Introduction

The introduction of Bitcoin in 2009, originated a revolution in the economic system as we know it. Creating a new decentralized currency, independent of conventional banking systems and accessible to all. Creating a secure and unalterable system to carry out transactions in electronic media with reduced rates. Opening a new world of possibilities with blockchain technology. An environment created by Satoshi Nakamoto, who is presumed to be a pseudonym and whose identity is unknown.

However, one of the peculiarities of the blockchain is its transparency, that is, all transactions are visible to all who wish to see them. Even, at first it was thought that the transactions were totally anonymous, but this is not entirely correct. There are companies like Chainalysis that can follow the flow of bitcoins in the blockchain ledger and identify the users that generated the transactions.

This has as a consequence that many entities are reluctant to enter the world of cryptocurrencies since they want their fund's balance to remain confidential and not open to everyone, even to malign entities (hackers) willing to find a way to steal them.

It is necessary to create some means of privacy to tear down this wall. There are many attempts to add privacy to the world of bitcoin and cryptocurrencies. However, these solutions become very heavy, requiring more computational processing (GPU) and more space (overhead), which does not make them completely acceptable when they are implemented.

It was not until July 19th, 2016, that the Mimblewimble protocol (named after a Harry Potter world spell) was published, by a fictional character named Tom Elvis Judesor (In french: Je suis Voldemort, which we know it in english version as Tom Marvolo Riddle, I am Lord Voldemort). This protocol, since then, has been examined by experts (cryptographers and developers) and they have determined that it guarantees privacy within the blockchain environment in an efficient manner.

In the words of its creator:

I call my creation Mimblewimble because it is used to prevent the blockchain from talking about all user’s information

In this publication, I am going to present the project implemented by the team of BEAM developers, who have inherited MimbleWimble protocol and have put it into operation creating a financial environment on the blockchain that guarantees privacy and anonymity for all its participants without losing the benefits that characterize blockchain technology (security and inalterability).

BEAM

BEAM implements its own completely private blockchain technology based on the MimbleWimble protocol (programmed in C++ from scratch), thus creating its own decentralized cryptocurrency that offers completely anonymous transactions, since no information from both the receiver and the issuer are stored in its blockchain, which makes it more compact, thus avoiding computational overload, improving its performance and making it fully scalable.

BEAM allows its users to have control over their personal data, deciding what information will be available and to whom.

BEAM makes use of the asymmetric Proof-of-Work consensus algorithm Equihash, ASIC resistant, which offers a more decentralized type of mining and oriented entirely to memory RAM, which allows being mined by a standard PC with enough RAM memory; unlike the conventional PoW, which is dominated by a small number of entities worldwide, who are able to afford the expensive ASIC technology.

BEAM will have a limited issuance of approximately 210 million tokens, using a periodic division in half. There will be no premine (mining or creation of tokens) and therefore BEAM will not have ICO. BEAM will be maintained by the BEAM foundation, non-profit, which will be funded through the block reward mechanism along with a certain percentage of tokens issued in each new mined block, during the first 5 years.

BEAM features

• Confidentiality: All transactions are anonymous, no information of the parties is stored in the BEAM blockchain.

• Versatility: makes use of the "Scriptless Script" technique based on cryptographic signatures, so it does not require smart contracts to perform transactions within the blockchain, such as escrow, atomic swap, and time-locked.

• Scalability: the use of the MimbleWimble protocol, allows to reduce the excessive computational overhead, improving the performance and space of the blockchain; what allows a fast synchronization when generating the blocks.

• Sustainability: the project is maintained by the BEAM Foundation, non-profit and by the mechanism of the reward of the mined, 20% of the token mined goes directed to the development of the platform.

• Usability: BEAM has its own wallet application, available for PC and mobile devices.

• Compatibility: BEAM makes use of the Equihash consensus algorithm, which allows being mined by any equipment with enough RAM (as explained above).

Mimblewimble

BEAM, as mentioned above, implements the MimbleWimble protocol to achieve privacy, anonymity, and scalability.

MimbleWimble focuses on two areas in particular:

1. Privacy: the transactions are totally confidential or anonymous since no information is stored about the senders and senders. The quantities that are sent or received are homomorphically encrypted by the receivers (a process called blinding factors).

2. Scalability and Size: MimbleWimble uses another process called CoinJoin, in which transactions are combined with their results, which makes it impossible to determine to the viewers, how many tokens have been sent or received. In relation to the MimbleWimble transactions, a block will consist of a list of entries, exits and signature data. By reducing the space per transaction, it allows saving more transactions per block which ensure scalability.

MimbleWimble protocol for an ordinary person is obviously complicated since it requires mastering mathematical and cryptographic knowledge; this publication does not intend to deepen into the technical part of this protocol. However, to understand how it works, one must understand that private, public keys and signatures are numbers, and as such, mathematical operations can be done with them (add, subtract).

Suppose we have the following operation:

Let's say that equation (a) shows a transaction (one input and one output); the balance of the equation shows that no money was created. Applying to this equation (a) a secret value 7 (blinding factor) as shown in (b); you get the equation (c), in which you can not prove the original amounts without having the secret value, however, you can check that no money was created during the transaction. This secret value represents the one encrypted key or signature, which is usually formed by combining part of the secret keys of both parties involved. And only the possessor of the key can reveal the values, combining it together with its own secret key. In this way, the identities of the parties involved can be verified without the need to include any personal information of both.

Basically it works in that way, however, there is a lot of mathematics and cryptography involved, however, the important thing is that it reduces the information to save in the blockchain (scalability) and privacy is maintained.

How BEAM works

As can be seen in the image, when a transaction is created with the BEAM wallet, the inputs and output information of the operation is sent to the nearest node. This operation is verified by the node and then added to the mining pool. Finally, once mined, the block is propagated throughout the network. It is important to note that when a node connects to the BEAM network for the first time, it requests what is called the Fast sync, which is a compact copy of the history of the system state and headers, so it does not It is necessary to obtain all the information stored in the blockchain. Fast sync are created by the nodes periodically.

Use Cases

AntiqueAuction.com

It is a company that uses blockchain technology to conduct auctions of valuable antiques online, in a transparent manner. The company considers that it must conduct the auctions privately along with the amounts of the bidders and keep the antique purchasers anonymous; however, this information can be retrieved from their blockchain. Therefore, to improve its anonymity and confidentiality, it has decided to use the BEAM blockchain, to ensure a fairer and more private auction for all participants.

FreelancerZ.org

It is a company that brings together experts in different areas of work to offer their skills as a solution to problems of third-party companies via online. However, to guarantee the confidentiality of employers and freelance staff, it has decided to use the blockchain technology of BEAM to carry out transactions between the parties involved (freelancers and employers) to maintain privacy and security.

Conclusion

Thanks to the introduction of the MimbleWimble protocol, it is possible to create a blockchain whose transactions are anonymous and efficiently private. BEAM has made this fact a reality by implementing a tangible solution by creating a scalable and totally confidential cryptocurrency. Is that the protocol on which it is based, not only provides anonymity, but also eliminates the overhead of transaction information (saving space) and provides versatility to create a blockchain capable of performing all types of transactions without using smart contracts.

This will give rise to a new standard within the blockchain technology, oriented towards privacy.

Annexes