UPDATED | January 21, 2019
ORIGINAL | January 4, 2019
Concerns over privacy have spurred the creation of cryptocurrencies like Zcash and Monero, which aim to add confidentiality to blockchain transactions. Joining this lineup of privacy coins is Beam, which launched its mainnet on Thursday, January 3. Though also focused on privacy, Beam is different from its crypto counterparts.
The key distinction is that the Beam mainnet is an implementation of the Mimblewimble privacy protocol. Potterheads will recognize the name, as the fraudster wizard Gilderoy Lockhart taught students the Mimblewimble spell – also called the tongue-tying curse – in "Harry Potter and the Chamber of Secrets." More magical yet, the protocol's white paper was posted online under the pseudonym Tom Elvis Jedusor, an anagram for the French variant of "I am Voldemort" (aka the main antagonist in the Harry Potter series).
Much like its use in the wizarding world, Mimblewimble in real life prevents "secrets" (transaction details) from being shared with the public. No information about senders, recipients, or transaction amounts can be obtained by outside parties. Mimblewimble also compresses the size of the blockchain so that it's significantly smaller than the Bitcoin network.
Unlike the blockchain privacy models of zk-SNARKs and ring signatures (which are used in Zcash and Monero, respectively), Mimblewimble does not obfuscate transaction information. All transactions are private by default. Thus, an observer trying to read the blockchain would not be able to see transaction details.
Obfuscation is an important consideration because it increases blockchain size. The Zcash chain is about 19 GB and yields an average of 5.3 KB per transaction, which is around nine times higher than Bitcoin. Monero is even larger at 48 GB and has an average transaction size of 14 KB, almost three times greater than Zcash. While all options – Zcash, Monero, and Mimblewimble – offer a solution to blockchain privacy, Mimblewimble appears to be the most scalable (although, of course, Zcash and Monero are working to improve the scalability of their chains).
Beam uses the Mimblewimble protocol and its own confidentiality-focused accoutrements to offer what it calls "true privacy" to users. The Beam crew hopes that its privacy model will attract both traditional crypto users and newcomers, who may have been reticent to enter the market due to privacy concerns.
The recently released version of Beam comes with a desktop wallet app, a command-line interface wallet, and a Beam node, among other components. However, before using the mainnet, the team advises individuals to remove all their old Beam data.
The only ways to obtain the Beam cryptocurrency – currently, at least – are through mining or purchasing it from others who already own the coin. Beam has not offered its coin to the public, nor is it going to hold an initial coin offering.
Additionally, Beam intends to establish a nonprofit foundation to govern the protocol, though a timeframe has not been given for this initiative.
Besides Beam, a project called Grin is developing a Mimblewimble-based blockchain. Though similar, Beam and Grin differ in several ways, such as programming language (Beam uses C++, whereas Grin uses Rust) and mining algorithm (Beam features a modified version of Equihash, whereas Grin uses Cuckatoo32+ and Cuckaroo29).