Mimblewimble Protocol - Crypto Academy / S4W2 - Homework Post for @fredquantum

Hello friends and welcome to my assignment task by professor @fredquantum, in this assignment I will provide a detailed assessment of Mimblewimble Protocol, I hope you enjoy and learn from my assignment.

Question (1)

In detail, explain your understanding of the Mimblewimble protocol.

Mimblewimble is a curse word used in the harry potter series to tongue-tie spell users. It was founded in 2016 by a group of people using the code name Tom Elvis Jedusor which is the name given to the antagonist in the French version of the Harry Potter known as Lord Voldemort.

Mimblewimble is a POW mechanism that enhances the privacy and scalability of a blockchain network. The Mimblewimble uses what is called the Confidential Transaction Technology, which entails a Blinding Factor encryption which is used by the sender to hide the amount or value of the transaction by altering it, but this will not affect the actual value of the output or input of the transaction. The receiver is then faced with a range of Blinding factors offered by the sender to choose from, the Blinding Factor enables the recipient to spend the asset (coin) because it serves as a confirmation for the transaction.

Also, keys and addresses are hidden to the public eye by merging the two addresses into one thereby eliminating the third party from identifying the Origin of the transaction. The Mimblewimble protocol cuts out data or redundant transactions information from a block without altering the integrity of that network thereby limiting details of that transaction to only the parties involved.

The Mimblwimble was created to solve the privacy and scalability issue that faces the Bitcoin Blockchain.

Question (2)

Discuss in detail how the Mimblewimble blockchain protocol works.

• Mimblewimble & Confidential Transactions

The Mimblelewime uses the Confidential Transaction protocol. The Confidential Transaction protocol uses the Blinding Factor Process to make transactions private, the sender encrypts the values of the amount of coin that is to be transferred, the encrypted value is then chosen by the receiver at random. These values are only known by the parties involved in the transaction, thereby keeping the transaction details or data hidden to third parties.

• Mimblewimble & CoinJoin

The Coinjoin is a Cryptographic Protocol that was developed by Gregory Maxwell, it is a process whereby a group of people agree to merge their transactions into one, this way it is impossible to know the exact origin of each of the transactions or its receiver.

• Cut-through

The Mimblewimble uses the Cut-through Feature, which entails the reduction of Block size which contains inputs and outputs by pairing old transaction output to new block Inputs. The transactions are then verified by the Kernel Offset which is a binding protocol that contains all the details of the transaction, thereby ensuring that the security of the network is in check.

Question (3)

Discuss in detail your understanding of Confidential Transactions (CTs).

Confidential Transaction is was first introduced by Adam Back to solve the problem of privacy on the Bitcoin Blockchain. The Protocol uses what is called the Blinding Factor which enables a bitcoin sender with the ability to encrypt the amount of Bitcoin they wish to transfer. The encryption is represented as an altered value of the original Bitcoin amount but the actual value is not affected by this encryption.

The parties involved in these transactions are aware of the original value of the Bitcoin amount but these values are hidden to onlookers. The transactions are then confirmed through the Pedersen commitment scheme which ensures a commitment confirmation to the Binding Factor this helps to prevent double-spending and loss of data.

Question (4)

How do you think Mimblewimble Protocol can be utilized on the Bitcoin Network to enable anonymity of transactions and improve scalability?

The Mimblewimble protocol can act as a side chain or as a Softfork. By integrating the Mimblewimble protocol into Bitcoin Blockchain, users will be able to make transactions without worrying about their transaction details been seen by onlookers due to the use of the Confidential Transaction Technology and the use of the Coinjion Protocols.

The Bitcoin scalability issues with the speed of transactions have already been solved by the layer 2 payment protocol called the lightning network which enhances the speed of transaction, but the Mimblewimble protocol can only help improve that with the Cut-through protocol which will help reduce the Block size of Data during transaction and validation, thereby optimizing the scalability of the network.

source

The image above shows how the Mimblewimble blocks will look like to onlookers (third parties)

source

The above image shows no trace of the origin of the transaction and there is limited information about the transaction to outsiders.

Question (5)

State the Pros and Cons of the Mimblewimble protocol

Pros of the Mimblewimble protocol

• Anonymity/Privacy

Bitcoin user’s addresses can be traced due to them being public to third parties. The Mimblewimble protocol however eliminates the third parties access to these transaction historical data/information by using the CT and Coinjoin protocols to hide or protect the information of the parties involved in the transaction.

• Fungibility

The fungibility of coins/currencies transferred within the Mimblewimble network becomes much high due to its anonymity. In cases where these currencies have been used to conduct illegal transactions platforms might decide not to accept them, but because they cannot be detected, they are thereby made more fungible.

• Scalability

Block SIze is a major issue that has pledged the Bitcoin Blockchain because of its large block size, this caused the famous hard fork in 2017 that split the Bitcoin Blockchain into two, but this is not the case for the Mimblewimble protocol which has a much smaller Block size due to the use of Coinjoin and Cut-through protocols to reduce the block size, thereby making the network much scalable.

Cons of the Mimblewimble protocol

• Increased Transaction Processing

The Transaction of cash through the network will take longer periods due to the COnfidential Transaction Protocol which involves the use of encryption, this makes the validation of these transactions take longer periods.

• vulnerability to quantum computing

With the use of digital signatures in the confidential Transaction protocol, the system becomes endangered by attacks by Quantum Computing.

• limitations to the only transaction of currencies

The Mimblewimble protocol is set to function only on currencies or coins but it does not work on other forms of data of asset exchange or transaction.

Question (6)

Discuss in detail at least a Crypto that uses the Mimblewimble protocol.

Beam

The Beam is a cryptocurrency that was built based on the Mimblewimble protocols and uses The proof of work Mechanism. This means that users of this cryptocurrency are safe to know that their transactions are made private. The address of transactions executed on the beam Blockchain is kept secret from third parties, also the parties involved in the transactions have total control over their transaction data.

source

The Beam system was built and released in March 2018, but its main net was released in January 2019 by its founders which included Alexander Zaidelson, Alex Romanov, and Amir Aaronson.

coinmarketcap

Above is an image that shows the Current price, Circulating supply, and Market price of the Beam cryptocurrency which is at $0.6838, 97,017,320.00 BEAM, and $66,345,013 respectively. But the coin was created with a total supply of 262,800,000 tokens.

coinmarketcap

The image above illustrates the price action of the Beam CryptoCurrency which started trading in January 2019 with a price range of about $0.7. But since its launch to the market the beam made a huge increase at the early stages but since has been on a huge decline.

Conclusion

The Mimblewimble protocol is a great project for crypto developers to adopt its protocol because of its advantages which includes Anonymity, Fundibility and Scalability. But there needs to be a review of its protocol so that improvements can be made on the Blockchain to correct its Con's which include its Transaction processing period and its vulnerability to attacks by Quantum Computing.

Thank you Professor @fredquantum for the amazing lecture.