πŸ›Έ Beam Me Up β€” Issue No. 32

πŸ“°News

This week saw the mainnet launch of a new cryptocurrency called Beam. Beam is the first live implementation of a new blockchain protocol called "MimbleWimble"; yes, that is a Harry Potter reference. We'll talk more about MimbleWimble in a minute, but first a bit more on Beam. The new coin was developed by an Israeli startup of the same name. Similar to Zcash, the company uses a slowly declining "founder's reward" mined in each new block to fund operations. The bootstrapping of a Proof-of-Work coin is always a risky phase, but so far seems to be going well for Beam. Beam uses the same hashing algorithm as Ethereum, though with modified parameters which aim to make specialized mining hardware built for ETH unusable. Link.

So, whats this "MimbleWimble" all about? The protocol was initially proposed in a whitepaper released by a pseudonymous user on a Bitcoin IRC channel in 2016. It subsequently attracted attention from the broader technical community and was found to have merit. It combines the basic elements of Satoshi's Bitcoin with modern blockchain research as well as a few novel ideas. The result is a protocol with some interesting properties. For one, it offers much better privacy than Bitcoin-- transactions are obscured by default and very hard to trace. It also requires much less data to be shared on a per transaction basis and allows nodes to fully validate transactions without having to download the full blockchain history. The result is improved scalability with no sacrifice in terms of decentralization. For a more in-depth explanation of the protocol, checkout this excellent summary by Jordan Clifford. Link.

Jordan's writeup also mentions another implementation of MimbleWimble called Grin. Unlike Beam, which has the backing of a for-profit company, Grin is being funded and developed by a community driven effort. It also makes some distinct technical tradeoffs, such as using a more cutting edge hashing algorithm for mining and favoring fixed, continuous inflation instead of a supply hardcap. Grin's mainnet launch is scheduled for January 15th, though a quick look at their GitHub launch milestone indicates to me it may end up being delayed a bit. Link.

The launch of Beam and imminent launch of Grin means we get to see the results of a few interesting experiments play out in realtime.

First, there's the obvious intrigue of watching two competing implementations of the same protocol launch at the same time. The two networks have completely different funding and development models. Which is a better approach for cryptonetworks in 2019? A bottom up, community driven development process that risks being chaotic and underfunded? Or a top-down, well funded enterprise that risks being too centralized? The relative success of each network will give us a datapoint in that debate.

Less obviously, I think the launch of these MimbleWimble based networks provides an interesting test of the staying power of Bitcoin itself. From a purely technical standpoint, MimbleWimble seems superior to Bitcoin. It has the same desirable properties as peer-to-peer, censorship resistant money. It improves on significantly on privacy, scalability, and decentralization. What it lacks-- and it's no small thing to lack-- is the network effect, name recognition, and battle tested hardening that Bitcoin has attained over these 10 years.

Is it still early enough for a technically superior network to gain adoption and challenge Bitcoin in a meaningful way? Or are we already too far along the history of blockchain networks to threaten the existing top coins, even with something thats ostensibly better? This will be something to watch in the coming months and years.

πŸ“ŠStatistics

11.5%. The percentage of reachable Ethereum nodes which have upgraded to a client version which is ready for the Constantinople hardfork. With the fork expected to take place on January 16th, 2019, that number seems worryingly low. Link.