Grin Money Explained #1 — Greater than Bitcoin? Myths around Mimblewimble and Grin Unlocked
Note: this is part of Grin Money Explained series by CryptoProfG
Many protocols were developed, or under development, ever since Bitcoin came around. The goal of those new protocols is simple — to enhance the performance of blockchains. Currently, one of the biggest challenges for many public blockchains is the compromised privacy level. Another popular discussion around Bitcoin performance is about its scalability which only completes 7 transactions per second.
Mimblewimble, a technology that’s named after a Harry Potter spell, has become a hot topic recently. It was mysteriously dropped in a Bitcoin research chat channel in 2016 by a person who calls himself “Tom Elvis Jedusor”, the French name of the evil Harry Potter character, Voldemort. Jedusor indicated that Mimblewimble has the potential to significantly uplift the privacy as well as the scalability of the Bitcoin network. Now, before questioning if it is the real magic or just a puff, let me explain what Mimblewimble is and why it can be.
Mimblewimble provides true anonymity
All money systems, from gold and cash, to cryptocurrencies, have to fulfill two requirements during transactions:
1. the amount received is equal to the amount sent;
2. the transaction is made from the actual sender’s account/address.
Bitcoin meets these requirements by disclosing three essential information involved in transactions in its system, namely, the sender’s address, the amount of coins sent and the receiver’s address. The Bitcoin system is absolutely transparent, but this means little privacy exists in this system. Mimblewimble, in comparison, prompts true anonymity by obfuscating transaction inputs and outputs, as well as eliminating public addresses. How does it achieve that?
Mimblewimble transaction is a derivation of confidential transactions, which allow senders to encrypt the amount of bitcoins they want to send using Blinding Factors. Senders can choose a random Blinding Factor that suitably encrypts the bitcoin amounts without affecting the input and output of a transaction. In a confidential transaction, only the sending and the receiving parties apprehend the amount of the transaction. The onlookers don’t know the exact transaction amount, whereas they can still validate the transaction by matching outputs with inputs — the numbers should be the same. As a result, confidential transactions preserve the integrity of the system and ensure no bitcoin is created out of nowhere.
What is a bit different for Mimblewimble is that , they require the recipient to select a range of Blinding Factors provided by the sender. The recipient can then use this blinding factor as a his proof of ownership and permission to spend the Bitcoins.
Mimblewimble achieves higher scalability
In addition, Mimblewimble transactions leverage CoinJoin, another piece of cryptographic innovation that join several payments into one transaction. It works as combining multiple payments from different senders into a single transaction and paying to different receivers. Therefore, it is hard for external parties to identify the relationship and details among different payments. CoinJoin has also significantly saved the block space by only requiring the storage of inputs, outputs and signature data without losing the relevancy of a blockchain — one can easily verify the transaction by subtracting the total inputs from the total outputs, and ensuring that the result is zero. To the contrary, Bitcoin transactions’ validity is checked by the whole blockchain and transaction history.
At this stage of my explanation, you can already understand how Mimblewimble improves scalability and privacy. First, they provide higher scalability because less transaction data is carried, and therefore more transactions can be included in a single block. Second, they enhance privacy protection through the elimination of public addresses and obfuscation of inputs and outputs. True anonymity, as opposed to pseudonymity, is achieved.
Is Mimblewimble greater?
Mimblewimble gets rid of traditional private and public keys/addresses by combining the merits of confidential transactions and CoinJoin. It also replaces the traditional signature per transaction with blinding factors proving ownership of the coins.
Mimblewimble miners combine individual transactions into one big “CT and CoinJoin” transaction. This is something really innovative in the current blockchains we know of, which I think it can be the magic for great things to happen. And when more and more transactions and users get involved in this system, it will make it harder and hard to tell the real relationship between the senders and receivers. Let’s stay tuned for the magic to make a change and provide real anonymity and privacy to their transactions.
While other projects may often compromise between privacy and scalability, this is not the case for Mimblewimble. What the protocol really amazes me is that old and new transaction data can be cancelled out against each other, which means new nodes don’t need to sync to the whole transaction history like a typical blockchain. This has effectively lighten the whole blockchain system.
Is Mimblewimble greater than Bitcoin? I don’t have a definite answer but it does uplift the level in terms of privacy and scalability. Let’s give it more time for this magic to produce some great outcome.
What is Grin?
Grin is a promising privacy-focused cryptocurrency, it is highly scalable and possesses strong privacy features which make it cash-like in the digital world by enabling global peer-to-peer transfers. Grin’s design and technology promises to make transactions confidential, untraceable and secure on an efficiently secured decentralized mining network. It is lightweight, immutable, and fungible as a digital money. It’s value stems above all from these properties and the founders wanted to design this cypherpunk protocol to be the best version of cash that provides a new privacy-enhanced alternative to bitcoin, which is much to the liking of many bitcoin and monero developers, maximalists, cypherpunks and those who care about data privacy. It is the first mimblewimble protocol project (the first to launch on mainnet was Beam recently, a project created by a private company — we’ll compare them in a future post). Grin’s long run goal is to become a practical, privacy-preserving and censorship-resistant digital currency that is actively used and spent.
Here is a list of properties of Grin (Source: bitcointalk forum):
- Electronic transactions for all, without censorship or restrictions: Grin empowers anyone to transact or save modern money without the fear of external control or oppression. Grin is designed for the decades to come, not just tomorrow. Grin wants to be usable by everyone, regardless of borders, culture, skills or access.
- Private: Grin has no amounts and no addresses. Transactions can be trivially aggregated. To hide where a newly created transaction comes from, it gets relayed privately (a “random walk”) among peers before it is publicly announced.
- Scalable: MimbleWimble leverages cryptography to allow most of the past transaction data to be removed. This guarantees Grin won’t crumble under its own weight in the long term.
- Open: Grin is developed openly, by developers distributed all over the world. It’s not controlled by any company, foundation or individual. The coin distribution is designed to be as fair (but not gratis) as is known to be possible.