Yesterday Grin rallies a lot and finally entered the top 100.

What is GRIN?

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GRIN is a decentralised PoW cryptocurrency, that focuses on strong privacy. There is no premine, no founders rewards, no people with special authority. It is based on the MimbleWimble protocol that works entirely different than bitcoin.

Instead of having an address that holds a certain value of coins, these two informations are mixed up cryptographically into a single Pedersen commit P = k * G + v * U, where k is the private key (from which the address would be derived if there were an address) and v is the number of Grins locked to that commit. That means that nobody knows how much Grin each user has, and there is no address linked to the UTXO's. Also there is no address at all, just the private key that must be kept secret. The only public information are Pedersen commits. And these have the amazing property, that without knowing v or k, they look just like random numbers.

Now there are two problems. First, how can you pay someone else, and second, how can one be sure that no money is created from thin air. These two are solved in a single instance. To transfer funds from one Pedersen commit to another, the difference of the commits needs to be signed, and only if the same value v is used in both it drops out leaving
P_1 - P_2 = (k_1 - k_2)* G. This can be signed by for example an aggregated Schnorr signature.

This leaves a fundamental difference to bitcoin. In bitcoin you can give me your address and I can pay it. In GRIN you can tell me your Pedersen commits, but I cant do anything with them. Instead when I want to pay you, you need to tell me which new Pedersen commit I should pay to, and you need to sign the transaction in addition to me. Transferring funds is interactive!

But on the other hand, only the parties involved in the transaction know what is happening. For the rest of the world, including the miners, we are just exchanging random numbers.

The improved privacy is actually gained by cryptography that is much simpler than in Monero and a joke compared to the very complex SNARKS and STARKS of zcash. In my opinion this is a massive plus since cryptographic simplicity allows to build secure and well audited code. How many people are there in this world that really know the code of Zcahs? I guess it is not many more that the developers.

Quite amazingly, the simplicity of GRIN also allows for a much compressed chain. While Zcahs and Monero have larger transactions than bitcoin, Grin is actually more lightweight. The fundamental reason is that all redundant information is simply cut out of the chain. Only together with information stored locally only at the holder of GRIN does it start to make sense.

The only huge drawback is that GRIN breaks with the traditions of classical blockchains. No addresses, no easy transactions.

Developments

GRIN is not perfect yet. There are several proposals, enabling non-interactive transactions, ideas to compress the chain even further and even ideas to implement tokens on top of MimbleWimble. However, all of that is very speculative.

My price outlook

This is just my opinion, please inform yourself before making decisions!

Grin is still very young and has a huge inflation, currently 200% per year. This means that there is a constant supply of fresh grin flowing into the markets (and that is necessary for a fair launch, giving everyone the chance to buy some GRINS, not only the earliest adopters). And these GRIN will make it very hard to have a sustained rise of prices. My rough analysis is already factoring in the inflation of the next 3 years and then expect the same market cap as Monero. This puts one GRIN at roughly 21$. But I do not expect this to be realised anytime soon, especially not when inflation is high and a steady price assumes a constant, not ending, supply of buyers.