Privacy and security have become two ends of a spectrum along which we are forced to make tradeoffs on a daily basis.
While the range of use cases for cryptocurrencies has vastly evolved since the launch of Bitcoin ten years ago, the underlying technology of elliptic-curve cryptography and public/private key combination that undergirds the blockchain has more or less remained unchanged. Every public blockchain fundamentally ensures that the transactions are legitimate and not being double spent by performing the following tasks:
1) the sum of outputs minus the sum of inputs, including the transaction fees, should be zero for every transaction.
2) The digital signature that is generated by the private key to ensure that the spender has the right to spend the coins he/she is spending.
Additional features such as privacy and smart contracts are layered on top these two verification steps to create blockchains for more specific use cases. Alternatives to blockchain technology such as DAG, Tangle, etc. do exist, but have so far failed to attract any significant developer mindshare or user adoption.
In 2016, a cyberphunk with the Harry Potter-inspired pseudonym ‘Tom Elvis Jedusor’ uploaded a post on the Bitcoin Chat forum, a key on-line ‘watering hole’ for early crypto aficionados. The post introduced a variation of the Bitcoin protocol called “MimbleWimble” that trimmed down the Bitcoin blockchain to make it easily more scalable and potentially more secure. Skipping blithely over a fair bit of technical minutiae, what is important to know here is that “MimbleWimble” is more easily scalable, and also offered more privacy
. MimbleWimble does not store the entire blockchain history and this makes it easy for nodes to synch with the blockchain without downloading the entire state of the ledger. Using Pedersen Commitments
, transaction details (sender’s and receiver’s addresses and transaction amounts) can be obfuscated easily without increasing the size of the transaction. MimbleWimble is therefore a lightweight version of the Bitcoin protocol with the two critical features of a compact blockchain size and concealed transactions.
Grin and Beam, both set to launch in the first half of 2019, are the first major implementations of MimbleWimble with each project having fundamentally different approaches. If Zcash and Monero were Gen 1 Privacy coins, Grin and Beam are Gen 2. Grin follows the true-blue cyberphunk playbook pioneered by Bitcoin and Monero, with a team of anonymous distributed developers. Beam mirrors the ZCash playbook with a more traditional setup including a foundation. These two projects have been eagerly awaited for a while now, with a number of crypto market participants extensively setting up investment vehicles to mine these currencies.
A comparison of these projects are as follows