MimbleWimble, Grin, and the future for Bitcoin privacy and scalability

If you’re a Harry Potter fan, MimbleWimble may sound familiar. But, I am not talking about the tongue-tying spell. I am talking about a protocol that aims to increase Bitcoin’s scalability and enhance Bitcoin’s privacy.

Simply put, the MimbleWimble protocol allows two parties to transact anonymous amounts using a combination of Bitcoin innovations known as confidential transactions and CoinJoin.

Currently, Bitcoin is considered pseudonymous because transactions and their amounts may be traced to single addresses. Addresses do not necessarily prove identity, but identity may be assumed based on the evidence of transaction history.

Blinding factors, or strings of numbers used for encrypting Bitcoin amounts, is a feature of confidential transactions that MimbleWimble implements. Blinding factors allow onlookers to verify transactions by validating the number of inputs and outputs are the same.

That is, Alice pays Bob 1 bitcoin, but pays him .25 Bitcoin four times would be an example of a single transaction having more than one combination of inputs and outputs needing to be verified.

The cost of privacy is a bloated transaction that is nearly 3x the size of a regular Bitcoin transaction. Another concept, CoinJoin, negates such size increase and actually decreases the transaction size to less than a normal Bitcoin transaction.

This derivation of confidential transactions solves anonymizing transaction amounts, but what about anonymizing addresses?

Like confidential transactions, CoinJoin was invented by Bitcoin developer Gregory Maxwell. The idea behind CoinJoin is that transactions are combined to obfuscate inputs and outputs. By obfuscating inputs and outputs, a block would then be filled with a randomly combined list of inputs, outputs and signature data that takes up less space in a block than a normal Bitcoin transaction does.

Not only does this make it impossible for anyone to determine who-sent-who however much Bitcoin, MimbleWimble also increases Bitcoin’s scalability as a side effect.

As strong as MimbleWimble sounds, it is still a highly experimental technology. Some of the first implementations are being tested on a new project.

From the creator of MimbleWimble, Grin is a blockchain and cryptocurrency implementing MimbleWimble with extensions for a complete blockchain. As of late, Grin’s third testnet has been released and is currently in need of those technically savvy enough to test it. Grin also uses a community-driven funding model in which might be considered unique in the latest ICO craze.

Nonetheless, Grin is developing a very exciting potential solution to some of Bitcoin’s weaknesses. I look forward to monitoring their progress.