On July 19, 2016, an anonymous blockchain developer working under the pseudonym Tom Elvis Jedusor posted the Mimblewimble white paper. Tom Elvis Jedusor is the original name of Voldemort from Harry Potter, and Mimblewimble is the tongue-tying curse from Harry Potter.
In the white paper, he said, “I call my creation Mimblewimble because it is used to prevent the blockchain from talking about all user’s [sic] information.”
Andrew Poelstra posted another Mimblewimble whitepaper in October 2016 which expanded upon the original whitepaper. An excellent video on Mimblewimble is here.
Bitcoin (BTC) nodes are required to download the entire history of the blockchain since the genesis block in 2009 and replay each transaction in order to verify the final chain state. This is not efficient since most outputs are destroyed in later transactions. Further, all Bitcoin transactions are traceable on the blockchain, which compromises anonymity.
Mimblewimble is a protocol that drastically improves scalability while making transactions anonymous. Transactions are combined across blocks so outputs that are created and then destroyed are not recorded. Nodes only need to verify where money went into the system, which would be the block rewards and the unspent transaction outputs.
One-way aggregate signatures (OWAS) is then used to merge transactions within blocks to obscure the transaction history. The concepts of encrypted transaction amounts and CoinJoin developed by Greg Maxwell are also included, in addition to transaction darkening which blinds transaction entries.
The result is that all parties in a transaction are combined into one multi-signature public key. The multi-signature can be used to verify transactions, and the existence of the multi-signature is proof that all parties involved signed it. Only the parties involved know the amount that was sent. There are no public addresses and no way to trace individual users. Mimblewimble uses binding factors to send money between users instead of public addresses, which is a shared secret that encrypts the transaction.
The First Mimblewimble Cryptocurrencies: Beam (BEAM) and Grin (GRIN)
Grin (GRIN) launched its testnet back in November 2017 but has just gone live on Jan. 15. Grin stands for Gringotts Wizarding Bank, another reference from Harry Potter. Grin (GRIN) has its own blockchain, and uses a unique proof of work (PoW) algorithm called Cuckoo cycle. Mining with Cuckoo cycle depends on memory bandwidth rather than processing power or GPU speed, which makes it far more energy efficient and also less prone to being taken over by ASIC mining.
Grin (GRIN) increases anonymity with Dandelion relay, which obscures the IP address from which inputs and outputs came.
The block reward is 60 Grin (GRIN), with a block time of one minute, and this block reward will not change. The idea is that inflation will decrease over time as the supply grows. Currently, there are 1.2 million Grin (GRIN) in circulation and each Grin (GRIN) costs $9, yielding a market cap of $10.8 million.
Beam (BEAM) is the first cryptocurrency that uses the Mimblewimble protocol and launched on January 3. Beam (BEAM) uses the Equihash proof of work (PoW) algorithm for mining, with a block time of one minute. Unlike Grin (GRIN), Beam (BEAM) will have a total supply of 263 million coins after mining is complete, with block rewards regularly decreasing from an initial 80 Beam (BEAM) per block.
The main difference between Beam (BEAM) and Grin (GRIN) is that Beam (BEAM) is operating like a startup, and 20 percent of all mined Beam (BEAM) goes to the dev team’s treasury. Grin (GRIN)’s supply is fully decentralized in comparison.
Beam (BEAM) currently has a value of $2.16 and a supply of 3 million coins, yielding a market cap of $6.48 million. Beam (BEAM) has rallied over 150 percent in the past week.
It is rare to see a truly new type of cryptocurrency launch, but that is exactly what has happened in January 2019 with the launch of the first Mimblewimble cryptocurrencies. Generally, cryptocurrencies with truly unique algorithms and protocols perform the best long term, so cryptocurrency enthusiasts and investors should keep their eye on Grin (GRIN) and Beam (BEAM).