Bitcoin has a problem

Chris Dev

March 14, 2019

Bitcoin has a problem. It doesn’t scale. Every transaction that is ever sent must be stored forever. Yes, think about that. If Bitcoin becomes a global reserve currency it will last over 100 years. So 100 years from now, the world will be downloading every coffee purchase, satoshi dice roll, silk road pot brownies, and yes even the first Bitcoin transaction where Satoshi sent Hal Finney 10 bitcoins way back in 2009. What about Lightning Network? Well, it helps, but still over time the blockchain will grow so big that it’s effectively impossible for end users to download it.

Luckily, there’s a solution. On July 19, 2016 a pseudonymous poster released a paper documenting a new blockchain protocol to the Bitcoin mailing list. This poster referred to it as “Mimblewimble”. Why does it scale so much better than Bitcoin? Well, the math is quite complicated, but the bottom line is that you don’t need to save every transaction that has ever occurred, you just need to save the ones that haven’t been spent yet. So, if I send you a bitcoin and you send it back to me and we repeat this 100 times, all of those transactions must be retained forever in the Bitcoin blockchain. With Mimblewimble, only the last transaction will need to be saved. The rest can be discarded by everyone.

Let’s quantify this. If the Bitcoin blockchain were to have been ran as a Mimblewimble blockchain from the beginning, how much less space would it take up? Bitcoin currently has around 360 million transactions in its history. About 50 million of those transactions are unspent (have a balance). The others are already spent. The total size is approximately 200 GB worth of data and this is why it’s so hard to run a full node. You have to download this 200 GB worth of data. The problem is only expected to get worse over time. To make matters worse, if all of those transactions were using confidential transactions (amounts hidden for privacy), the blockchain would take up another 450 GB of space (total 650 GB). The same amount of transactions using Mimblewimble (which uses confidential transactions for privacy) would use around 70 GB. This is roughly 10 times better if you assume confidential transactions and even 3 times better without confidential transactions. There are possibly ways to even reduce this. Also, it’s important to note that over time these advantages grow because the ratio of spent to unspent transactions is likely to increase. Bottom line is Mimblewimble is likely to require 10X less space than the Bitcoin blockchain.

What are the implications of this 10X decrease in space? Probably the biggest implication is that full nodes could be run on phones and other devices and download the blockchain in a reasonable time and make the system much more usable for end users. I suspect some people are saying that you don’t need to run a full node, but without running a full node, you are not really using Bitcoin because you are trusting the miners to validate transactions for you. More full nodes means a healthier ecosystem.

With all this in mind, let’s talk about what the implications are for Bitcoin holders. It’s fairly clear that Mimblewimble is a dramatic improvement that is important to implement, but it needs to be proven in the real world first before it is incorporated into Bitcoin. There has been talk about implementing Mimblewimble as a sidechain or an extension block, but that really negates most of its advantages. If you’re trying to reduce the initial block download and increase privacy you need incorporate Mimblewimble directly into the Bitcoin blockchain as a hard fork (or series of hard forks). This would require consensus. How would that consensus manifest itself? The only way to mobilize the Bitcoin community to implement Mimblewimble is if a competitor was taking market share away from Bitcoin. And while there could be a minority that splits off (as happened with BCH), a real competitive threat is probably the only way to get consensus for such a dramatic change as Mimblewimble.

This is where grin comes in. Did you wonder why VCs invested hundreds of millions of dollars in grin mining hardware? Or why grin uses a mining algorithm that requires the purchase of the newest graphics cards which these VCs undoubtably own most of? These same VCs will likely end up owning almost all the supply of grin even though it supposedly is having a “fair launch”. If you control all the mining, a supply cap may seem less important which may explain grin’s decision to not implement one. Also, in looking at the code, it is very clear to me that it has a VERY good development team behind it. In my experience, this is not a kind of volunteer project, but many of these anonymous contributors must be funded by someone. It would be in the interest of the VCs that invested in mining hardware to hire this caliber of developer, which believe me, is not cheap. It seems fairly clear that these VCs have major plans for grin and it’s being kept quiet as of now. The future plans are not reflected in its current $13 million market cap.

So, what Bitcoin holders were supposed to do was sit back and watch while these VCs make money off of grin until eventually it’s incorporated into Bitcoin. That is, until MWC came into the picture. Now Bitcoin holders can register for their own Mimblewimble coin through the airdrop process that is launching on April 20, 2019 and a snapshot date of July 19, 2019, the three year anniversary of the Mimblewimble white paper. So, take action and follow us on twitter and join us on discord today and make sure to register for the airdrop which opens in just over a month.

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