Mimblewimble Protocol - Crypto Academy / S4W2 - Homework Post for @fredquantum
Q. In detail, explain your understanding of the Mimblewimble protocol.
Excessive exposure or Transparency of anything don't always benefit you; it is a double-edged sword. In the world of cryptocurrency, where Transparency plays a vital role, no one would have thought of Privacy as a factor for choosing a particular currency. Still, due to the exposure, to details like the amount sent, receivers & senders address along with the whole transaction history of both sender and receiver made Privacy a foremost thing for someone who has been blackmailed or whose account got hacked just because of the details that have been shown on the block explorer.
The sole reason for providing Privacy is to provide security to the users of the platform or blockchain. And that's why we needed Privacy coin.
Mimblewimble protocol can serve the purpose of Privacy in any blockchain compatible with the Mimblewimble protocol. Developers are still amazed and thinking of using Mimblewimble protocol to its highest potential.
The name Mimblewimble protocol is the name of the spell in the movie called Harry potter. The work of the Mimblewimble extent is to entangle the opponent's tongue so that the opponent can't use any spell against the caster of the outbreak. Developer/developers of Mimblewimble protocol gave the name Mimblewimble to the protocol maybe because of the Privacy it provides or wanted to shut the mouth of other privacy coins or blockchains that weren't able to provide Privacy as well as Scalability.
Mimblewimble protocol was developed by the Tom Elvis Jedusor in 2016, which, when translated to English from French, gives the name of the antagonist in the movie Harry Potter and that is Voldemort, after knowing this, I think the developer/developers might be a hardcore lover of movies of Harry potter. The name of developer/developers is a pseudonym, same as in the case of Bitcoin, where the developer of Bitcoin is anonymous. It could be that the developer for both the bitcoin and Mimblewimble protocol could be the same person/people.
Salient features of Mimblewimble protocol
(1) Privacy using Elliptic curve cryptography, Conjoin and Cut-through.
(2) Scalability using Cut-through.
(3) Fungibility using Elliptic curve cryptography, Cut-through.
Q. Discuss in detail how the Mimblewimble blockchain protocol works.
The primary purpose that Mimblewimble protocol serves is providing Privacy to the users of a platform using it. Still, in the quest to offer Privacy, the developer/developers of the Mimblewimble protocol came up with two more features. Those features are ** Scalability** and Fungibility or Non-traceability you can say that these two features are cherry on the cake.
(1) Mimblewimble handling Privacy: To send or receive crypto assets, we need address, and that address can easily be visible on the blockchain explorer. As well as we need to sign a transaction via key related to money transfers to execute a trade, but it is not the case here in the Mimblewimble protocol.
Mimblewimble protocol uses a cryptographic property or process called Elliptical Curve Cryptography. Now what purpose does Elliptical Curve Cryptography serve?? This question might arise in anyone's mind, so the answer is:
Using Elliptical Curve Cryptography, Mimblewimble protocol combines the signatures of the sender and receiver to form a new signature. The point is that the signature created will serve the purpose of an address. And as well as hides the actual address of both the sender and receiver, and that signature can only be used once. Suppose we want to execute a transaction again. In that case, a new signature will form again by combining the signatures of the sender and receiver, which will also serve the purpose of a new address and hide the address of the sender and receiver for that particular transaction.
So that is how anonymity of the sender and receiver remains intact.
Mimblewimble protocol hides:
(1) The address of the sender and receiver.
(2) The amount transacted or transferred(Using Confidential transaction)
Regarding Confidential transactions, I will talk about them in detail in the following question. For now, you can say that Confidential transaction hides the amount transacted and along with Coinjoin makes a blockchain fungible.
The data, as mentioned above, don't get stored in the blocks.
(2) Mimblewimble handling Scalability: Scalability gets maintained in the Mimblewimble protocol with the help of a cryptographic method called Coinjoin and a feature of Mimblewimble protocol called Cut-through.
(a) Coinjoin: Coinjoin is a cryptographic method blockchains use to ensure anonymity. Coinjoin bundles all the transactions performed by the sender and makes it a single transaction or entity to make it difficult for anyone to trace a particular transfer or transaction.
Mimblewimble block and Coinjoin cryptography method both do the same work by only focusing on inputs, outputs and signatures and neglecting other data relevant to transaction, including amount and address. So Mimblewimble block only keeps data of input and output, thus saving storage and increasing Scalability.
(b) Cut-through: Cut-through collects the data of all the transactions and stores it in a block. Then the data inside the block gets compressed, which leads to deleting the data and leaving only input and output of the transactions that will serve as the input for the upcoming transactions.
For example:
A sent 1 BTC to B
B sent 1 BTC to C
C sent 1 BTC to D
In any other blockchain, these all transactions will be saved from A to B, B to C and C to D.
But in Mimblewimble, with the help of Cut-through, only input and output will be saved by deleting or removing redundant transaction and will show only Input A. Output D. By doing this, it saves a lot of storage, leading to provide good Scalability.
Q. Discuss in detail your understanding of Confidential Transactions (CTs).
Confidential Transactions (CTs) is a cryptographic protocol based on the Zero-Knowledge Protocol and developed to make transactions private and confidential on the Blockchain Protocol. The Confidential Transactions idea was first presented initially by Adam Back, the CEO of Blockstream, in 2013. Afterwards, Gregory Maxwell solidified Back's thoughts around the same time and guaranteed improved Privacy & flexibility.
To make this conceivable, Confidential Transactions utilises an idea called Pedersen Commitment, a sort of homomorphic encryption. This scheme shares a mysterious code-named "Blinding Factor" to peers (sender and receiver) in the first place. In straightforward terms, Pedersen's (PC) commitments use blinding factor rather than Public Address. Additionally, PC permits the encryption input & output of the transaction when Blinding Factor takes place.
As this commitment allows the transaction to be completed without the public address, the blind signature is known only to the sender and receiver. However, no third party can decipher the encoded information alone, other than the transaction participants. So when we use the Pedersen commitment formulation, we have something like this:
Formulation of CTs:
C(BF1 + D1) + C(BF2 + D2) = C(BF1 + BF2, D1 + D2)
Where BF is random data or blinding factor, D is transaction data. C(BF1 + D1) is direction of change. C(BF2 + D2) is destination address. C(BF1 + BF2, D1 + D2) is address of origin of the funds.Source
Furthermore, The Blinding factor is nothing but an automatically generated random hash revealed only to the participants in the data exchange, which guarantees that this hash is entirely anonymous and not traceable.
Q. How do you think Mimblewimble Protocol can be utilised on the Bitcoin Network to enable anonymity of transactions and improve Scalability?
Word Bitcoin, these days, there are not many individuals who have not caught wind of Bitcoin, and the people who have heard may not think about it. To be blunt, all we have come to think about cryptocurrency is Bitcoin due to its components, pros, cons. In the quest of moderating those cons, numerous developers assembled numerous crypto resources, blockchain and so forth. Yet, bitcoin has its limits. In this topic, we will only discuss privacy and scalability.
Mimblewimble protocol utilised in Bitcoin network to enable anonymity of transactions
At this point, when we check for anonymity on the Bitcoin blockchain, we can undoubtedly get all of the information like Sender's address, Receiver's address, time, amount transacted. And if you further open the address of either the sender or the recipient, you will see all the transaction history alongside the final balance of the sender/receiver.
I wouldn't prefer to show my balance to anybody, and in the Bitcoin blockchain, anybody can see my final balance that might attract blackmailers and hackers. So to settle this much transparency and so-called anonymity in the Bitcoin blockchain, I would suggest that side blockchain of Bitcoin can prove to be valuable where individuals who need privacy and scalability can join. On that side, bitcoin blockchain Mimblewimble protocol would be utilised in an accompanying manner:
=> By using Coinjoin: By using coinjoin, the transaction made by the sender can be bundled together and send so to anyone in the blockchain. However, the sender thinks about their transaction. For instance, there are three senders, A, B and C, and they want to send 10, 5 and 8 BTC, so Coinjoin will bundle all these transactions in a way that turns out to be highly challenging to track down a specific sender's address or transaction.
=> By using Elliptic curve cryptography: Each time, a new key can be generated with the help of Elliptic Curve Cryptography which will be used to sign the transaction. This transaction is entirely anonymous, as the key is generated logarithmically so that no third party can crack it. This makes transactions in the bitcoin network anonymous.
=> By using Cut-through: I would say that this element fascinated me the most. It fills the two needs of providing anonymity and scalability. To provide anonymity in the Bitcoin blockchain, the Cut-through feature can focus on only input and output and reflect only input and output in blockchain, giving anonymity to the transactions in between.
=> By using Confidential Transactions (CTs): By using CTs, It will be impossible to track down transactions or addresses in the Bitcoin network, and this will make it anonymous. Confidential Transactions uses a concept called Pedersen Commitment. This scheme shares a mysterious code-named "Blinding Factor" sender and receiver in the first place. In simple terms, Pedersen's (PC) commitments use blinding factor rather than Public Address. As this commitment allows the transaction to be completed without a public address, the blind signature is known only to the sender and receiver.
Mimblewimble protocol utilised in Bitcoin network to enable scalability
Scalability has ever been a problem in the Bitcoin blockchain, and the Bitcoin network has been trying to improve its scalability by creating a fork, lightning network and Segwit.
In the Mimblewimble protocol, there is a feature called Cut-through that can improve the scalability of the Bitcoin network. Cut-through removes the redundant transaction, and only necessary information gets stored in the block leading to improved scalability.
Bitcoin has stored all the data since its inception or generation of the genesis block, which can be avoided by using the Cut-through feature of the Mimblewimble protocol. Using Cut-through in the Bitcoin network can help reduce the Bitcoin network's size and less the computational resources required to maintain the Bitcoin network.
Q. State the Pros and Cons of the Mimblewimble protocol.
Pros :
Fundamentally, Mimblewimble Protocol is more functional than other blockchain protocols and differs in three ways, making it advanced from them.
(1) Anonymity: The Mimblewimble Protocol makes on-chain exchanges anonymous contrasted with bitcoin or other blockchain protocols. For Bitcoin, as we probably know, There is consistently a public address allocated to the sender and receiver, which can be traced to extract information from that transaction.
Yet, according to Mimblewimble's viewpoint, The exchange between two peers is mysterious. Just the individuals who are involved in the trade are known about this transaction. In this protocol, transactions are not recorded on-chain, and the transaction history cannot be traced.
(2) Scalability: The innovation of Mimblewimble Protocol offers further developed Scalability over the other Blockchain Protocols. But how? Bitcoin can be taken into consideration as the destiny of our financial system. In any case, But it has faced challenges with its scalability issues. With the Hash function, exchanges in the Bitcoin network interconnected after the Genesis Block, just as it increments on-chain activities. Besides, based on the old blockchain, it burns through additional time, energy, cost.
But in Mimblewimble Protocol, There is no address, and it acts as a side chain, so it does not even require a single node for confirmation. Therefore, The block size in Mimblewimble is much smaller than other Blockchains, as it does not record transactions on-chain, which improves scalability issues. This makes it fast and efficient. So that is why The Mimblewimble Protocol is more scalable over other Bitcoin networks & other Blockchains.
(3) Fungibility: As the Mimblewimble Protocol acts as a side chain, it often lacks address registration. Additionally, Referring to anonymity, this protocol does not reveal the origin of the coin, so it is always labelled positively. This one can exchange Coins for another unit without any risk of loss, making it more fungible than Bitcoin.
Cons :
Of course, Mimblewimble has gained a lot of attention & interest due to being first-class security since its inception. But it also has some drawbacks which are as follows.
(1) Mimblewimble protocol depends, for the most part, on joining two signatures to check which can't get hacked using any traditional PC. Since it will require some time to hack that system, using any quantum PC or PC that uses photons to figure will set aside considerably less effort to do this. Thus using quantum PC, there are helpless in the security field. In any case, the quantity of quantum PC is significantly less and is a long way past an ordinary person's reach.
(2) Any protocol that inclines toward protection over transparency has more transactions recorded in a block. Consequently, this leads to having a more drawn out Throughput. What's more, as Mimblewimble protocol does likewise, and along these lines, it is experiencing precisely the same thing.
Q. Discuss in detail at least a Crypto that uses the Mimblewimble protocol.
MimbleWimbleCoin
As its name demonstrates, MimbleWimbleCoin is a native cryptocurrency of the Mimblewimble Protocol based on the same protocol. With the components/features of MW Protocol, MimbleWimbleCoin empowers the more important network security, Privacy, Scalability and fungibility contrasted with the Bitcoin Network and Other Blockchain Protocols.
The idea of MimbleWimbleCoin was first presented in 2016. Yet, around then, this protocol was disregarded, as it was an innovation of that time. Be that as it may, later in November 2019, MimbleWimbleCoin Network dispatched its mainnet initially. From that point forward, it came according to everybody and acquired a ton of consideration and accomplishment. Furthermore, it was depicted as a fork of GRIN.
MWC Technology based on the C31, Proof of Work Consensus Algorithm with open source.
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Essentially, MimbleWimbleCoin is only a reformist implementation that can't be portrayed entirely at this point. Its attributes are as yet vague yet But something has been uncovered on which it needs to stick, which are as per the following:
- A smoother bend for more complex issues.
- Minimal, protected and clean implementation, and intend to adhere to it for eternity.
- Relatively fast block time: one minute.
- Follows the Mimblewimble protocol, which gives hidden volume and scaling benefits.
- A decent block compensation for them which diminishes after some time with weakening.
MimbleWimbleCoin Team's Mission:
It is accepted, Cryptocurrencies are the eventual fate of human existence. Indeed, It is valid. The makers of MWC thought of the same thing. Just, The mission of the MWC developer team was to create an unrivalled quality abundance that could coordinate every great in the market regarding money related attributes. And all its transactions also remain confidential. Consequently, All transactions at the base level use Greg Maxwell's Coin with his CTs and sign. Therefore, MWC is also described as Ghost Money.
Stats of MimbleWimbleCoin
| MimbleWimble Coin Value | $3.13 (as of 18/09/2021) |
|---|---|
| Rank on CMC | 639 |
| 24h low | $3.06 |
| 24h high | $3.37 |
| Market Cap. | $33,729,623 |
| Circulating Supply | 10,775,211.06 MWC |
| Max. Supply | 20,000,000 |
| Trading Volume(24h) | $140,347.61 |