The Beauty of Mimblewimble
To understand the benefits and beauty of Mimblewimble, one must first understand the UTXO (unspent transaction output) model of Bitcoin Core (BTC) and other blockchains.
BTC transactions consist of multiple inputs and outputs going from the sender to the receiver. Instead of deducting the exact amount from the sender's wallet, the network bundles multiple inputs from previous transactions sent to the sender to balance the amount being sent. There are cases when a transaction involves thousands of inputs. If the sum of the inputs is greater than the transaction amount, the transfer generates an additional output. In this way, the first output contains exactly the amount that goes to the recipient, and the rest is returned to the sender. Since each transaction must be signed individually by the wallet software, the network must process vast amounts of data making it extremely inefficient.
Mimblewimble replaces the traditional UTXO model with a multi-signature model for all inputs and outputs. The sender and receiver make direct contact and each creates a multi-signature key that is used to verify the transaction. The parties share a "blinding factor." This encrypts the inputs and outputs of the transaction along with the private keys of both parties. Since the blinding factor replaces the addresses, only the two parties involved in a transaction know that they were involved in that transaction. The Pedersen Commitment Scheme is used to mathematically prove that the sender actually owns the number of coins sent and that no new coins were created without disclosing the amount.
The most important feature of the Mimblewimble protocol in terms of scalability and what makes it vastly superior to all other protocols is "Cut-Through". A single block consists of hundreds, even thousands of transactions and a large amount of information that needs to be stored in the blockchain. However, these blocks can be compressed using Mimblewimble's cut-through feature without compromising the security of the blockchain.
Suppose Alice sends 1 EPIC to Bob and Bob sends 1 EPIC to Charles. While the UTXO model of BTC stores all inputs and outputs forever, Mimblewimble eliminates the output of the first transaction and the input of the second transaction. In this way, there is only one input and one output to verify how Alice and Charles received their coins. This creates massive space savings. For example, the BTC blockchain is currently 380 GB and the EPIC chain is only 2.2 GB. Even at comparable usage levels, it will be 90% lighter.
The anonymity of Mimblewimble is a by-product that, in contrast to other protocols such as Monero or ZCash, does not have to be brought about in a complicated way, but simply happens by default. The simplicity of Mimblewimble makes this protocol state of the art tech. Highly complex obfuscation tactics such as those found in older protocols such as Monero and ZCash are extremely prone to bugs, require a lot of computing power and are memory intensive, making them unsuited to many applications such as mobile. Moreover, these protocols leave traces forever, which can be decrypted at a later date with the appropriate computer power. Therefore, cryptocurrencies utilizing Mimblewimble are highly superior and preferable to all other protocols, especially when speed, anonymity and privacy are highly important to the user.
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Excellent well-articulated article. Thank you author. Indeed, if Satoshi had access to 2019 technology, he would have created Bitcoin using Mimblewimble.
Thanks