, how it works, and the advantages and disadvantages of using it. We’ll also look at coins that use the Mimblewimble protocol, and answer some of the most common questions around it.
Before we jump into how Mimblewimble works, let’s look at what it is in more detail. Mimblewimble is a decentralized blockchain protocol that is heavily focused on user privacy. It employs a unique approach to structuring and storing transactions that does away with addresses, as well as a custom security framework.
Mimblewimble was created by an anonymous developer who used the pseudonym Tom Elvis Judasor, which is a French counterpart to Harry Potter antihero Voldemort. It was released in 2018 and the first cryptocurrency to support it, Grin, quickly exploded in value. Since then, other cryptocurrencies have taken advantage of the Mimblewimble protocol.
Despite this, Mimblewimble itself is still seen as something of a mystery for much of the cryptocurrency industry, which seems to be undecided on how best to take advantage of it. Many feel merging it with Bitcoin would be far too complex, but that it can greatly enhance Bitcoin’s functionality, as well as that of other cryptocurrencies, as a sidechain.
How does Mimblewimble work?
Mimblewimble’s primary functionality is derived from the Confidential Transactions (CT) protocol proposed by Blockstream CEO and Hashcash co-founder Adam Back in 2013. CT allows Bitcoin, Monero, and other cryptocurrency users to execute more private transactions by taking advantage of a system that encrypts transaction data so that it is not visible to the public.
One of the biggest problems with CT, however, is that it does not completely conceal wallet addresses, so although we cannot see the details of a transaction, we can at least see that one party sent assets to another. And, thanks to improvements in blockchain analysis techniques, it is now easier than ever to link obscure wallet addresses with actual people.
Mimblewimble solves this issue by not only concealing transaction information — including the amount of cryptocurrency sent and received — but also all of the wallet addresses involved. This is made possible by the use of Elliptic Curve Cryptography (ECC), which allows transactions to be verified without the need to make any of their details known.
There are other factors that play a key role, including:
Blinding factors Unlike other confidential transaction implementations, which encrypt transactions using random values known as “blinding factors,” Mimblewimble allows a sender to pick those blinding factors themselves. As long as the receiver also picks the same value, then the transaction is deemed valid and can go ahead.
CoinJoin Mimblewimble also implements CoinJoin, a system that allows payment data from multiple senders to be combined into a single transaction. This makes it near impossible to trace which sender transacted with which receiver, with the added benefit of having to store only inputs, outputs, and signature data on the blockchain.
Cut-through Finally, Mimblewimble uses a feature called cut-through, which takes inputs and outputs and aggregates them to reduce the size of the blocks required to store them.
What are the advantages of Mimblewimble?
As we’ve touched upon throughout this guide, one of the biggest advantages of Mimblewimble is its increased privacy. When you use the Mimblewimble protocol, it is impossible for anyone outside of your transaction to find out that the transaction took place. That means any cryptocurrency transfers you make cannot be traced.
Mimblewimble also boasts robust security thanks to its use of ECC, while its fungibility is better than most cryptocurrencies in existence today. The fact that Mimblewimble users can exchange any coin on its platform without the risk of loss gives it an advantage over Bitcoin and others which can become “tainted” if their coins and tokens are used for nefarious activities.
Finally, Mimblewimble boasts notable scalability benefits. Since its block sizes are significantly smaller than Bitcoin’s and most other cryptocurrencies’, it can more easily scale to accommodate greater demand. It should be noted, however, that Mimblewimble — like any technology in the web3 world — has some drawbacks, too.
What are the drawbacks of Mimbewimble?
One of the biggest drawbacks of Mimblewimble is its longer transaction throughput. Although its block sizes are smaller, the size of its transactions is larger — as is the case with any confidential transaction protocol. This means that processing speeds are typically a lot longer than those for traditional cryptocurrency transactions, like Bitcoin or Ethereum.
In addition, Mimblewimble’s reliance on digital signatures makes it more vulnerable to theorized quantum computer attacks that standard cryptocurrencies don’t have to worry about.
Which coins use Mimblewimble?
It’s clear to see that Mimblewimble’s advantages outweigh its drawbacks, which is why the technology is considered a major advancement in protection and anonymity within the cryptocurrency industry. It’s also easier to adopt than other blockchain protocols, which, when coupled with its benefits, indicates that Mimblewimble will only grow in popularity in the future.
As things stand, Grin and Beam are two of the biggest cryptocurrencies that have adopted the Mimblewimble protocol. Neither of these use addresses, or show transaction amounts and histories. Litecoin has also implemented Mimblewimble on the LTC mainnet.
The main features of Mimblewimble are significantly improved privacy, better security, and greater scalability. Mimblewimble transactions are not traceable and it is not possible to see wallet addresses or transaction details.
You can mine Grin, Beam, or Litecoin by visiting their official websites and downloading the necessary software you’ll need to become a miner.
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About the author
Senior content writer
Senior copywriter for AAG Marketing team with the focus of educating our community on all things web3, blockchain and Metaverse.
This article is intended to provide generalized information designed to educate a broad segment of the public; it does not give personalized investment, legal, or other business and professional advice. Before taking any action, you should always consult with your own financial, legal, tax, investment, or other professional for advice on matters that affect you and/or your business.