Litecoin’s MimbleWimble

What is MimbleWimble? 

MimbleWimble is an upgrade to the Litecoin network aimed at protecting transaction privacy. Blockchains like Litecoin are transparent by default – the sender’s address, recipient’s address and the amount sent are all open to view to all.

MimbleWimble, first suggested in 2016 by Tom Elvis Jedusor (a developer’s online handle, taken from the French-language version of Harry Potter character Voldemort’s ‘real’ name) was named after a spell that tongue-ties its targets, again taken from JK Rowling’s famous series of books. 

Why do users transact with MimbleWimble? 

Users wishing to implement this privacy-first functionality can move their litecoins into what are called extension blocks – a process known as “pegging-in”. Extension blocks can be imagined as a blockchain parallel, analogous to the core Litecoin chain – though these extension blocks actually already exist within each Litecoin block. 

When using these extension blocks, transaction addresses and amounts are only visible to parties of the given transaction. Once such a transaction has been completed, the user can move their litecoins from the extension blocks back onto the main Litecoin chain – known as “pegging-out” where they are able to conduct transparent transactions once more. 

How can users move funds into and out of extension blocks? 

In order to send funds into these privacy-oriented extension blocks, users must either create a peg-in transaction or send the funds to a dedicated MimbleWimble Extension Blocks (MWEB) address with an ltcwmeb1 prefix. In the latter case, the miner will create a peg-in transaction on the user’s behalf. 

The HogEx (short for Hogwarts Express) transaction in the same block processes these peg-in transactions, enabling users to carry out transactions with these litecoins in the next extension block.

To remove funds from the Extension Block, users create a peg-out transaction by sending funds to a standard, transparent Litecoin address. They can subsequently move these funds after six block confirmations, meaning six blocks being processed on top of the block their transaction is in. These peg-out transactions are also processed in the block’s HogEx. 

Users wishing to make use of the extension blocks will need to use Litecoin Core to generate a MimbleWimble stealth address, which will start with the prefix ltcmweb1. This is not a typical crypto address – it cannot be found within the block data. To see associated activity with it, users will need the viewing key, meaning the recipient cannot see the sending address unless they have that viewing key.

How private is MimbleWimble? 

MimbleWible prevents Litecoin transactions being tracked through extension blocks –  but users can see when the feature is being used. 

Unlike most blockchains systems, which have traceable public addresses that list the sender and recipient of a given transaction, MimbleWimble transaction history is private.

However, crypto asset tracing can trace which addresses are using MimbleWimble – Coinfirm added support for MimbleWimble in August 2022, alongside cross-chain risk analysis.

What makes the MimbleWimble protocol unique? 

Anonymity, baked in at the code level, as mentioned above.

Fungibility – users can trade any cryptocurrency on the platform without the risk of its loss or the possibility that the cryptocurrency will become tainted because of illicit activity, meaning it would bear less value. 

Scalability – in blockchain transactions, each node adds information regarding the transaction to the ledger to increase overall block size. Large block sizes cause scalability issues, meaning that the ability of the blockchain network to handle large amounts of transaction data in a short span of time is limited. By implementing CoinJoin and Cut-Through to eliminate unnecessary transaction information and reduce block sizes, MimbleWimble achieves superior scalability due to compact blockchain size.

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