Trust-less Bitcoin needs more privacy: spell MimbleWimble and the magic happens!

The privacy issue, and the need for complete anonymity in Bitcoin transactions is a problem felt by the whole community of active users and not only.

The “be-your-own-bank” paradigm also shifts the problem of safe-keeping one’s own assets onto oneself. Banks are widely equipped for custody with caveaux, alarm systems, guards, control systems, all of which protect them as much as possible from theft and robbery. Instead, if a person uses cryptocurrencies, he/she also assumes the risk to keep them safe. Many will think this is not a real problem, since, given that cryptocurrencies are “virtual”, there must be little to nothing to keep safe. Really, there is much that must be securely protected: “the secret” that allows us to use such cryptocurrencies.  It can be a password, the place where we store a cold wallet, or maybe our own mind, where we have memorized the access passwords. The difference with the traditional currencies here is striking. In fact, if an a malevolent third-party finds out the “secret”, it can immediately manage to set up a transaction to another address, and at that point everything is lost in just a few minutes.

Returning to Bitcoin in particular, even if it has the reputation of being an anonymous means of payment, transactions are public, permanently registered on the blockchain, making it less difficult to trace a given address and identify the origin and direction of each transaction.

To solve this problem of privacy, additional methods, not directly included in the same protocol of anonymity of Bitcoin, have been developed and are still being developed. A good example of that is MimbleWimble.

MimbleWimble is natively private. There are no Schnorr ring signatures or Zero-Knowledge-Proofs on top of a transparent bitcoin-like transaction. In a MimbleWimble transaction, all values ??are completely obscured. There are no reusable or identifiable addresses. Each transaction looks the same to an external user.

The only two properties that need to be verified in a MimbleWimble transaction are that no new currency is created and that the parties involved in the transaction have demonstrated ownership of their cryptographic keys. To verify that no new currency is created, it is necessary to demonstrate that the algebraic sum of the outgoes and of the incomings is equal to zero. To verify the ownership of the keys, however, the negotiating parties must legitimately show the public one and prove that the corresponding private keys exist in order to authorize the transaction. MimbleWimble uses a blinding element to obscure all values ??- transaction amounts and cryptographic keys – which is based on multiplying and adding secret factors to the real, concealed values.

By hiding all the values, MimbleWimble offers privacy and allows the user to choose what and what not to reveal to the rest of the network. This right to privacy gives the possibility to choose which parts of the domain can be accessed by others, and to control the measure, way and timing of use of those parts that we choose to reveal.

Furthermore, if the Bitcoin mining community is now highly centralized, the fact that MimbleWimble is ASIC-resistant will democratize its access. In fact, while the requirement to own a highly specialized and expensive chip – the ASIC – has made the role of the Bitcoin miner almost elitist, MimbleWimble offers the opportunity to participate in the miners’ network to anyone owning a simple GPU chip, widely available at local tech stores or online for quite affordable prices.

MimbleWimble is also concerned with safeguarding equal access to the network over time, addressing the central issue in the block-size Bitcoin debate, which consists of the fact that there are more transactions than those that can actually be placed in a block of 1Mb. As long as there is a restrictive size limit, there will also be an obvious capacity problem, as well as an issue of scalability. The volume of transactions is constantly increasing, and it is therefore necessary to rationalize the volume of each block.

Through “coinjoin” operations, MimbleWimble is able to spot if an outgo exactly equals an incoming, and, having no more reason to register those transactions because they cancel each other out, elides them from the ledger. In such a way, the amount of data to store and process is relevantly reduced. The only data that the nodes must store are the unspent outgoes and the block headers. This, in turn, increases privacy, as transaction data is kept to the minimum, and allows for fungibility as well.

If the problems of privacy and scalability will be solved, MimbleWimble could be the Patronus spell for Bitcoin, perhaps configuring itself as a complementary side chain and becoming a digital, fungible, universal currency that could allow access for everyone to the world of crypto-assets.

By Eloisa Marchesoni.

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