BEAM is the next generation blockchain that enables users to control the transactional information to share and with whom
Conventional blockchain may offer anonymity of a user but they dont ensure the users transactions on the blockchain are kept private. There is a big difference between anonymity and privacy!
You can consider buying tokens from an ICO without doing KYC as Anonymity, because your identity is unknown to the ICO; only your address is visible on the blockchain but what happens when you want to trade these tokens on an exchange???
A Case study: Blockchain-Exchanges Interactions
- After registering on the exchange of your choice
- You transfer tokens from your ether wallet to provided wallet address on the exchange
- You trade your tokens on the exchange. Now your balance on the exchange looks good and you want to transfer to your main wallet because of security concerns of using an exchange
- The exchange demands a KYC which proves your identity as the account holder/owner
- After completing the KYC, you wait for some days to get the KYC approved before you can withdraw from your exchange account to your main account.
This is a routine that most traders, crypto users are familiar with but each step pose a varrying degree of security concern to the user which consequently puts their privacy at risk in the event of an account attack on such exchanges because it leaves a lot more information for the intruders to exploit!
Lets look at the different permutations below
The possible privacy/security implications
Case Study 1 :
Little or No Security/Privacy Risk
Between the buyer and the ICO market, there are no huge security/privacy concern as all that is being dealt with mostly is just a raw communication between wallet addresses which can belong to anybody in general and nobody in particular except those ICO which requires KYC before investors can invest; which might have the same security/privacy concerns as those using exchanges
Case Study 2 :
Security/privacy concerns for exchange users
For example, an attacker can attack an exchange and garner personal information of a user which can be easily used to deanonymise the owners account; meaning to link an account details with a person directly. Consequently, a third party(attacker) can view all the transaction history of such user. This is possible because all transactions history on the conventional public blockchain technology is publicly accessible by anybody and everybody.
Although, blockchain offers anonymity by default, it doesnt offers privacy-control to users which is the marked difference between the Beam blockchain and the Public blockchain protocol.
But since privacy is not an option that is native to public blockchain, Beam is building a protocol that enables users to control which transaction information is shared and to whom!.
Introducing BEAM Blockchain Protocol
1.0 What is BEAM???
BEAM is a next generation scalable confidential cryptocurrency based on the MimbleWimble protocol which offer users control over their privacy.
1.1 Understanding the BEAM Blockchain
Just as bitcoin cryptocurrency is synonymous to blockchain; Beam cryptocurrency is native to the decentralized MimbleWimble Blockchain protocol; a new protocol which was published by an anonymous author in 2016.
The MimbleWimble concept builds on this two major concept which are
1.11 Confidential Transactions
It is implemented via a cryptographic commitment scheme which has two basic properties : hiding and binding
1.111 - How Hiding and Binding activates privacy option for users
Hiding acts to conceal the transaction history from the receiver unless the sender authorizes it via a commit scheme
Binding allows the receiver to view the transaction history once the sender authorizes activates the commit via his key
The protocol ONLY keeps a record of the commit and check if the commitment is VALID before the protocol grants the request.
WimbleMimble utilise the Pedersen Commitment scheme to achieve its privacy objective using this formular
C = r * G + v * H where r is a binding factor, v a secret hiding value, G and H are generator point on a specific elliptic curve
1.12 Transaction Cut-Through
This property is inherent in the MimbleWimble protocol due to the linear property of the Pedersen Commitment, enables transactions to cut through intermediate block thereby reducing the block size before a transaction can be registered on the blockchain.
This approach is replicated accross each chain block which means that the system ONLY needs to store the current UTXO (Unspent Transaction Output) state instead of transaction history!
UTXO = Commit
Ownership of UTXO is transfered to another receiver by revealing the value and blinding factor to the receiver, who also creates a new commit known only to him and the trend is maintained to ensure a confidential blockchain!
1.2 Features of the BEAM Protocol
But first, a quick review of how some features compares with other blockchain
In Beam Protocol, every transactions can be kept private with the option for users to reveal their transaction history
The Beam Protocol is based on a decentralized MimbleWimble technology just as your conventional blockchain technology. It bores many similarities with the conventional blockchain except it's marked improvement on privacy option for blockchain users.
* PoW Algorithm
BEAM uses the Equihash PoW mining algorithm. Back then Equihash was limited due to mining difficulty with ASIC miners but today that limitation is no longer there.
* Scalable via compact blockchain size
Enabled via the cut-through feature of the MimbleWimble BEAM blockchain
Others are :
- No addresses stored on the blockchain
- No premine, No ICO
- Developed from scratch in C++
2.0 Who Can Benefit from the BEAM Blockchain??
2.1 Solution For All
* Individual Users
Users can enable this privacy option while sending and receiving funds on the Beam blockchain. The system only creates a commit to identify the validity of the transaction; which could be activated by the sender to enable the receiver view the transaction history and consequently transfer ownership.
Therefore investors and traders alike can easily use the escrow and atomic swap functionalities of the blockchain to carryout transactions in a secure manner.
* Institutional Investor
This category of people loves their privacy because exposure to unwanted third party could be seen as a breach of security as security could use malicious token to attack their target wallet. This might not be effective in terms of stealing their funds but it might cause an unrest.
* Commercial Marketplace
Commercial providers with strong privacy policies will look to partner with BEAM to build a strong privacy-controlled economy for their varied users who will love to verify through any means that their information is in safe hands. Which makes BEAM blockchain suitable for mass adoption!
2.2 Full Benefits of the BEAM Ecosystem
- Escrow and time locked transaction
- Atomic swaps
- Privacy transactions without clogging network
- Fast and easily scalable for mass adoption
- Untraceable transaction history
- Decentralized just like public blockchain
- No additional block size required
- User Controlled features enabled
- Open sourced
- Based on "Scriptless Script" technology
- Mobile and desktop supported wallet
3.0 How It Works
4.0 Possible Use Cases
Mr John is highly connected individual who will like to use the blockchain to make all of his transactions but he finds out in a short time that he might be exposed to unwanted third party audit who are looking for extra information such as his transaction history to stay on his radar and maybe launch an attack on a possible exchange he is using inorder to steal his funds.
After careful assessment of the pros and cons, he realised his privacy might be jeopardised on the longrun, then he decides to put his crypto plans on hold until recently he ran along a friend who told him about the BEAM blockchain.
Mr John loved the concept and decided to read more until he was left convinced that it is the right oppurtunity for him to invest in a privacy-owned cryptocurrency.
BEAM is a truly anonymous store-of-value coin which will help many cryptocurrency users and enthusiast to define how they use the blockchain and its accesories such as exchanges, OTC marketplace, commercial providers.
Beam blockchain doesnt just tells us to trust the system but wants us to VERIFY!!!
Useful Links And Resources
- Beam Website
- Beam Youtube
- Beam Position Paper
- Beam Medium
- Beam Telegram
- Beam Bitcointalk
- WimbleMimble Paper