How Mimblewimble Could Make Bitcoin Work Better

By September 4, 2016Bitcoin Business

Mimblewimble claims to use a new cryptographic protocol that could revolutionize the way bitcoin works, making it more scalable and private. The protocol 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. The author refers to himself as “Tom Elvis Jedusor,” a name taken from the Harry Potter novels. Bitcoin’s Verification Challenge Bitcoin is the first widely used financial system for which all the necessary data to validate the system status can be cryptographically verified by anyone, the white paper notes. It accomplishes this by storing all transactions in a public database called “the blockchain.” Someone who wants to check this state has to download the whole chain and replay each transaction, checking each one as they go. It would be easier if an auditor only had to check data on the outputs themselves, but this is not possible since they are only valid if the output is at the end of a chain of prior outputs. The whole blockchain has to be validated to confirm the final state. Considering that the transactions are cryptographically atomic, the outputs that go into and emerge from every transaction are very clear. The “transaction graph” that results reveals a lot of information and is subjected to analysis by numerous companies whose business model is to monitor and control the lower classes. This makes it very non-private and even dangerous to use. Proposed Solutions Some solutions to this have been proposed, Jedusor notes. Greg Maxwell discovered how to encrypt the amounts so that the graph of the transaction is faceless but […]

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