SteemCryptoAcademy Season 4 Week 2 - Homework Post for Professor @fredquantum | Mimblewimble Protocol
Hello, steemians of this wonderful community welcome once again to my blog. In regards to the crypto academy lecture by our dear prof @fredquantum talking about mimblewindle protocol, I will be writing about the given tasks below.
The Mimblewimble Protocol
A protocol that exists as an increase in the privacy and scalability of existing blockchain technology. It was around 2016 that the Mimblewimble protocol was created by an anonymous being named Tom Elvis Jedusor. The intention behind the creation of this protocol was to enhance the privacy and scalability of blockchain technology.
The name Mimblewimble came about through the Harry potters book series and is as well related to the Harry Potter universe. It is not really the traditional mode of transaction in the blockchain, but a way that allows easy synchronization, download, and verification of transactions in the blockchain
How does it carry out these activities? It has mathematical computation that tends to solve these related problems by allowing the nodes involved to view the transactions. There are blockchains like the Bitcoin blockchain, Ethereum Blockchain, and so on where information/transactions are been stored in a public manner.
Information stored in these blockchains is the sender's and receiver's wallet address, the amount of transaction, transaction ID, and so on. Now implementing the Mimblewimble protocol, implies that this information would not be disclosed to third parties nodes except the ones that are present in the on-chain transactions.
The Mimblewimble Protocol - How It Works
Youn could imagine a situation whereby a particular transaction is not contained in the addresses of the user but in a group and is being recorded in a single transaction, this is how the mimblewimble protocol does its transaction. It makes use of confidential transaction that tends to hide transactions in such a way that the sender would encrypt the transaction using a way of Blinding factors.
These factors are a kind of value that will be chosen by the sender and in terms of disclosing the transaction to the intended receiver, he/she must select the appropriate value that was chosen by the sender in order to successfully access the transaction details. In this process, If the user selects the correct value as chosen by the sender the transaction will be then termed as a valid transaction.
It uses a cryptographic algorithm called 'CoinJoin' to carry out the function effectively in the blockchain. The blinding factors serve as an authority from the sender to receiver. Now, in this CoinJoin cryptographic algorithm, the transactions are been bottled up in a single group which will be recorded in the block of transactions.
Understanding Confidential Transactions (CTs)
The confidential transaction is a solution that was introduced by CEO Adam in 2013 with the intention of solving the problem of fungibility weak pseudonymity in blockchain technology, after its discovery in the same year, it was later expanded by a bitcoin developer named Gregory Maxwell.
In this kind of transaction, it is only the users that are involved in the transaction would be allowed to view the transaction amount, outsiders do not have access to the transaction information because it has a method of increasing the network's privacy by encrypting the input and outputs of the transactions vias blinded factors which we have discussed briefly above.
There is a method by which confidential transactions uses to calculate its transaction, it is called the Pedersen commitment. How does this method work? it makes use of commitment notation in front of the blind factor data would be transacted within the chain. Below is the formula used in calculating the Pedersen commitment.
C(BF1 + D1) + C(BF2 + D2) = C(BF1 + BF2, D1 + D2)Where the BF represents the binding factor and the D is serving as the Data of the transaction that would be sent. Let's briefly see the two main importance of CTs.
- Provision of Fungibility
- Provision of Anonymity
The above-mentioned are the two main factors that affect the bitcoin blockchain. So utilizing the CTs would be of great benefit to this blockchain. I will discuss these importance in the next question of this article.
Mimblewimble Protocol and Bitcoin Network to Enable Anonymity of Transactions and Improve Scalability
Since the inception of the bitcoin network, it has been seen as the true decentralized anonymous cryptocurrency blockchain. But in the recent challenge anonymity has been an issue as every user in the network are been represented by a public address, every transaction that is been done can be traced in the block explorer of the network.
Fungibility and scalability are other shortcomings of the bitcoin network. Fungibility in this context refers to the ability of a currency to interchange for another currency without loss of value. Let's take the fiat currency of the United States (USD), it is fungible because it can be changed to another currency without losing value.
But in the case of bitcoin, because of its network congestion, it can be seen as non-fungible. Let's say a BTC coin was gained through illicit activity, it could be labeled as polluted, thus making merchants not gain interest in the coin again because of its loss in value compared to other BTC assets.
Now, Mimblewimble with its CTs mechanism can solve this issue by implementing encryption of data where transactions cannot be traced as such discovering a polluted and unpolluted asset would be very hard. It will increase the security level of the transaction that are been carried out on the chain. Let's see the image below.
One feature of the bitcoin network is that it lacks anonymity of transactions, any user can view transactions on the block-explorer and most users are comfortable with this feature. If the Mimblewimble protocol connects with bitcoin's network it will enable anonymity by implementing the CTs mechanism to increase privacy in such a way that only the participants would have access to the information. Let's have a look at the second screenshot below.
The above describes how the information would look like to non-participants of the transaction. The CTs mechanism hides the sensitive details of the transactions. It would greatly increase security in the entire bitcoin network. It also makes use of the Cut-Through method to release some space by cutting out the transaction that needs to be replaced in the blockchain.
Pros and Cons of the Mimblewimble protocol.
As it is with every working protocol, there must be a good and bad situation in such a platform. Let's take a look at some of the pros and cons of Mimblwwimble protocol.
The Pros Of Mimblewimble protocol
- Scalability
Scalability is one of the shortcomings of blockchain especially that of Bitcoin. The Mimblewimble protocol is highly scalable because of its minimal space in the data processing. It has the ability to reduce dispensable data which is why transaction congestion are not been experienced.
- Anonymity
Anonymity is another advantage of this protocol, it has already built-in mechanisms that tend to hide participant's information in the chain. sensitive information like wallet address, amount of transaction, and so on is completely kept away from non-participants, thus ensuring high privacy.
- Fungiblity
Fungibility is another advantage, as I have explained earlier, it is the ability for an exchange to interchange without losing value. The Mimblewimble protocol is fully built in a way that it solves the non-fungibility issues of blockchains by encrypting the outputs and inputs of the transaction.
Another advantage of this protocol is the ease to use access where nodes can easily join the network and begin confirmation. Let us look at the Cons below.
The Cos Of Mimblewimble protocol
It is certain that protocols that make use of CTs are usually slow in terms of processing transactions, and because of the high surge of encrypted data on the protocol, it would be requiring an additional time in the validation of blocks.
Another seen disadvantage is that the protocol makes use of digital signatures which means it is highly dependant on these signatures as such can lead to vulnerability via quantum attacks.
Introduction to BEAM Cryptocurrency
BEAM is a cryptocurrency that is built on top of two protocols namely - LelantusMW and Mimblewimble. It is a confidential decentralized finance asset that was created in 2018 with the intention of solving the issue that was revolving around bitcoin's network back in the years of its early introduction.
It was started 3years ago by some crypto experts namely - Alexander Zaidelson, Alex Romanov, Beni Issembert, and Amir Aaronson. Alex Romanov is said to be the current chief technical officer of the project who is also an expert in developing projects with team works while Alexander Zaidelson, Beni Issembert, and Amir Aaronson are the chief executive officer (CEO), chief marketing officer (CMO), and chief operation officer (COO).
In collaboration, they created the Beam to solve the issue of anonymity on transactions and user privacy. It works in a way the participant's addresses are kept confidential and can never be made public to non-participants. It allows users o securely store information and also allows both parties to carry out safe and reliable transactions.
Let's Explore The BEAM coin on CMC site
Beam is a cryptocurrency with a current rank of 496 and can fluctuate by its market capitalization and 24hours trading volume. It makes use of a proof-of-work consensus algorithm which was selected because of its ability to cover a large amount of data.
From the above, you can see the Beam coin at its current rate of $0.6869, 0.00001433 BTC, and 0.0001993 ETH respectively. Also on the screenshot, we have the rank which is 496 based on its market capitalization and 24hours trading volume. Let's see the next screenshot.
The above screenshot depicts the market capitalization of Beam coin which is at $66,557,160, the fully diluted market capitalization - $180,313,950, 24 hours volume of trade - $9,144,864, circulating supply of 97,036,440.00 BEAM with a maximum supply of 262,800,000 BEAM, and a total supply of 97,036,440 BEAM.
Where Can You Trade Beam Coin
Beam coin is a crypto asset that can be traded on most crypto exchange platforms like Binance exchange, BitForex, Gate.io, Hotbit, and so on
The above markets are just but few, there too many of them that have listed Beam for exchange. You can trade the coin on any of these exchangs.
Conclusion
In conclusion, I want to appreciate our dear professor for unveiling this knowledge to us, it was really a wonderful time writing about these protocols. The mimblewimble protocol is indeed a nice protocol as it tends to mitigate the shortcomings of blockchains that are facing the issue of privacy and fungibility. I trust as the technology increase so will blockchain enthusiasts adopt to this protocol. Thank you so much for your wonderful to time spent on my blog. See you soon.
Regards
