This week we had the privilege to meet Alex Romanov, the CTO of BEAM, The new confidential and scalable privacy coin which is based on the innovative Mimblewimble protocol.
The company currently has 20 employees, among them: CEO Alexander Zaidelson, CMO Beni Issembert, and COO Amir Aaronson
This protocol was first published 2 years ago by an anonymous user by the name of Tom Elvis Jedusor (the French name of fictional Harry Potter character Voldemort) as a way to create a privacy blockchain where the sender, recipient, and transaction details are unknown while the size and the complexity of the blockchain remain scalable.
Today, it has become fairly easy to identify users through their Bitcoin addresses and history of transactions. There are even companies that exist specifically for this purpose. The lack of privacy in Bitcoin poses a real problem for businesses and individuals who view anonymity and censorship resistance as a top priority when handling their finances.
Most solutions to the privacy problem come with their own issues around scalability and implementation. However, in the Mimblewimble white paper, the author solved the problem of privacy without adding additional information to the blockchain and actually making it smaller and more efficient.
Alex caught wind of this protocol through a friend in the industry and decided that it would be the ideal solution to utilize for Beam.
Mimblewimble is a combination of 2 concepts: the first is confidential transactions, where the value of each transaction is encrypted so that they can’t be known to anyone outside of the participants of the transaction.
The second is the unique structure of transactions. Transactions are structured in such a way that allows them to be combined, thereby removing any unnecessary intermediate steps. For example, when a transaction is sent from recipient A to B, then B to C, you can remove recipient B, and only focus only on prioritizing data relating to recipient A receiving the funds, and recipient C owning it.
Essentially, the protocol traces the creation of news ‘beams’ (the coins base transactions created by miners) and the current state of the system. With Mimblewimble, all transactions look the same, and until the parties involved disclose their private keys to the transactions, no one can know how much is in it.
BEAM’s blockchain size is much smaller than Bitcoins, making it more efficient for Miners to get involved. The main advantage that Beam has over other privacy coins such as Zcash, Monero, and DASH is its scalability. Zcash uses zero-knowledge-proofs to ensure privacy. However, this forces them to add a lot of information to the blockchain that makes it harder to scale. Monero uses ring signatures, where each transaction needs to be signed by several participants in order to be approved. This mechanism also leads to the blockchain being larger and therefore less scalable.
Dash is considered to be the most centralized of all privacy coin competitors, which makes it less private despite its scalability advantages.
Beam primarily solves 3 problems that exist in Bitcoin: privacy, confidentiality, and size of the blockchain. Although the team acknowledges that Beam is not yet fast enough to function as a peer-to-peer payment solution, it currently has a capacity of 16-20 transactions per second, which is more than Bitcoins 7 transactions per second. For now, Beam primarily serves as a store of value.
Instead of launching an ICO, the company is being funded through the Treasury model, which means that a certain percentage of the mining rewards for each block goes to the treasury, which will be used to fund the Beam project.
BEAM is launching a non-profit foundation next year, which will govern the project and its protocol. The team is also currently working to build communities of privacy coin supporters, enthusiasts, and developers who want to participate in the ecosystem. Currently, Beam is in Test Net 1, which was launched 1 month ago. Testnet 1 includes a fully functional node and graphical wallet.