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Whenever commentators talk about cryptocurrency and blockchain, a recurring theme is private life. This feature is increasingly becoming a growing population that wants its information to be available on a public ledger accessible by governments, regulators or even close-knit associates such as family and friends.
Bitcoin report with privacy (or lack thereof)
Initially, when Bitcoin came to light, it was a pseudonymous currency that offered sufficient privacy to convince users of the difficulty in connecting a Bitcoin hash address to an individual or to real companies. However, since the cryptocurrency ledger was public, it came to light that it was very possible to trace specific addresses based on their usage patterns and their transactions.
Furthermore, specific nodes accidentally gave details about IP addresses when a transaction was transmitted. The first case in which it became clear that Bitcoin operations were not as private as we thought in 2013, when Sarah Meiklejohn, along with her colleagues, published an article named "A handful of bitcoins: characterizing payments between unnamed men" that identifies groups belonging to secure online portfolios, e-commerce sites and other service providers.
Once this is established Bitcoin transactions could be traced, society like Chainalysis is elliptical came to light. Among others, these two companies quickly began to discover transactions on the public ledger to provide information on detecting complaints of laundry, fraud and compliance violation.
The "defect" of traceability of Bitcoin has given rise to many services such as CoinJoin and others who have provided the privacy required to users. Despite their best efforts, these offers still presented their flaws and continued to give others the opportunity to launch a privacy-based solution. One of these attempts was Mimblewimble.
Mimblewimble
In August 2016, a text file was published by an anonymous person in a Bitcoin development forum that provides a description of a primitive MimableWimble white paper. The post presented MimbleWimble as a blockchain similar to Bitcoin, but that leveraged sidechains or a potential extension block scheme to improve privacy and scalability.
MimbleWimble has brought together some of the previously tested concepts such as confidential transactions and one-way aggregated signatures (OWAS) which made it a private blockchain by default.
Compared to Bitcoin, MibleWimble only needs to store ten percent of the data by optimizing its speed. MimbleWimble also outlines further updates to the Bitcoin protocol, like privacy, functionality and better democratic access.
Grin: implementation of MimbleWimble
In October 2016, another unknown developer published on the same forum explaining that he was working on an implementation of MimbleWimble called Grin. By implementing MimbleWimble, Grin expected to fill the areas, namely privacy, fungibility and scalability, which currently prevent cryptocurrencies from becoming a true means of global exchange.
The main features of Smile are as follows:
- Privacy by default: This function has the purpose of facilitating complete fungibility without diverting the system from the detection of details as required.
- scalability: Grin offers significant space-saving features and can merge with other protocols as it grows with the number of users and, to a certain extent, with the number of transactions.
- Validated cryptography: Grin takes this feature from MimbleWimble that has been dependent on the proven elliptic curve encryption (ETC).
- Simplicity: The auditing and maintenance of various Grin components is more accessible because the design of the project is simple.
- Community-driven: The project is led by a community that uses a ASIC– persistent mining algorithm (Cuckoo Cycle) encouraging mining decentralization.
Grin has specific features and techniques that make it a standout compared to other projects that are also working to improve Bitcoin's privacy concerns. These are confidential transactions, uniformity and dandelion relay.
Grin (MimbleWimble implementation) is looking for funds to pay a full-time developer in the second quarter of 2018. No ICOs, no prizes, no fun deals. https://t.co/7SvXq0S3Tu
– Jameson Lopp (@lopp) December 14th 2017
Private transactions
Grin natively uses a named transaction format Private transactions (CT). This type of transaction is not an extension of other types of transactions that help hide the amount; instead, it is what Grin uses for every transaction that occurs. Catering for privacy, Grin's transactions save very little transaction information. The data that you save include:
- Inputs, which refer to the outputs passed
- The outputs, which would be a 33-byte blurb, have defined a commitment. This commitment encrypts all related information related to that transaction such as amount, property, and evidence that validates that the amount is not negative.
- A proof showing all inputs and outputs (including transaction costs) are matched.
Grin uses commitments that are referred to as "perfect hiding places" that incorporate the amount in the effort. It also hides the details of ownership of the transaction.
Uniformity
All transactions within the Grin protocol appear to be random bits that make it difficult to track the critical information of the parties involved. All Grin transactions are uniform and retain much less information, making it very difficult for portfolios or people to reduce their privacy safeguards.
Dandelion
Commonly, cryptographic transactions are sent by "fluffing", which sends transactions to all peer participants to which a user is connected. However, to address the problem of losing IP addresses, Grin uses a dandelion, which adds a "stem" phase before fluffing, in which the user delegates the exercise fluffing to another peer that is was selected randomly from the network.
This makes it almost impossible for anyone to track down the user's IP address. Beyond that, when a transaction is sent to the stem, there is an opportunity to group them together with other transactions on the stem. However, its application in a practical sense has yet to be seen.
Cut through
As the name suggests, Cut Through is a technique in which the protocol crops out inputs and outputs from blockchain while they are spent. This technique is effective for resizing because a large part of the data needed to be stored on the blockchain can be removed. The only drawback here is that this feature offers a minor privacy benefit.
While Grin and MimbleWimble are taking significant steps to improve the privacy and scalability of Bitcoin, many of these features still need to be implemented successfully. The regular improvements to Grin and MimbleWimble should finally make privacy goals a practical solution for blockchain with these goals as a primary goal.
What do you think about Grin? Let us know your opinions in the comments section.
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