When it comes to scalability and especially, privacy, we face them as major problems in terms of the whole Bitcoin blockchain system. Let’s figure out if it is possible to avoid this problem in our Mimblewimble review. It is enough to get an address, find it in your browser and boom, you can get the information about amount of bitcoins that it holds. This is a transparent kind of approach that inspires a certain level of confidence and trust. However, it can turn into a problem for a lot of people. It is clear that you can’t learn about the owner of the address this way, but some other data can be genuinely traced. This tells us that when it comes to privacy in Bitcoin, this privacy is not complete.
On the other hand, scalability has become a controversy. The first cryptocurrency is not prepared to be massified with its current capacity of use, although that is exactly what it does: increasing its number of users step by step. At this moment, every block of the blockchain takes only 1MB, which rise many question and point out as the cause of the problem, and can only handle an average of 6 transactions per second. Which would not be so bad for a few users, but when it comes to millions of people a lot more capacity is required. Just to compare we have the Visa infrastructure, which supports 56 thousand transactions per second. There is no doubt, Bitcoin is far behind.
However, the obvious solution (increasing the size of the block), despite still being considered, does not seem to be the most popular. The reason for this is that many are against modifying the original protocol of the blockchain through a bifurcation, a risky process that could lead to a division of Bitcoin as happened in the blockchain Ethereum and cause huge losses to thousands of users. Therefore, we are really looking for solutions that do not affect the system so directly, such as SegWit or Lighting Network, essentially external to Bitcoin but working to their advantage.
Something similar is proposed by Mimblewimble, a concept born in August 2016 to solve these two shortcomings in Bitcoin: scalability and privacy. How this idea was first disseminated, added to its particular name, make it have a certain aura of mystery, as do the origins of Bitcoin. While Satoshi Nakamoto chose that pseudonym that would never come out, allegedly based on Pokemon due to the name of its protagonist in the Japanese version (‘Satoshi’), this time the creator of Mimblewimble chose the Harry Potter saga of J.K Rowling to hide. As told in the White Paper purged by Andrew Poelstra, anonymous person showed up at dawn in a Bitcoin research channel, left a plain text document hosted on a hidden network server (only accessible through Tor) and disappeared just like his pseudonym: Tom Elvis Jedusor, that is, the name of Lord Voldemort (Tom Marvolo Riddle) in the French version.
More ‘characters’ of the saga arrived at the project, discussing it on Reddit; among them ‘Ignotus Peverell’, the first holder of the invisibility cloak, and ‘Grindelwald’, the first great dark magician. All these developers, mostly anonymous, came together to do the magic, which is still in development.
WHat about privacy?
It must be said that not everything comes from ‘Tom’. He himself explains in the original document how Mimblewimble, to achieve the promised privacy, is based on two approaches already proposed by Gregory Maxwell and Nicolas van Saberhagen, respectively: CoinJoin and Blinding Factors. CoinJoin is essentially the creation of a certain transaction that comes with a few entries and outputs that related with different users. This approach makes it harder to find the origin of certain transaction. Blind Factors uses randomization in order to hide outputs, and hides public data as well without the user’s interaction. In accordance with Shen Noether’s words, by combining these proposals you will get the confidential transaction. If you want to get the modification based on these solutions, ‘Tom’ proposes to encode the amount of the transaction with a ‘Pedersen Commitment’, a type of protocol that is known as Commitment Scheme in cryptography, also used for zero knowledge tests that they have already integrated cryptocurrencies like Zcash.
What about scalability?
In order to achieve scalability, the trick is basically suggests the ability of checking of the transaction’s validity in a certain blockchain, and avoiding consult of every block in the history with each and every detail. This will occupy up to 100 GB of space in each and every node. So the information that represents importance is in our scale and the rest will be discarded, which eventually will save space and your time.
A POSSIBLE FUTURE: Is Mimblewimble protocol legit?
This proposal could be adapted to the Bitcoin network in the form of a side chain or soft fork, as Poelstra explained in Scaling Bitcoin. The first option basically consists of creating a new blockchain connected to Bitcoin for this specific use; while the soft fork would involve changing the network protocol directly. As proposed by ‘Tom’, it can be said that this was his proposal, since he suggests removing the Bitcoin Script to implement it.
Poelstra seems to lean more towards the option of the side chain, although it makes clear that, to achieve its advantages, Mimblewimble sacrifices the functionality in the blockchain, except for the characteristics of zero knowledge in transactions, exchange between block chains and micropayment channel. However, these utilities have not yet been implemented on this platform, although they are among their future research and development objectives together with important improvements in security against cyber attacks. Interestingly, the White Paper also reads: “We describe a research project to design a cryptocurrency like Bitcoin”, which suggests that, if it cannot be implemented to the first blockchain, Mimblewimble will end up joining the market on its own as soon as it finishes.