A slimming down of the bitcoin protocol called Mimblewimble generates a blinding factor that can prove ownership of bitcoins, making private keys unnecessary, and offering a solution to the need to balance bitcoin privacy against fungibility while also improving scalability, according to a white paper that appeared mysteriously on a bitcoin research site authored by a person using a pseudonym, according to Nasdaq . Privacy and fungibility are at odds in bitcoin because anyone can trace transactions over the blockchain , and as the number of transactions increases, the verification cost can become a centralizing force. A white paper by Tom Elvis Jedusor, a pseudonymous name taken from Harry Potter, presents a way to alter the bitcoin protocol that could improve privacy and fungibility while offering more scalability. The name of the proposal, called Mimblewimble, also comes from Harry Potter. Based on Privacy Bitcoin Feature Mimblewimble is based on Confidential Transactions, a privacy feature developed by Bitcoin Core developer Gregory Maxwell that is deployed on Blockstream’s Elements Alpha sidechain. Confidential Transactions allows senders to encrypt bitcoin amounts in transactions. Transactions have information that only receivers can decrypt. Utilizing a cryptographic technique known as Pedersen Commitment, anyone can do the math on the encrypted amounts. As transactions are sent, bitcoin nodes can subtract these values on the receiving side. If the two sides cancel out at zero, the combined outputs and inputs are equal, and no bitcoins are created. Mimblewimble uses this technique, but with the receiver generating the blinding factor. This blinding factor, a primary deviation from the bitcoin protocol, proves ownership of the blinded bitcoins. Private keys, public keys, and addresses are no longer in play. A series of cryptographic techniques proving ownership of the blinding factor is Mimblewimble’s closest equivalent to bitcoin cryptographic signatures. The full extent […]
