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What are Grin and MimbleWimble?
Smile currency is an implementation of the MimbleWimble protocol. Grin aims to be a scalable privacy currency that has no addresses or amounts, and is therefore less rich in storage than other private currencies and digital coins.
The coin has an anonymous founder, was developed by the community, and Grin plans to launch a fair proof-of-work in Q1 2019. Its mining algorithm is currently resistant to ASIC, which means you can Grin Grin with your laptop.
The MimbleWimble protocol is a design for a ledger based on blockchain where there are no addresses and the storage of the requested data is reduced to a minimum. It's a private blockchain by default which is also scalable and uses elliptic curve cryptography which has been tested for decades. When compared to Bitcoin, MimbleWimble only needs to store 10% of the data requirements, which means it is more scalable, less centralized and significantly faster.
Grin and MimbleWimble: History
On August 2, 2016, a text file was published anonymously in a Bitcoin development forum outlining the initial stage of the MimbleWimble whitepaper. The aim was to make this project a blockchain-ledger in Bitcoin as a solution to the problem of resizing and adding private transactions. On October 20, 2016, a different anonymous developer published on the same forum that was working on an implementation of MimbleWimble – it was called Grin.
When Satoshi first wrote the Bitcoin white paper, his goal was to become a peer-to-peer electronic payment system. The high transaction fees and the opportunity costs of using bitcoins have transformed its main use case into a value store.
Right now, cryptography lacks a real currency to act as a means of exchange between the parties because no currency has all the four cardinal properties of global digital money without checks: price stability, scalability, decentralization and privacy. The Grin implementation of MimbleWimble hopes to resolve these four areas differently and more effectively than any other currency focused digital resource available today.
Private transactions are essential for having fungible tokens, which are needed in a currency used as a medium of exchange. In the case of Bitcoin, some investors will actually pay to prize for tokens without prior transaction history, and in the future we could see an economy where bitcoins that have ever been associated with nefarious addresses could be more difficult to move. In general, why would you want all your purchases to be transparent to everyone in the world? There are privacy, security and personal risks associated with this.
Grin was the first project to implement MimbleWimble and the community-based project launched its testnet in November 2017. The fourth and last testnet before starting the main network now has its own branch and is ready for release. My best estimate is that we will see a launch of Grin mainnet at the start of 2019.
The project is called Grin as a sign to Gringotts Wizarding Bank in Harry Potter.
How does MimbleWimble work?
Understanding MimbleWimble requires a basic understanding of the output model of the unused Bitcoin transaction (UTXO):
If Alice sends 1 bitcoin to Bob, she does not just transfer a 1 bitcoin balance to him as a cash company, which looks like:
- Alice -1 Bitcoin
- Bob +1 Bitcoin
This makes sense, does not it? But that's not how bitcoin accounting works. Each transaction consists of a set of inputs and outputs ranging from one person to another. So, Alice's bitcoin transaction from 1 to Bob, his software portfolio is grouping the inputs from the previous bitcoin transactions that make up the bitcoin 1 that Bob is sending. Sometimes there may be hundreds of inputs in this transaction, and each transaction must be individually signed by the wallet software. As you can see, this adds lots of data to the blockchain and becomes cumbersome. Alice's transaction could be more like this:
- Alice – [0.2+0.1+0.7], where is the [X+Y+Z] they are previous transactions that need to be grouped and validated by Alice's portfolio.
It's a bit complicated, but this is a proven model of consensus that has proven to be safe. Other models offer more experimental security.
MimbleWimble changes this bitcoin model by creating a multisignature for all inputs and outputs. The parties involved in a transaction create a multisigning public key that can verify the transaction. There are no addresses in the system because two parties involved in a transaction share what is called a "blinding factor" in which only those two parties know they are involved in a transaction; maintain the privacy of the network.
A blinding factor is a shared secret between the two parties that encrypts the inputs and outputs in that specific transaction, as well as the public and private keys of the parties. MimbleWimble uses a Pedersen's commitment scheme where the complete nodes subtract the ciphered amounts on the sending side of the transactions (input) from the ciphered amounts on the receiving side of the transactions (exits).
A balanced equation means that no currency was created from nothing – and the node must never know what the amounts of the transaction were.
The biggest change here at Bitcoin is the native privacy where all values are completely obscure and there are no reusable or identifiable addresses. The only necessary verification is that no new funds are created and that the parties involved in the transaction have ownership of their keys. Both of these processes are performed using a blinding element to obscure the values; based on multiplication and the addition of secret factors to obscure real values.
Here really is simple example of how a blinding element in cryptography functions:
1 + 2 = 3 // 1 + 2-3 = 0
This is just a simple balanced equation to show that no new money has been created (reorganized to show that the balance is net zero).
1 (5) +2 (5) = 3 (5)
Here a secret number of 5 is multiplied by all the variables, which obscure the original values.
5 + 10 = 15
The values and the blinding factor are now private and you can still prove that no new money has been created.
Where MimbleWimble becomes creative is that the blinding element is actually a combination of private and public keys to the parts of the transactions, so with that one equation I can prove that no money has been created and that I am the owner of the keys .
At the end of the transaction you are given a multi-sign header of this transaction. This is much lighter than the one that publicly maintains all inputs and outputs on a full node for the entire blockchain and the excess data is simply deleted.
A problem with Bitcoin and Ethereum right now is the decreasing number of units running entire nodes. Decentralization requires the parties to execute entire nodes. A complete node houses the entire blockchain chronology, which becomes more intensive every day.
In Bitcoin, this requires the download of all inputs and all the outputs of all transactions, which becomes exponentially larger over time because there are smaller and smaller entrances to be grouped.
Less complete nodes mean that the blockchain is more centralized and prone to manipulation. Light nodes on both platforms can verify transactions, but must be served by complete nodes to connect to their networks. The Ethereum blockchain, for example, is larger than 1 TB and the number of complete nodes decreases because the incentive to run a complete node is only to maintain network integrity.
This is evidenced by the growth of the user of Infura – a service on Ethereum that allows dApp to manage read requests by executing a complete node.
Currently Bitcoin can mimic the privacy feature of MimbleWimble using what is called CoinJoin, but this is not the default setting and therefore presents various security issues. Some implementations use a central server that requires trusting an intermediary with their own bitcoins, so it's not a true native implementation.
What is Grin Coin?
Grin is an implementation of MimbleWimble's private currency on its blockchain that is developed using the Rust programming language, renowned for speed and scalability in network applications. When asked why Grin was not coded in a language that everyone was as comfortable as C ++, the main developer said, "When you write code in Rust, it does exactly what you think it will do, every time" and that "Because Grin uses rust [this] free up time to focus on real problems. "
Like Bitcoin, Grin uses the Poof (Proof of Work) extraction, but with an algorithm called Cuckoo Cycle, which proved to be resistant to ASIC. It is resistant to ASIC because it requires a lot of memory. Currently, the design is ASIC resistant to the placeholder and will gradually become ASIC friendly over several years. Grin also made minor changes to the MimbleWimble to make the "quantum-resistant" design and the coin can be extracted with the CPU at home; encourage decentralization between miners.
Only the mining mining of the testnet, which is live now, will make you gain about 1/1000 blocks using a new Macbook Pro (2018 i9) and a Raspberry Pi or a SSD disk is enough to run an entire node at this time. This means that it will be economical and easy to run a complete node and that the new nodes will be able to synchronize with the network quickly and efficiently. Keep in mind that this will probably become more competitive when the mainnet is launched.
The main principles of the project are:
- Privacy as a default
- Scalable transactions by storing a fraction of data
- Proven cryptography that has been tested for decades
- Simple design for peer-to-peer transactions
- Guided by the community with particular attention to decentralized development and mining
Grin, unlike Bitcoin, does not enable Script, which makes more than one project send value from one person to another rather than programmable money. Grin's developers are working on the implementation of the Script feature and claim that they can already perform atomic exchanges and multi-sig transactions.
One criticism that has been leveled to the system right now is that both parties must be online to engage in a transaction, while in bitcoin I can send anyone bitcoins if I have their public key and can still receive it when they are offline. This sounds like a big flaw, but it's not true. It comes from a misunderstanding of how the word "interactive" is used in cryptography, which shows that a "back and forth" is required and not that the 2 parts should be online at the same time.
There is no founder of the project and the project aims to have a good launch. According to principles of Community financing, there will never be an ICO and the launch will be pre-announced, open and fair without pre-mines or other "fun business".
There will be no percentage of mining earnings for developers and no acceptance of capital with a 'profit expectation' or undue influence on the project's decision-making process.
Grin was developed by ad hoc part-time community developers, and lifted up a total of $ 55k in community donations to get a developer to pay full attention to the project. The funding process has been incredibly transparent and can be found Here. Recently, developers have identified that they will need about $ 80,000 per security audit before the launch.
Monetary policy
A new Grin token is released every second and it is likely to remain that way forever. The reward of the block is 60 grin with a block target every minute. This gives the project a predictable monetary policy in which the dilution becomes smaller each year.
After 10 years there will be an inflation of less than 10%, after 20 years less than 5%, after 25 years less than 4% and so on … Some analysts believe that supply currencies, such as bitcoins, are Experimental because we do not know how the miners and the market will react when the block premiums disappear and the miners rely only on the transaction fees for funding.
This becomes even more confusing when you add that the lightning network will reduce the number of chain transactions that will require extraction costs. An endless inflation issue guarantees that miners are infinitely incentivized to guarantee the chain.
This monetary policy aims to support a digital money that turns into a digital gold when inflation approaches 0% and does not reward speculators almost as much as a pre-mine. The stock to flow ratio, which is a ratio for commodities in which the inventory is divided by the quantity produced annually, will be incredibly low in the first years after launch; reduce the opportunity cost of selling Grin and encourage spending.
Discouraging hodling should improve money distribution patterns and drive the network Coefficient of Gini closer to zero (a statistical dispersion of wealth). This is the economic theory behind monetary policy, but I still think there will be speculation and hoarding, making Grin a good investment. Things usually do not go according to academic principles in this area.
To conclude, MimbleWimble and Grin are still in an experimental phase, but here are the strengths and weaknesses of the project:
Strengths:
- Naturally private
- Socially scalable (light)
- CPU-resistant Minic ASIC compatible (proven cryptography with cuckoo cycle)
- No ICO or pre-mine
- Team of anonymous founders with particular attention to community development
Points of weakness:
- The nodes must be online to make transactions
- No scripts or any programming language
- Many strong coins competing (ZEC, XMR, BTC, BCH)
How do you compare with competitors?
At this time, I believe Monero and Zcash are the two strongest private currency projects in circulation based on their privacy technology. Some critics will argue that the problem with these coins is that ring signature is ZK-snarks they are incredibly computationally intensive, which makes the transactions cumbersome, slow and expensive compared to Grin.
One analyst noted that in the case of XMR, the software allows users to configure the default number of "mixins" to be included in each transaction. 64% of all transaction the inputs contain no mix at all, which means that there is no privacy for the user, and there is also a risk to privacy for other users. Other researchers they mentioned that almost 80% of Monero transactions can be traced.
With ZCash, users have the ability to send transparent or secure transactions and transparent transactions are the default. Screened transactions are computationally more complex, more expensive to send, and more data for the blockchain. From the beginning only 2.8% of the whole ZEC volume has been protected with zk-SNARKs and it is unlikely that ZEC will resize if 100% of its transactions are protected. I think the best fungibility is best achieved when privacy is the default setting.
MimbleWimble and Grin are experimental and XMR and ZEC are very strong privacy projects, but the important takeaway is that these projects are not perfect, and MimbleWimble could improve their supposed weaknesses in cumbersome transactions, lack of scalability and non-native privacy .
Leaderless company
It is possible that the anonymous founders of MimbleWimble and Grin recognized that leaving Bitcoin and never being known was the best thing Satoshi ever did for the network because it allowed development to continue decentralized without everyone focusing on a leader .
The leadership in the crypt can be seen as one responsibility. For example, there are many people who criticize Vitalik for stopping the growth of Ethereum because development hinders a person's intellect because it has been painted in a similar picture to his followers.
The founders of the project offer a central point of failure or success in a project, and Grin does not have this. MimbleWimble and Grin may have leading community leaders, just like Bitcoin and Monero, but these are not founders who have privileged access to equity with pre-mine or ICO. We have also seen that highly concentrated networks do not seem to conform to the SEC, as per William Hinman speech because tokens are more "security-like" when some concentrated parties exert excessive influence on the network.
ZCash, who is considered an important competitor of Grin, has a fundamental figure. At ZCon0, Zooko, the founder of ZEC, provided details on its founding reward. It receives about 2000 ZEC per month, which at current prices is about $ 250,000 USD, or almost $ 3 million a year. A centralized business model like this is what we are used to in Western capitalism (and has proven to work well in traditional equity markets), but having an anonymous founder and focusing on community development is a better strategy to avoid being classified as a safety.
Nerd Alert: What's in the Harry Potter references?
As mentioned, Grin and MimbleWimble were created anonymously, just like Bitcoin. The creators have done so using pseudonyms related to Harry Potter and references are intertwined in the history of money.
In the series, MimbleWimble is the linguistic curse originally used by Gilderoy Lockhart to teach its students to defend themselves better in the Club Dueling.
The original link to the onion of the point that was shared in the Bitcoin development forum introducing MimbleWimble was published by "Tom Elvis Jedusor", Which is an anagram of Voldemort in French.
Then, "Ignotus Peverell", The magician who invented the cloak of invisibility, published the Github link to his implementation of MimbleWimble called Grin a few months later.
This article has been updated to reflect that after testnet 4, Grin will not be ASIC-resistant forever.
The author is invested in Bitcoin, which is mentioned in this article.
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