Mimblewimble (MW) is a blockchain architecture that adopts an innovative approach to constructing and storing transaction data. It is an alternative implementation of a Proof-of-Work (PoW) blockchain, offering greater privacy and improved network scalability.

Mimblewimble was initially designed and proposed by an anonymous author, Tom Elvis Jedusor, in mid-2016. Although he outlined its core concepts, the initial version of Mimblewimble still had many unresolved issues. Later, Blockstream researcher Andrew Poelstra began studying and refining the original concept of Mimblewimble. Shortly afterward, Poelstra wrote a paper titled Mimblewimble (published in October 2016).

Since then, many researchers and developers have explored the possibilities of the MW protocol. Some argue that while it is technically feasible, implementing the protocol on Bitcoin is not straightforward. Poelstra and others believe that Mimblewimble will eventually improve the Bitcoin network as a sidechain.

How Mimblewimble Works

Mimblewimble changes the traditional blockchain transaction model. It enables higher compression ratios for the blockchain, making historical transaction records easier to download, synchronize, and verify.

In an MW blockchain, there are no identifiable or reusable addresses, meaning all transactions appear as random data to outsiders. Only the involved parties can view the transaction details.

Thus, blocks with the Mimblewimble protocol resemble large transaction networks rather than collections of individual transactions. This means blocks can be verified and confirmed without revealing transaction details. There is no way to link inputs to their corresponding outputs.

For example, Alice receives 5 MW tokens from her mother and 5 MW tokens from her father. She then sends all 10 tokens to Bob. The transaction is verified, but the specific details are not disclosed. Bob only knows that Alice sent him 10 tokens but cannot trace who originally gave those tokens to Alice.

To transfer tokens on a Mimblewimble blockchain, the sender and receiver must verify the information. Therefore, Alice and Bob still need to communicate, but they do not need to be online simultaneously for the transaction to occur.

Additionally, Mimblewimble features a "cut-through" mechanism that removes redundant transaction data and reduces block size. The block only records a single input-output (from Alice to Bob) rather than every intermediate transaction (from Alice's parents to Alice and then from Alice to Bob).

Technically, Mimblewimble designs and expands upon the concept of Confidential Transactions (CT), proposed by Adam Back in 2013 and implemented by Greg Maxwell and Pieter Wuille. In simple terms, CT is a privacy tool that hides transaction amounts on the blockchain.

Mimblewimble vs. Bitcoin

The Bitcoin blockchain retains a record of every transaction since its genesis block, meaning anyone can download and verify the public history of all transactions.

In contrast, the Mimblewimble blockchain only stores the most critical information while preserving greater privacy. Validators ensure no suspicious transactions (e.g., double-spending) occur and that the circulating token supply is accurate.

Moreover, Mimblewimble removes Bitcoin's scripting system, which defines how transactions are constructed through a series of instructions. Eliminating this system enhances the privacy and scalability of the MW blockchain. Privacy is improved because transaction addresses are entirely untraceable, and scalability is achieved due to smaller block sizes.

Another key difference between Bitcoin and Mimblewimble is the relative size of blockchain data, related to the aforementioned cut-through concept. By eliminating unnecessary transaction data, Mimblewimble requires fewer computational resources.

Advantages

Block Size

As mentioned, Mimblewimble compresses block data, reducing overall block size. Nodes can verify transaction history faster with fewer resources. Additionally, new nodes can download and synchronize the MW blockchain more easily.

Lower costs for joining the network and running nodes foster a diverse and decentralized community, reducing the centralized mining power common in many PoW blockchains.

Scalability

Eventually, Mimblewimble may connect to Bitcoin or its parent chain as a sidechain. The MW protocol's design could also enhance payment channel performance, similar to the Lightning Network.

Privacy

By removing Bitcoin's scripting system, Mimblewimble obfuscates transaction details, improving confidentiality.

Furthermore, tokens on a Mimblewimble blockchain are considered fungible. Fungibility means any unit of the token can be exchanged directly with another (they are indistinguishable).

Disadvantages

Transaction Throughput

Transaction confidentiality significantly reduces throughput. Compared to non-private systems, blockchains using Confidential Transactions (CT) offer higher privacy but lower TPS (transactions per second). However, the MW protocol's data compression may offset the TPS loss caused by CT.

Vulnerability to Quantum Computing

The Mimblewimble system is not resistant to quantum computers (powerful computing devices). The MW protocol relies on relatively simple digital signatures. However, quantum computers are still decades away from maturity, and cryptocurrencies using Mimblewimble will likely find ways to defend against quantum attacks in the coming years.

Conclusion

Mimblewimble's emergence is a significant milestone in blockchain history. First, its cut-through feature makes the MW network scalable, inexpensive, and simple. Second, the MV protocol could be used for sidechains or other payment channel solutions, offering greater privacy and scalability.

Currently, several blockchain projects have adopted the Mimblewimble protocol, including the Litecoin team. Grin and Beam are two other examples. Grin is a community-driven project serving as a lightweight proof-of-concept for Mimblewimble, while Beam is innovation-oriented. Although both are based on Mimblewimble, they are technically independent and employ unique implementations of the MW protocol.

Outstanding questions remain about whether Mimblewimble can achieve significant levels of trust and practicality. It is an exciting and promising idea but remains immature. Thus, potential use cases are still under development, and the future of the Mimblewimble protocol remains uncertain.