Beam is a so-called “privacy coin” stemming from Mimblewimble, a proposed change to the Bitcoin protocol that would increase privacy and fungibility while offering a better ability to scale. The concept was introduced in a white paper by the pseudonymous Tom Elvis Jedusor (Voldemort’s name in the French version of “Harry Potter”) in July 2016, and Beam is set to become the first project to realize it. It should shortly be followed by Grin, scheduled to launch on January 15, 2019.
“We were fascinated by the elegance of the Mimblewimble protocol and understood that this is something that Bitcoin should have been,” Alexander Zaidelson, Beam’s CEO, told Distributed. “Lack of transaction confidentiality and poor scalability are some of the major issues that hinder crypto adoption.”
Beam aims to provide this confidentiality while still allowing business users to report financial transactions to tax authorities or auditors as necessary by allowing users to choose the level of privacy and disclosure they want. It also seeks to enable the issuance and trading of “confidential assets” on a blockchain.
“We felt we could build a platform that has confidentiality and scalability at its core and allows for tons of powerful and usable features to be built on top of it, giving it a great chance for wide adoption and for eventually realizing the original crypto dream of making financials truly decentralized and permissionless,” Zaidelson said.
Since the project was announced, Beam has been developing its blockchain, making it usable and conducting testing. It expects to launch with an anonymous cryptocurrency and a user-friendly wallet that will run on three major platforms.
How Does Mimblewimble Work?
As the first project implementing Mimblewimble to launch, Beam sees itself as filling a critical need in the cryptocurrency space. In Mimblewimble, there are no cryptocurrency addresses that hold balances. Rather, users hold a set of keys that control their own unspent transaction outputs (UTXOs). There is no distinguishing between UTXOs from the outside (making them effectively anonymous), and they are only accessible to those with the keys. To conduct transactions, users create two new outputs, one where they send the amount of cryptocurrency they wish to transfer and the other where they store their remaining balance, and provide the keys to the former to the party they are transacting with. Upon receiving these keys, that party changes the keys. Then, both parties sign the transaction and make it publicly available so it can be validated. Through clever mathematics, the miners can validate transactions without needing to see the precise UTXO amounts.
“Contrary to many other cryptocurrencies, Beam blockchain does not hold all the transaction history,” Zaidelson explained. “Instead, it only holds all the UTXOs and a small piece of information called ‘transaction kernel’ for each transaction. Using the kernels, it can be proven that the current state of UTXOs is valid and that everyone’s [cryptocurrency] originates from a valid transaction.”
The Future for Beam
In an exclusive to Distributed, Beam also announced its two latest side projects.
The first is called “Project Lumini,” and it is set on connecting the Beam blockchain to Ethereum so that users can represent certain Ethereum-based tokens as confidential assets. This project is a partnership with StableUnit, a low-volatility cryptocurrency protocol.
“This will allow confidential trading in additional asset types, and the first use case will be a stablecoin based on one of the popular stablecoins on [Ethereum],” Zaidelson said. “It will be very beneficial for anyone who wants to use tokenized assets or stablecoins but is concerned about privacy.”
The second side project is called “Beam Lightning.” This is Beam’s effort to integrate the Lightning Network, with the hopes of enabling fast payment channels based on its cryptocurrency.