Using a new technology protocol anonymously published in 2016 called ‘Mimblewimble,’ a group of projects is proposing to improve one of the biggest issues with cryptocurrencies: privacy – regarded as one of the hottest topics in blockchain coming up in 2019.
Since the invention of Bitcoin, privacy and anonymity have been two of the main attractions for holding and transacting with the digital currency. But the reality is that transactions using bitcoin are not private at all. Bitcoin is actually only pseudonymous, with the ability to deanonymize users possible through data leaks and subsequent mapping of their public addresses on the blockchain to specific transactions using blockchain forensics.
Transaction privacy on public blockchain networks is a feature that is required by institutions, high net-worth individuals, and enterprises. While projects such as Zcash and Monero have introduced strong privacy features, many of their transactions have been shown to not actually be private. Both Monero and Zcash are not very scalable. Zcash’s blockchain requires is about 9 times more space per transaction than Bitcoin’s. While Monero’s recent update has greatly improved the coin’s scalability, its blockchain still requires 5 times more space per transaction than Bitcoin’s Just to illustrate, that means that when Zcash and Monero reach Bitcoin’s level of usage, their blockchains size will be around 2 Terabytes and 1 Terabyte respectively, making it very hard to run a full node on a consumer-grade laptop or desktop PC.
Similar to the anonymous posting of the Bitcoin whitepaper by Satoshi Nakamoto in 2008, “Tom Elvis Jedusor” published a paper for a new privacy-preserving protocol in 2016 named Mimblewimble – a Harry Potter reference. Mimblewimble elegantly addresses both privacy and scalability and has remained a well-kept secret until recent implementations of the protocol initially with Grin and followed by a different interpretation with BEAM.
For enterprises and individuals alike, BEAM presents a unique proposition as a decentralized digital currency with the following features:
- All transactions are confidential by default
- No addresses or other private information are stored on the blockchain
- Superior scalability due to compact blockchain size
- Capped emission
- Opt-in Auditability
- Issuance of Confidential Assets
The issue of privacy in blockchains has been regarded as one of the biggest topics heading into 2019 as Bitcoin and other public blockchains have been shown time and again that their transactions are not actually private – which defeats much of the original tenets that led to the rise of digital currencies.
In December, the BEAM project will be officially launching their mainnet and the only way to acquire coins will be through the process of mining transactions on their platform, which can be done with a modern desktop computer.