BEAM: The New Privacy Cryptocurrency Implemented with The MimbleMimble Protocol
With the birth of Bitcoin, the world finally had the hope of a digitally enabled financial system that will serve as an alternative to the institutional banking system, and the decentralized nature of bitcoin will take the power off the hands of institutions and the government agencies, and put it back in the hands of the people. And it did, for a while, with Bitcoin, all transactions are stored in a public database called the “blockchain” and the details of the transactions cryptographically encrypted. But with the advancement of technology, and people started understanding the blockchain technology more and more, talented individuals found ways around deciphering bitcoin's encryption, sooner or later more systematic ways were unravelled on how to track bitcoin transactions.
No doubt, Bitcoin is still the leading digital cryptocurrency out there, in fact, the value of a coin alone should tell a story, but the anonymity of the transactions that go on the network is clearly an illusion, as there is none. Traditionally, tracking these transactions are meant to be difficult, but as mentioned earlier, with the advancement of technology, and other information like IP addresses, transaction addresses etc; one way or another, the transaction can still be found, and all the parties involved, can be identified.
Some time ago, read an article about the activities surrounding a bitcoin wallet that is being suspected to be owned and controlled by a criminal organization with holdings worth $1 billion. The wallet which was reported to have been dormant for over four years recently became active and started transferring bitcoin to different addresses, these addresses were all tracked and successfully identified. The balance of the bitcoin wallet in question is known, and the amount of each transaction, as well as the wallet address the funds, are being wired to are all well known.
In line with this activity, not everyone will like their account balance and transaction history and information to be publicly available. Especially, Whales and corporate giants won’t appreciate having sensitive information available to the public eye. Even on the Mas-chains like Steemit, Whaleshares, despite the many pros of having a decentralized blogging platform, one of the major cons that users are not too excited about is the open wallets, that everyone can access the account balance information of users on the platform, and this makes the platform less private. This makes bitcoin less anonymous than the traditional banking system, who won’t reveal account details as well as transaction history to the public except to the authorities.
Over the years, since the emergence of the blockchain technology, there has been several projects that have tried to solve this financial privacy problem, some have not truly been decentralized, while the others were too technical and computationally heavy, making such projects unscalable and unfit for mass adoption.
Financial privacy is a fundamental human right, and it is on this premise that BEAM was born.
Here Comes The BEAM!
Earlier, when I mentioned that there have been other projects that tried to solve the financial privacy problem and failed due to several reasons such as; the lack of scalability of their product due to the massive computationally mass of the network, or not truly being decentralized. Now, BEAM is the project that successfully solved all the right problems, by creating a decentralized currency, whose privacy is airtight, that is scalable and fungible as well. BEAM is a completely anonymous value storage currency, that is truly scalable, and offers confidential transactions. The BEAM framework is marked by its confidentiality, where the information of all transactions and all the participants involved are securely stored on the blockchain.
BEAM is unique in every sense as it confers private transfer of assets in a peer to peer fashion. The transactions are private by default, and the entire transaction history is not necessarily stored publicly for blockchain validation. This minimalistic framework reduces the size of the blockchain hereby optimizing scalability. The success of bitcoin has created a whole new market entirely, constant technological innovation and advancement are needed for the cryptocurrency space to remain relevant. One of bitcoin’s flaws among other things is the issue of its transaction privacy which has been a thing of concern for many parties. And this flaw is what BEAM is set work upon, with a platform that gives users total control over their transactional data, giving them the option to either remain anonymous or reveal their identity.
Gives users total control over privacy - BEAM users get to decide what information will be accessible, and to what individuals will this information be available to. Hence, complete control of users information within the boundaries of the law
Addresses are not stored on the blockchain, details of all parties involved in a transaction are never stored on the blockchain
Limited discharge with the use of periodic dichotomy splitting the total amount of coins 210 million (tentative supply)
BEAM enables various transactions, such as time locked transactions, escrow, atomic swaps and many more
Value of transactions are completely concealed for the sake of user’s privacy
The BEAM platform is built from scratch by a team of professional developers
With fewer transaction details per transaction, thereby making transaction confirmation faster, this makes the blockchain leaner and the whole system efficient and ready for scaling
Existing Challenges with Privacy
Little to no Anonymity - Bitcoin transactions were initially thought to be anonymous, the generation of random pairs of keys (private and public) and the public part is used to create an address that is meant to be used to carry out transactions, people were confident that this system won’t reveal their true identity. Unfortunately, using great analysis tools, to track these transactions, and the identity of the parties involved can be revealed. With the use of blockchain analysis, data shows that data always leak which may be as a result of OTC transactions, merchants, from exchanges, or by the random collection of blockchain data. And once the information is gotten, users can easily get deanonymized, and since information of all transactions are permanently stored on the open ledger of the blockchain, once an individual’s identity is known, all transaction from that user, both past and future, as well as balances, can be known
Fungibility - This is when an asset or goods can be interchanged with other goods and asset of the same identity. it one of the most important factors in general acceptability of money. So in other words, assets or currencies should not be distinguishable from each other, they should all be the same regardless of the source of how the currency was acquired; that is when a currency is said to be fungible. Bitcoin on the other is not fungible because they will be able to track down all your previous transactions, as well as the sources of your bitcoin. For example, if a certain amount of bitcoin was used to purchase firearms illegally, and somehow that bitcoin ends up in your wallet. If the authorities were to carry out a check on your wallet and they trace the bitcoin in your wallet to that illegal firearms deal, you could possibly be prosecuted for a crime you didn’t commit, and your coins and other digital assets could be seized due to civil forfeiture laws
Despite the poor privacy nature of the blockchain, files and data are still quite bulky and computationally heavy. This makes the system ineffective and difficult to scale when global demand grows
Cryptocurrency may somewhat be anonymous, but as explained earlier, the real identity of wallet holders can be sniffed out with a proper analysis
The Mimblewimble Based Solution - BEAM
Mimblewimble is a blockchain scaling proposal that helps to minimize blockchain size, while also offering private confidential transactions. Mimblewimble (which is a reference to a tongue-tying spell from the Harry Potter series) tries to enable confidential transactions without obstructing or blocking the network. The BEAM network is being built from scratch in C++ based on Mimblewimble because of its unique abilities to enable scalable and confidential transactions.
So, the development of the BEAM network with Mimblewimble at its core, the BEAM system will be ready for mass adoption, one with utmost privacy because there will be no public addresses in the system, it will just be two individuals having a peer-to-peer transaction, hence a completely confidential transaction.
Mimblewimble is a security protocol published sometime in July 19th 2016 by an anonymous author by the name Tom Elvis Jedusor. Tom Elvis Jedusor interestingly is the French version of Voldemort a character in the fictional movie Harry Potter, remember, Mimblewimble is a tongue tying spell in the same Harry Potter, the author and creator of the Mimblewimble platform, is such a strong Harry Potter fan.
In a nutshell, Mimblewimble is a privacy coin that maintains the security of all the users involved. It uses a lot of complex maths as well as cryptography to achieve this. The system builds upon two concepts that were originally proposed by Greg Maxwell, and they are:
Confidential Transactions: This was invented by Gregory Maxwell, and it is when a two individuals want to enter a business transaction with each other, a confidential transaction is utilized. The confidential transaction uses a binding factor which encrypts all the outputs and inputs that are part of the transaction. This is what makes Mimblewimble a privacy coin because it secures the details of the users involved, while also making the transaction light. The validation process is the same as that of bitcoin, as it ensures that money isn't minted out of thin air.
Mimblewimble scans through for inputs that have been signed by the owners of that input, and at the end of the transaction, you will be cryptographically notified that no money was printed out of thin air, and all inputs and outputs added up to zero. This is a lot lighter than keeping track of all the inputs and outputs that ever existed in the network, and storing them somewhere like bitcoin. In bitcoin, every validating node has to download the entire history that is over 100 gigabyte in space, this is in order to validate the entire blockchain. This translate to a heavy transaction data in the blockchain, when relating to how these inputs and outputs are moving around.
In Mimblewimble, everything is peer-to-peer with the users, and that translate to a highly scalable solution.
Transaction Cut: A block which is a large list of transactions, that individually possesses a list of inputs and outputs, this means that a block is seen as a large transaction, which enables us to “cut through” hence, it is a convergence of all outputs across multiple blocks as well as within a single in a blockchain. Replicating this idea on the entire blockchain, we will be left with a system that only needs to store the current unspent transaction output (UTXO), instead of the whole transaction history. Validation of the history that brought us to this point can be verified by storing only the headers of previous blocks that possess the proof of validity of the previous states (with the use of Merkle tree system) as well as proof of work that allows to reach harmony on which of the header chains should be considered the right one.
What is basically needed to prove ownership of the UTXO is the value and the unique binding factor, and the storage of any addresses on the blockchain is not necessary. After the creation of the transaction between the two wallets, only the commitment is documented on the blockchain. This simply means that the personal information of the transacting parties can never be extracted from the blockchain, regardless of the resources of whoever is trying to pry.
Mimblewimble transactions make use of another vital resource (in addition to outputs, inputs, fees and proofs) known as the transaction kernel, which basically contains the difference between binding factors of both the receiver and sender.
Mimblewimble cuts down the amount of data required to store and verify transaction data, this allows it to work with smaller blocks, thereby making it a scalable coin, and since BEAM was developed from scratch with Mimblewimble at its core, this makes BEAM ready for mass adoption because it is designed to scale, and the private nature of the platform, is also an added advantage.
The BEAM Platform
Just to recap, BEAM system was built with Mimblewimble at its core, and it enables users to send and receive money in a private and secure way free from prying eyes. The benefits of using the Mimblewimble protocol is because of its ability to execute the transaction without displaying addresses, amounts and other details of the transaction on the blockchain.
With fewer records on each block, leading to less and less record on other blocks, the entire blockchain is not burdened with excess records. Hence, this enables the system to be able to facilitate leaner, faster, safer transactions due to Mimblewimble’s scalable architecture.
Confidentiality - The is the main selling point of the BEAM system, all transactions on the platform are private and secure. Information about any given transaction is securely stored on the blockchain.
Versatility - With the use of the scriptless script technology, this enables the application of a wide variety of transaction types beyond the elementary transmission of value example of such applications to include: escrow, time-locked transactions, atomic swapping.
Scalability - Mimblewimble’s “cut-through” feature aids to avoid the excessive computational overhead, this enables BEAM blockchain orders of magnitude less than other blockchain implementation
Sustainability - The BEAM network is an open source project that was built from scratch, supported by the Beam Growth pool (an allocated 20% of the rewards from mining proceeds goes this group for their efforts in the development and promotion of BEAM)
Usability - An efficient user-friendly wallet designed for both desktop and mobile is available, it supports daily usage for both small-scale businesses as well as individuals. The highly intuitive user interface has a dashboard that enables easy budget management, as well as insights into an account holder’s spending and earning activities
Compatibility - In order to encourage GPU miners adoption of this project, the industry-proven Equihash algorithm utilized. BEAM has an extensive toolkit for managing and running mining nodes.