BEAM - A Confidential Way of Transaction

vhagar (38)in #contest • 6 years ago (edited)

Introduction

When bitcoin was first mined in 2009, it opened a new realm of possibilities, a new way of transaction, one that will give the banking institutions a run for their money. It threaten the very foundation of bank's existence, a decentralized way of transactions where no middle man (Banks) will be needed. Nine years after, and we can say it has had a bitter-sweet story so far, and one of the reasons behind this (among many other reasons) is because of the privacy issue bitcoin has.

Initially, transactions on the bitcoin blockchain were private, or so people thought at the time, but as technology advanced, and people got got smarter, ways were devised on how to truly track people's transactions on the blockchain, that became another challenge Bitcoin has to confront. Unfortunately, till today, the privacy problem hasn't been completely solved by bitcoin, but there is crypto that is making strides in that domain BEAM

BEAM is a cryptocurrency that is built on the MimbleWimble blockchain, that enables its users carry out transactions in a peer-to-peer manner, without disclosing details of the transaction.

Why Use BEAM?

BEAM Features

Users have utmost control over their privacy, they decide what is to be seen and who can access these information
It doesn't require any trusted setup
BEAM makes sure privacy comes at no additional cost
They use the industry standard Equihash proof of work mine blocks
BEAM is scalable as it utilizes the Mimblewimble cut-through feature
Supports escrows, time based transactions, atomic swap, and others

Being integrated with the Mimblewimble blockchain enabled BEAM to become more efficient, by keeping transactions private, as well as making the system more scalable, which makes BEAM ready for mass adoption.

What is Mimblewimble?

The issue of privacy was bound to come up at some point, and in August 2016, a protocol was published by an anonymous person or group. It’s focus was on an efficient confidential blockchain. This was named MimbleWimble, which is a reference to Harry Potter. It is primarily built around two principles proposed earlier by Dr. Greg Maxwell, which are Confidential Transactions and Transaction Cut-through.

MimbleWimble is able to ensure transactions are confidential, by making use of cryptographic commitment schemes that have two basic properties, which are hiding and binding.
Binding refers to the process of ensuring commitments made, are valid. The other party is unable to have access to this commitment at this time, but can see it is there. The process of providing a key, to ensure that the information within is exactly what is expected, refers to the hiding aspect.

The commitment scheme MimbleWimble makes use of is known as Pederson Commitment. It is able to achieve this by using Elliptic Curve Cryptography.

MimbleWimble is a UTXO (Unspent Transaction Output) based system, which essentially means that it is defined by inputs and outputs, unlike in a state based system.
It ensures it works efficiently by combining intermediate outputs within one block, and also when it is dealing with multiple blocks. By doing this, it ensures that it stores only the current state of UTXO. This means that size of the blockchain is much smaller than it is, in ethereum and bitcoin.

Such input come from genesis blocks or block rewards, after which they can be used from outputs.

Use case

Aboki rented a place for the next 12 months and the landlord has tough penalty clauses on delay in payment. Aboki does not want to end up paying penalties over and above the already high rentals. He thinks of using the blockchain and make the payment time bound to the landlord. However, he is unhappy with the lack of privacy of his wallet balance and other transaction details which may be exposed on the chain. Besides, he needs to know a robust solution which can execute the rent transfer at the assigned time.

Aboki hears about Beam and is impressed with the privacy it provides. Further, he is excited to know that Beam itself can provide him the time-bound transaction implementation. Devoid of Beam, he would have had to use multiple solutions to enable his payment. Now, the same is done through just one blockchain solution and that is Beam. Aboki goes ahead and uses Beam.