MimbleWimble is a privacy-oriented blockchain protocol with mysterious origins. Much like other top privacy cryptocurrencies, MimbleWimble attempts to make transactions completely opaque, while still allowing for external verification. 

Additionally, MimbleWimble looks to keep its blockchain’s size on disk as small as possible while maintaining quick verification for all clients.

So far, two privacy cryptocurrencies have launched on top of MimbleWimble technology: Grin and BEAM. 

What is MimbleWimble?

The original MimbleWimble whitepaper was released on July 19, 2016, by an anonymous person that signed the whitepaper as “Tom Elvis Jedusor.”

Just a few months after the release of the original whitepaper, another anonymous person stated that they were working on an implementation of MimbleWimble, which would be known as Grin.

The name “MimbleWimble” and the signing name on the whitepaper are both references to JK Rowling’s Harry Potter novels. Where MimbleWimble is a spell that stops its target from being able to speak coherently. And the name  “Tom Elvis Jedusor” is an anagram for “Je suis Voldemort”, the name chosen by the antagonist in the French version of the novels.

MimbleWimble Goals

MimbleWimble has three goals that are outlined in its whitepaper:

Privacy

MimbleWimble is first and foremost a privacy blockchain protocol. Its designer had a very good understanding of the privacy technologies it is built upon. And using that understanding, MimbleWimble’s designer created a new and more secure strategy that increases transaction privacy to a whole new level. We’ll go into the technical details of this below.

Small Blockchain

Blockchain size on disk is a major issue for those looking to run full nodes for any cryptocurrency. Put simply, blockchains grow. This growth makes maintaining a large number of nodes more problematic over time.

MimbleWimble’s designer saw blockchain size as a major issue and pushed to make MimbleWimble blockchains as small as possible. The whitepaper states that the technique used could reduce the size of Bitcoin blockchains from a size of 80GB to a size of 30GB. An impressive change, especially given that MimbleWimble maintains user privacy through this size reduction.

Quick to Verify

The last goal MimbleWimble aims for is verification speed. Having a tiny blockchain is only good if the processing power required to verify it is equally tiny.

Cryptocurrency Grin launches on MimbleWimble technology

Cryptocurrency BEAM launches on MimbleWimble technology

How does MimbleWimble’s technology work?

MimbleWimble uses its own transaction and block schemes. They work together to hide transaction data as much as possible while still allowing verification to occur.

Put simply, both use zero-knowledge proofs, with blocks building on the math used in the transaction to further hide the information.

No Addresses

MimbleWimble has no concept of a blockchain address. Rather than tying all outputs to an address, outputs have no data regarding where they came from, and are spent via a private key.

This does mean that the wallets of the involved parties wallets have to talk to each other when making a transaction. But the method of communication and time taken is up to the user. One could, for example, negotiate a transaction using encrypted email.

Opaque Transactions

MimbleWimble’s transactions use zero-knowledge proofs (specifically a mixture of Confidential Transactions and CoinJoin) for security. Outside verifiers can independently prove that no cryptocurrency was created or destroyed over the transaction. This is somewhat similar to how Monero secures its transactions, but with added protection from CoinJoin and the total lack of addresses.

Putting together a MimbleWimble transaction requires communication between both parties as discussed above. The following steps are what happens during that communication:

1. The parties agree on the amount to be transferred.

2. The sender picks the inputs they want to use to create the amount to be transferred and adds together all the blinding factors for that transaction.

3. The sender sends the transaction data to the receiver. The receiver then picks the blinding factors for the outputs of the transactions, adds them together, and sends them back to the sender along with any additional required information.

Once the above steps are complete, the transaction can be sent to the network and confirmed.

In the above steps, I mention a blinding factor. The blinding factor makes up part of the zero-knowledge proof system used in Confidential Transactions. It is the ‘missing part’ or the private key for each input – if you know the blinding factor for a given output, you can spend it. By adding together all the blinding factors for every input in the transaction, you can prove you own all the inputs used in the transaction, but not share the private keys.

Reduced blockchain size and increased verification speed

MimbleWimble blocks are different from the blocks employed in other blockchains. Only unspent outputs and new currency generation are saved. The idea being that you don’t need to know about every transaction ever to verify a blockchain. All you need to know is where all the currency is now, and where it all came from.

Storing just that data increases fungibility, user privacy, and verification speed. Much like above, anyone looking to verify the blockchain simply needs to verify that the sum of the inputs subtracted from the sum of the outputs equal zero.

The downside of MimbleWimble

Unfortunately, with the security that MimbleWimble provides, you lose some of the tech Bitcoin has.

For example, in order for all transactions to be consolidated in blocks, they have to be very similar. And due to the requirement for said similarity, MimbleWimble does not have any sort of script system.

Otherwise, due to the consolidation of transactions, MimbleWimble has no transaction history. Meaning that an external auditor or similar would be unable to monitor transactions directly.

Conclusion

MimbleWimble is a fantastic step forward in privacy crypto. If the upcoming launch of its first implementation GRIN goes well, and no issues are found in the algorithm, MimbleWimble will be a serious competitor in the privacy coin market. My only concern is whether or not the inability for even the owners of the currency to audit where it came from using the blockchain itself will deter large scale users.

Sources and further reading:

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Ethereum Constantinople

Ethereum Constantinople is a hard fork of the Ethereum blockchain designed to lay the groundwork for huge scaling improvements.

Originally scheduled for Wednesday 16th January, Ethereum Constantinople has been delayed by developers. A vulnerability was found in the code that could have been exploited by hackers, putting funds at risk.

In a blog on Ethereum.org, the team explained: “Out of an abundance of caution, key stakeholders around the Ethereum community have determined that the best course of action will be to delay the planned Constantinople fork.”

The delay is temporary while developers work towards a solution.

What is Ethereum Constantinople?

The hard fork is part of Ethereum’s long-term scaling road map. Ethereum has long suffered congestion problems which results in high fees and slow transaction times when the network is busy.

The Ethereum team is working on several scaling projects including off-chain solutions, sharding, and, ultimately, a switch to “Proof of Stake” algorithm. Together, these changes should result in significantly higher speeds and lower costs.

However, upgrading the network while operational is like changing the engine in a moving car. The Ethereum team need to lay the technical groundwork before the big changes can happen.

That’s where Ethereum Constantinople comes in. It implements a series of maintenance upgrades that facilitate enormous scaling in the future.

What’s in the upgrade?

Ethereum Constantinople will implement five ethereum improvement proposals (EIPs).  They are as follows:

EIP 145 – Will result in a 91.4% saving in Ethereum gas costs through more efficient information processing methods. It relates to a process known as Bitwise shifting and requires the introduction of a native operation on the Ethereum Virtual Machine (EVM).

EIP 1052 – Makes it cheaper to process large smart contracts that only require a hash.  More specifically, this functionality returns the keccak256 hash of a contract’s bytecode. It improves upon the design of the EXTCODECOPY opcode.

EIP 1283 – This proposal aims to help smart contract developers by reducing gas costs related to changes made to data storage.

EIP 1014Introduces some off-chain transaction solutions to improve scaling possibilities.

EIP 1234 – Delays the “difficulty bomb” and reduces the mining reward from 3 ETH down to 2 ETH.

Of the proposals above, only the last one is considered controversial. Ethereum’s difficulty bomb is designed to make it progressively more difficult to mine Ethereum. At a certain point, it will become almost impossible, forcing the switch from “proof of work” to “proof of stake.”

The proposal exists to de-incentivize miners by not only making it more difficult to mine but by reducing the reward too.

Despite the controversial proposal, mining pools were generally on board with the upgrade. We were not expecting a contentious fork or competing chains.

Ethereum Constantinople Delayed

On Tuesday 15th January, Ethereum developers announced a delay to the upgrade. The decision involved Ethereum founder Vitalik Buterin and other prominent Ethereum developers.

A new date for the upgrade will be discussed on Friday 18th January. 

A Critical Vulnerability Discovered

A vulnerability was discovered in one of the proposals (EIP 1283) by ChainSecurity, a smart contract auditing company. 

The vulnerability would have enabled a “reentrancy attack” against smart contracts similar to the 2016 DAO hack which saw $70 million in ethereum stolen.  

A reentrancy attack means a manipulative actor could theoretically ask the smart contract to perform a specific function multiple times before the contract is executed or anyone is notified. It means an attacker could keep withdrawing money almost endlessly. 

In a detailed Medium post, Chain Security explains:

“The upcoming Constantinople Upgrade for the ethereum network introduces cheaper gas cost for certain SSTORE operations. As an unwanted side effect, this enables reentrancy attacks when using address.transfer(…) or address.send(…) in Solidity smart contracts. Previously these functions were considered reentrancy-safe, which they aren’t any longer.”

Is Ethereum at risk now?

ChainSecurity concluded that the current Ethereum blockchain is currently at risk:

“A scan of the main ethereum blockchain using the data available from eveem.org did not uncover vulnerable smart contracts.”

At the time of writing, the Ethereum Constantinople upgrade is delayed with a new launch date to be discussed on January 18th.

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Bitcoin mining took a big hit in 2018. 

For most of the year, mining activity operated below the threshold for profitability. The biggest name in crypto mining, Bitmain, ended the year by cutting 50% of staff and shelving plans for a stock market launch.

But what will 2019 bring? Will cryptocurrency mining become profitable again? In this article, we present an overview of bitcoin mining for 2019, touching on the biggest trends you need to know if you’re looking to get started.

Is Bitcoin Mining Profitable in a Bear Market? 

The price of bitcoin fell more than 70% in 2018, putting huge pressure on bitcoin miners. Mining profits fell 50% in one month alone (November) with the equivalent of 1.3 million miners going offline.

With cryptocurrency mining currently offering slim or zero economic return, what happens next?

Crypto mining profitability chart
Source: CoinTelegraph

It is definitely more difficult to justify starting a mining operation for most people. However, with fewer miners, there are greater chances to earn mining rewards.

There are a number of tools available that allow you to estimate potential profits or losses (here and here). These can be customized according to factors like crypto prices, electric costs, hardware specs.

Even under poor crypto market conditions, miners could decide to “hodl” any funds earned in hopes of a market turnaround. Clearly, 2019 price trends will go a long way in helping people determine whether or not to mine at all.

Layoffs at Bitmain

Bitmain is the largest cryptocurrency mining company on the planet. It supplies mining hardware and operates various mining pools.

If you’re looking into cryptocurrency mining, you need to know what’s going on at Bitmain.

In December 2018, Bitmain reportedly fired more than 50% of its staff, including its entire Bitcoin Cash (BCH) development team. The combination of huge losses and the major bet on BCH presents big challenges for the company moving forward. US IT firm UnitedCorp sued Bitmain, Kraken, Bitcoin.com, and Roger Ver for allegedly manipulating the BCH network. 

According to numerous reports, Bitmain was unable to liquidate its massive BCH reserves via cryptocurrency exchanges. Moreover, BCH was one of the worst performing cryptocurrencies in 2018. This only exacerbated the struggles of Bitmain. 

The company originally planned to open up a Texas-based data center that would cost $500 million and generate 400 jobs but has decided to put these plans on the backburner. Bitmain has also halted plans for a stock market launch, at least for now. Co-founders Wu Jihan and Zhan Ketuan plan to step down from the CEO position and remain on the board of directors. The likely successor is Wang Haichao, who is currently the product engineering director of Bitmain.

The Rise of Cryptojacking

Cryptojacking is another growing issue in the mining world.

At one point in 2018, cryptojacking replaced ransomware as the most popular form of cyber attack. Essentially, cryptojacking happens whenever person A uses person B’s computing power to mine cryptocurrency without person B knowing about it. In the early days of cryptojacking, it was more difficult to get hacked. This is because doing so required the installation of malicious software on a device.

Now, however, it’s possible to become a victim of cryptojacking just by visiting a website. With options like Coinhive, cryptojacking can be made possible by inserting a snippet of JavaScript code. The rise of cryptojacking presents new challenges for individuals and businesses both involved in the cryptocurrency space and not. Most online threat detection solutions don’t cover cryptojacking protection.

For cybersecurity experts, this has become a new issue to solve moving forward. Some major examples in 2018 included the arrests of 20 individuals in China who allegedly affected over one million computers with cryptojacking software. Additionally, In Japan, 16 individuals were arrested for a Monero (XMR) cryptojacking case.

Lawsuit Against Nvidia

The crypto bear market has weighed heavily on companies that supply chips for cryptocurrency miners. Nvidia, which produces microchips for gaming, AI systems, and crypto mining, had a rocky year in 2018.

In December 2018, Schall Law Firm announced the filing of a lawsuit against Nvidia, for “false and misleading statements to the market”. More specifically, Nvidia allegedly asserted that a decline in demand for GPUs used for cryptocurrency mining would not have a negative impact on the company’s operations or performance due to high demand for GPUs from gamers. 

While the stock market, in general, experienced declines in Q4 2018, Nvidia was hit harder than most. In addition, the timing lines up with its business performance. The day after Nvidia’s Q3 earnings report was released, Nvidia’s stock fell around 19 percent. One commenter said, “Stock went down for external reasons and no stock exchange listed firm can be sued for ‘force majeure’.” Another has said, “Assuming Nvidia made this statement, it could plausibly be grounds for a lawsuit, as it’s clearly in violation of securities rules.” 

No matter whose side you are on in this argument, it’s important to recognize how it could impact the cryptocurrency industry moving forward. What will be the result of this lawsuit? Will Nvidia focus on crypto-specific products moving forward?

Crypto Mining and Gaming: Asus and Quantumcloud 

One emerging trend in the mining community is harnessing the idle power of gaming rigs.

In November 2018, Asus announced a partnership with Quantumcloud. The solution is simple. Currently, there is a major surplus of gamers who use graphics cards only when gaming. For long periods of time, the capabilities of graphics cards are not being utilized. With this partnership, ASUS will allow gamers to be able to make use of idle graphics cards to mine cryptocurrency. There will also be options to cash out earnings through PayPal or WeChat. It’s still unknown which coins will be available as options for cloud mining with Quantumcloud software. We also don’t know if, or how much of the cut from earnings, will go to Asus or Quantumcloud.

Nonetheless, it is cool to see that major tech companies are still working on partnerships that involve the expansion of cryptocurrency mining even in the bear market. Additionally, this could create greater decentralization and egalitarianism to mining operations, and crypto supplies in general, by opening a new potential user base of miners.

The Ongoing ASIC Resistance Battle

ASICs (application specific integrated circuits) are designed specifically for mining cryptocurrencies. The rise of powerful ASICs has made it almost impossible to mine cryptocurrency on a PC or laptop; some crypto projects are fighting back and blocking ASIC mining. 

bitcoin miner

Instead of allowing miners to use ASICS, several projects are developing algorithms to block this possibility. Monero was probably the most well-known case of this in 2018.

Throughout the year, ASIC rigs designed for Ethereum mining started to emerge. In September 2018, it appeared that Ethereum was willing to let this go on without the implementation of a new algorithm in its upcoming release of Ethereum v3.5 (known as Constantinople). This is likely due to the fact that Ethereum is planning to switch from Proof of Work to Proof of Stake, which would eventually make all mining operations, (ASIC, GPU, CPU) obsolete. However, in recent weeks ahead of the January 2019 update, Ethereum developers have begun to implement an ASIC resistant algorithm anyway for Constantinople. 

So where does that leave the cryptocurrency mining community in 2019? There are still a few blockchains which allow ASIC mining to take place. Bitcoin (BTC) is a good example. Additionally, Bitcoin Cash (BCH) mining pools have adopted a protocol known as Asicboost which “can speed up the mining process by a factor of approximately 20 percent by reducing the gate count on mining chips.” 

Essentially, the protocol can be applied to all types of ASIC chips. For now, it appears that the ASIC debate will continue to be relevant throughout 2019 as technologies on both sides become more advanced.

Proof of Stake (PoS) Winning over Proof of Work (PoW)?

If the battle between pro and anti-ASIC sides wasn’t enough to change the landscape of crypto, the decision between PoS and PoW as the go-to consensus algorithm definitely is. As mentioned in our recent Ethereum roadmap article, the world’s second largest cryptocurrency by market cap is moving from PoW to PoS. Along the way, the reduced mining reward from 3 ETH to 2 ETH puts pressure on the miners until the switch to Casper (Ethereum’s PoS). 

The good news is that these changes are planned out pretty far in advance. However, it also presents new big picture questions for crypto projects, miners, and entire communities. If Ethereum’s change is successful in reaching greater scalability and making the network more decentralized, it will be interesting to see which projects follow suit. Ethereum isn’t necessarily a definitive trial test for the capabilities of PoS. 

Other projects (i.e. PIVX, NIX, etc.) have already made this switch in the past. However, none have been completed at this scale or with this degree of attention from the industry. It could ultimately lead to less reliance on PoW and mining. However, at the beginning of 2019, that is still yet to be determined. 

Top Mining Tech Trends to Watch in 2019

FPGA (Field-programmable gate array): In 2018, we saw the clear advantages of new types of mining equipment. As detailed above, ASICs demonstrated the capabilities of faster hash rates. However, they lack versatility and can’t be programmed to keep up with algorithm changes. Meanwhile, GPUs are much slower but a bit more versatile for mining various coins.

Now, FPGAs could emerge and offer a solution that is the best of both worlds. For instance, some FPGAs are 10x the speed of GPUs and can quickly change to different algorithms. Additionally, they are designed to use less electricity to run. 

As of the beginning of 2019, FPGAs have yet to gain user adoption despite being around since the early 2010s. This is mostly due to factors like high price points ($4,000 per card, or $25,000 – $30,000 per rig) and highly technical configuration requirements. Still, it would be interesting to see if new tech will emerge to make FPGAs more accessible to the average miner.

Mobile Mining: There are a few different mobile mining solutions available in 2019. DroidMiner BTC/LTC/DOGE Miner and Electroneum are two such examples for Android devices. Free Bitcoin is an option available for both Android and iOS. However, there is a clear lack of options for iOS and viable apps overall. 

The power of mobile devices simply hasn’t been enough to compete with dedicated mining rigs. Moreover, this type of mining would likely cause you to need to constantly replace mobile phone batteries. As a result, any profits are likely to turn to losses in a short amount of time. Still, it will be interesting to see if or how mobile mining can become more innovative moving forward. 

Conclusion

In summary, cryptocurrency mining operations continue to change along with the overall market. The struggle of everyone from small miners to large-scale enterprises in the past year is evident. However, the fact remains that crypto mining plays an important role in the validation of transactions for the vast majority of blockchains. Along with numerous challenges for miners, it’s also possible to find opportunities that could lead to more innovation.

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HSBC blockchain

HSBC used blockchain technology to settle more than three million forex trades in the last year. 

The trades, worth $250 billion, are a “small proportion” of HSBC’s total trading figures. However, it’s a huge step forward and proof that blockchain can offer real-world solutions.

HSBC said the distributed ledger technology had helped the company lower costs while reducing errors and delays. It has also allowed the bank to automate some processes that previously relied on manual input.

While many banks have experimented with blockchain technology, few have implemented it into existing processes. HSBC is now looking at how blockchain can help global clients improve forex trades.

Source: Reuters

blockchain developer

The annual salary for a blockchain developer has risen over the last six months, despite the ongoing bear market and crypto layoffs.

According to a new report by Janco Associates, blockchain developers command an extra $4,000 per year compared to six months ago. The average annual salary for a blockchain developer is now $132,000, although some experienced individuals earn as much as $176,000.

“CIOs do not want to lose the talent they have on board. As a result, they have increased compensation for those positions,” Victor Janulaitis, CEO of Janco Associates, explained to Computer World.

Blockchain developers are now among the highest paid IT professionals, period.

However, the pay rise isn’t just isolated to developers. Most blockchain-related jobs are experiencing a rise in salary demand. After the bitcoin price fell more than 70% in 2018, keeping talented individuals in the space requires a larger compensation package.

The news comes as many blockchain startups announce layoffs and restructures. As Block Explorer recently reported, high-profile companies like Bitmain, ShapeShift and ConsenSys have cut staff in recent months.

Perhaps startups are focusing on the core tech rather than ancillary services as the crypto winter takes hold.

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