HPR2947: The Mimblewimble Protocol

Financial privacy is critical for adoption of cryptocurrency as a means of exchange. Individuals worry about employers monitoring their spending details, insurers increasing rates based on purchases and landlords raising rents when they get a promotion. Businesses can only operate using cryptocurrency if they can prevent disclosure of vendor payments, rates paid to suppliers, payroll details, and so on. At the same time, they need to selectively disclose financial data to governments and might need to demonstrate compliance in some industries.

Mimblewimble is a new protocol that uses cryptography to achieve striking reductions in blockchain size, so users can run a full node on low powered devices like phones. It offers the strongest privacy protection assurances around, through a variety of clever tricks. For one thing, transaction history is not recorded, which also results in a smaller blockchain. There are no addresses and no transaction amounts are recorded.

We’re not going to focus on the cryptography, although it’s a fascinating example of just how much progress is being made in recent years. We’ll focus instead on what makes this mysterious network protocol unique among cryptocurrencies.