Privacy-focused cryptocurrency Beam is now live. The much-anticipated launch of the first Mimblewimble based coin was successful, with substantial hash power being used to secure it from the very start.
For the unaware, Mimblewimble is a protocol proposed anonymously by a person with the moniker of “Tom Elvis Jedusor” (the real name of Lord Voldemort in the French translation of the Harry Potter series). It provides a multitude of advantages to older blockchains, which we’ll cover briefly.
First and foremost, it provides exceptional fungibility. This is achieved through a combination of confidential transactions and CoinJoin.
Confidential transactions make use of homomorphic encryption. In short, homomorphic encryption allows you to perform operations on the data in its encrypted state, such that when the data is decrypted, the result is the same as if the operations were performed on its unencrypted form.
This cryptographic trick, also known as “Pedersen commitment” means that the sum of money that’s being sent can remain a secret to the external observer, yet miners can verify that no double spends are being attempted.
In addition to confidential transactions, the protocol also proposes the use of Greg Maxwell’s CoinJoin system. CoinJoin allows “joining” a number of transactions into one, leaving only the list of senders and the list of receivers public. This obfuscates individual transactions, and as put in the Mimblewimble whitepaper, it leads to “confusing the transaction graph“.
The paper also cites Nicolas van Saberhagen – yet another anonymous person hiding behind a pseudonym – whose CryptoNote proposal shows how to further obfuscate the transaction entries, as well as Shen Noether – who first discovered the benefits of combining the upper-mentioned novel technologies.
In summary, it can be argued that the Mimblewimble protocol does pave the way for the next generation of privacy coins, and as its first real implementation, Beam is a hidden gem in a sea of low-quality bitcoin spinoffs.
There’s few who would disagree that scaling is the biggest problem that cryptocurrencies have met so far, and it is also the root of the biggest scandals, division and letdowns in the sphere.
As the general cryptocurrency community has failed to reach an agreement on a scaling direction. One positive, however, is the multitude of different competing ideas that have emerged. In addition to exciting second-layer solutions, block thinners, sharding and many other tricks developers have used to allow for greater transaction throughput, mimblewimble is another innovation that can prove incredibly promising.
And while the intricate details of the innovation can become incredibly complicated for the casual reader, the summarised solution is exceptionally simple – all the Mimblewimble “blocks” in a blockchain are just one giant CoinJoin transaction each. Miners don’t need to remember all transactions that ever happened, instead they can just keep in memory the equivalent of Bitcoin’s utxo (unspent transaction output) set. Transaction signatures, addresses, public and private keys in their familiar form are all gone, as is the bitcoin script.
In theory all of this greatly lowers the threshold to becoming a Mimblewimble read-only node. However full benchmarks comparing performance on Beam with traditional blockchains are yet to be performed. And as far as miners are concerned, there is the suspicion that the additional computations required for all the anonymity features might require greater resources than bitcoin’s simpler signature verification.
The mainnet launch for Beam was a success, as significant hashing power is being invested for its security. At the time of writing, the network hashrate has reached 1.68 MSol/second despite the limited ability of miners to sell the currency. While selfless mining for the sake of security is always present in enthusiastic communities, the solid start also shows that miners have enough faith in Beam’s long term success to use their resources without liquidating crypto to pay for electricity bills.
The enthusiasm is also fuelled by the choice of Equihash as a mining algorithm. It is generally considered a GPU and CPU-friendly algorithm, and rumours of ASIC chips have yet to be proven.
Still, the team behind Beam does expect that at some point ASIC miners will be present on the network, further enhancing its security – while early adopters will still be happy to have the privilege of acquiring the currency with their home computers.
By launching as early as January 3rd, Beam has beaten Grin in becoming the first mimblewimble coin. Grin’s launch will come less than two weeks later – on January 15th.
This gives Beam a marketing advantage over its competitor which was arguably the one that caused more excitement, mostly due to its lack of founders reward.
There is a multitude of differences between Beam and Grin – Beam does allow users to “switch off” the anonymity feature and to make transactions auditable, they’re written in different programming languages, there’s technical differences in the mempool representations, Beam makes use of Radix-hash trees unlike Grin – and the list goes on and on.
The largest difference, however, is that Grin is considered the philosophically pure cryptocurrency – community driven and funded, not premined and with no taxation on mining. In contrast, 20% of the Beam which gets mined during the first five years will be controlled by a company and reinvested into development, infrastructure, exchange listings and adoption.
While the allegations of Beam being a scam have been proven to be unfounded, it does have a drastically different model than Grin which is enough to discourage many from mining and using the coin. It remains to be seen whether the benefits outweigh the shortcomings.
In Beam’s defence the founders reward distribution scheme has not prevented Dash from becoming a success. In fact it is largely considered a major reason why the cryptocurrency, formerly branded as Darkcoin, has remained in the top 10 for so long.
Overall, there is place in the market for both Grin and Beam, and plenty of reasons for early adopters to be optimistic.