In mid-2016, Tom Elvis Jedusor, a pseudonymous individual, introduced Mimblewimble (MW), a blockchain design with a unique way of structuring and storing transactions. This blockchain employs Proof of Work (PoW) and can potentially increase privacy and network scalability.
Although the core ideas were shared, the first Mimblewimble document left several unanswered questions. To address this, Andrew Poelstra, a researcher at Blockstream, studied and improved on the original concept. Poelstra's paper, entitled Mimblewimble, was published in October 2016.
Since then, several researchers and developers have been investigating the possibilities of the MW protocol. While some believe that implementing it on Bitcoin may be technically feasible, it could be challenging. Nonetheless, Poelstra and others believe that Mimblewimble can potentially enhance the Bitcoin network as a sidechain solution.
How Does Mimblewimble Work?
Mimblewimble is a blockchain design that deviates from the traditional transaction model, resulting in a more streamlined and faster blockchain. It achieves this by minimizing the blockchain's history, making it simpler to download, verify, and synchronize.
In a Mimblewimble blockchain, transactions appear as arbitrary data to outsiders since there are no reusable or identifiable addresses. Participants are the only ones who can see the transaction data.
In Mimblewimble, a block looks like a single transaction instead of several combined transactions. While blocks can be verified and confirmed, they do not provide any details about individual transactions. There is no way to link inputs to outputs.
For instance, Alice receives 5 MW coins from her mother and 5MW from her father and then sends all 10 to Bob. The transactions are confirmed, but their specifics are not public. Bob only knows that Alice transferred him 10 coins, but he cannot trace the coins' previous owners.
To transfer coins on a Mimblewimble blockchain, the sender and receiver must exchange verification information. However, they do not need to be online simultaneously.
Mimblewimble also uses a feature called cut-through that reduces block data by eliminating unnecessary transaction details. Rather than recording each input and output, the block only records one input-output pair.
Mimblewimble extends the concept of Confidential Transactions (CT), which Adam Back proposed in 2013 and Greg Maxwell and Pieter Wuille implemented. CT is a privacy tool that obscures the number of blockchain transfers.
Mimblewimble vs. Bitcoin
When comparing the Bitcoin and Mimblewimble blockchains, one major difference is how they store transaction data. While Bitcoin keeps a record of every transaction since the genesis block, Mimblewimble only stores essential information to maintain privacy and scalability.
This privacy is achieved by removing the Bitcoin scripting system, allowing anonymous transactions with no identifiable addresses. Mimblewimble also benefits from the cut-through feature, which reduces redundant transaction information and leads to smaller blockchains that require fewer computational resources.
Validators ensure that no unusual activity occurs and that the amount of coins in circulation is accurate. However, the reduced amount of data in a Mimblewimble blockchain means that verifying its public history transaction by transaction is impossible. Nonetheless, many researchers and developers are exploring the potential of Mimblewimble, with some suggesting it may even be implemented as a sidechain solution for Bitcoin.
One of the advantages of Mimblewimble is its ability to compress data, which reduces the overall size of the blockchain. This makes it faster and more efficient for nodes to verify transaction history and requires fewer resources. This reduced cost may also lead to a more diverse and decentralized community, reducing the centralization of mining that often occurs with PoW blockchains.
Mimblewimble also has scalability potential as a sidechain solution that can be attached to parent chains such as Bitcoin. Additionally, the MW design may improve the performance of payment channels, including those used by the Lightning Network.
Privacy is another significant advantage of Mimblewimble. Removing the Bitcoin scripting system and using Confidential Transactions gives users a high level of privacy, making transaction details challenging to trace. Furthermore, coins that are based on Mimblewimble blockchains are fungible, meaning every unit of a coin is interchangeable with any other unit of the same coin and indistinguishable from one another.
One limitation of the Mimblewimble protocol is the reduced transaction throughput caused by the use of Confidential Transactions, which results in larger data sizes and lower TPS rates than non-private systems. However, the compact size of MW somewhat compensates for this limitation, and the transaction throughput also depends on block size and frequency.
Another limitation of MW is its vulnerability to quantum computers, as the protocol relies on the simple properties of digital signatures. However, quantum computers are not yet mature and are still decades away. Cryptocurrencies using Mimblewimble are expected to find ways to prevent quantum attacks in the future, and some solutions, such as Switch Commitments, are already being tested.
The emergence of Mimblewimble represents a major advancement in blockchain technology. The protocol's cut-through feature makes MW networks more cost-effective and scalable. Additionally, Mimblewimble may be applied as a sidechain or payment channel solution to enhance privacy and scalability.
Several blockchain projects, including Litecoin, Grin, and Beam, already utilize the Mimblewimble design. While Grin is community-driven and focuses on a lightweight proof of concept of the MW protocol, Beam takes a more startup-oriented approach. These projects are technically different because they have distinct approaches to implementing the MW design.
The question of whether Mimblewimble can achieve widespread adoption and reliability remains unanswered. It is a young and promising technology, and potential use cases are still being studied. The future of Mimblewimble is unclear, but it is an exciting prospect.