Mimblewimble Has Now Released Two Projects - But What Is It?

Colin Muller

Yesterday, January 15, marked the launch of the second publically available implementation of the mysterious Mimblewimble protocol, the Grin blockchain (the first one being Beam). The new blockchain is enough to get some crypto OGs like Andreas Antonopoulos to smile, because the new-ish protocol’s origins and development share a similar mystique with the Bitcoin protocol. But what is it, and what makes it special?

Mimblewimble - Name, Origin, Function

Firstly, it's important to note the origin of the unusual nae. Mimblewimble and everything attached to it are named after things and characters in the Harry Potter universe. And in that universe, “mimblewimble” is the name of a spell, also known as the “Tongue-Tying Curse.” The spell silences its victim from talking about a specific subject - and this name underlines the central function of the Mimblewimble protocol: Privacy.

Mimblewimble was given to the world in August 2016, in a Bitcoin developers’ IRC chatroom, quite out of nowhere. An anonymous user, Tom Elvis Jedusor (the real name of Voldemort in the French translation of the Harry Potter series), dropped this barebones whitepaper into the chat, and left. Bitcoin developer Andrew Poelstra then polished that text file into this pdf.

Before a (very) basic overview of how the protocol works, let us just start with this: Perhaps the most shocking thing to realize when first getting used to Mimblewimble, if one has been lingering in the blockchain space for any length of time, is that the protocol does not use public addresses.

Unlike most all blockchains we have become accustomed to, which make use of a public address matched to a private key, users of a Mimblewimble blockchain posses only a private key - no address is paired to it, which can receive funds at any time from anywhere.

How Is This Possible?

Mimblewimble in fact uses a largely different method of computation than Bitcoin. This method is inherently private, and inherently more space efficient than other privacy coins like Monero, Dash, and ZCash (although it must be said that Monero's recent upgrade to Beryllium Bullet has reduced that blockchain's output size quite a bit.)

As explained in this Beam Medium post, Mimblewimble - unlike Bitcoin - does not broadcast amounts and public addresses to a completely public network. Both of those publically broadcasted pieces of information make Bitcoin not actually very private at all. And Mimblewimble, as we said, has no public addresses to speak of.

Instead, on a Mimblewimble chain, transactions are accomplished by directly initiating a secure peer-to-peer transaction between two parties.

The two parties do some math using three pieces of information: Each of their private keys, and the amount being sent/received. The figure derived from that math acts as a hash of the transaction.

The hash of an individual transaction is then multiplied with other transactions’ hashes to produce another hash - with the result that all transactions in a Mimblewimble block are stored in a single hash. This saves Mimblewimble chains an enormous amount of space.

To go deeper into the protocol is beyond the scope of this article, but we have enough here to understand why Mimblewimble is a big deal. It completes Bitcoin-style functions (i.e., money) without any addresses, without any publically expressed quantities, using far less space, and with extremely robust anonymity and privacy that is not only on by default, but cannot be turned off. (More technical information can be found here, here, here, here, here, and here, for starters.)

One of the downsides of this protocol is that, because of its barebones quality of just doing one thing very well (again, money), it has no extra functions in the style of Bitcoin (many have envisioned more functions built onto Bitcoin's blockchain, especially when the cryptocurrency was younger). Bitcoin has scripting, which allows for things like atomic swaps and the lightning network, and it remains to be seen if developers can discover a way to add more functionality to Mimblewimble.

With two full implementations of Mimblewimble now already released - albeit not without hiccups already - the new protocol is just getting exciting.

It 'Makes Little Sense' to Add Altcoins to Bitcoin Portfolio, Prominent Developer Claims

Prominent Bitcoin (BTC) developer Jimmy Song has argued that diversifying a cryptoasset portfolio “makes little sense.”

More specifically, Song believes adding altcoins to an investment portfolio that has already allocated a certain percentage to Bitcoin will not improve the chances of receiving a higher return on invested capital.

Asset Diversification “Makes Sense” For Traditional Investment Portfolios

As Song explained, usually investors seek to diversify their investments in order to statistically reduce the risk of “permanent loss” and reduce the negative effects of volatility.

Acknowledging that asset diversification “makes sense” for more traditional investments such as acquiring shares of common stock in listed companies (as these are based on fairly safe assumptions and are regulated in a more consistent manner), Song wrote:

The reality of a cryptocurrency [and related investments] is in the code which, unfortunately, is very dense, hard to read and impossible to understand for a large [number] of people.

The Bitcoin developer explained that cryptocurrencies exist in a “digital realm” which means that the code and the network on which they are built is their “reality.”

Although the “underlying reality” of cryptocurrencies can be analyzed, Song believes it’s not practical “even for experienced developer” to fully comprehend and determine the legitimacy of a cryptocurrency platform in a reasonable amount of time. This, as the computer code used to develop a cryptocurrency might be too complex for most people to fully understand.

Song also mentioned that in most cases there’s “an abundance of marketing material” about various cryptocurrency projects. According to Song, marketing strategies for cryptocurrencies involve writing fancy whitepapers “that purport to show the details of the actual system, but are not rigorously defined like code is.”

Promoting “Marketing Stories” Is “Cheaper And Easier”

Although this documentation is more “understandable”, it is usually released before the actual product (the cryptocurrency) is created, Song noted. He also revealed that the “difficulty and/or expense” of accurately determining the legitimacy and usefulness of cryptocurrencies often leads to people promoting the “marketing story” as a “shortcut.” This, as it’s “cheaper and easier”, Song claims.

Song further explained that the marketing strategies related to traditional stocks “cannot diverge much without … serious penalties.” However, in cryptocurrency, Song wrote that there is “no enforcement mechanism” which would require the “reality to conform” to regulatory guidelines or some other objective evaluation criteria.

Instead, Song thinks there are “incentives to over-promise on the story and under-deliver on the reality.”

More Than 500 Active Bitcoin (BTC) Developers

Meanwhile, Song argued that investing in Bitcoin (BTC) makes sense because it has been “pored over technically by thousands, if not tens of thousands of people over the years.” Moreover, the developer noted that because Bitcoin is the very first cryptocurrency, its codebase has been carefully studied and scrutinized by a large number of software architects throughout the world.

Notably, Song revealed there are currently over 500 contributors that are involved in the ongoing development of the Bitcoin protocol. This makes Bitcoin the “largest open-source cryptocurrency project”, Song added.