BEAM

When the world was first introduced to cryptocurrencies, one of the features that stood out the most was the privacy these digital coins offered. However, as more people got on board the blockchain train, it became apparent that bitcoin and other pioneer cryptocurrencies weren’t exactly as private as we thought.

Thus, the need for privacy-oriented cryptocurrencies arose. These cryptocurrencies have several built-in security features that enhance privacy and anonymity. Therefore, it’s no surprise that they are a hot deal among crypto enthusiasts who prefer to keep their affairs to themselves.

Monero, Zcash, and Beam are three of the most popular privacy-centric cryptocurrencies. Crypto investors who are focused on the privacy features of a digital currency will probably contemplate buying into any or all of these three. So, which one should you go for in terms of scalability and confidentiality?

In this article, we’ll have an in-depth look at how the three altcoins compare. But first, how about a little background on them?

Monero

The cryptocurrency, launched in 2014 under the name BitMonero, relies on a technology called Cryptonote. It is a Proof of Work algorithm different than that of Bitcoin. In order to make the operations on its blockchain anonymous, the method adopted is that of the “Ring Signatures.”

It is a digital signature that can be created by anyone and in which each user has the key. A person can then put the electronic signature anonymously in a message or document on behalf of a “circle” of users. The members of the “circle” are chosen by the author of the signature and are not necessarily informed about the operation.

The strength of Monero (XMR) is therefore based not only on decentralization but also on its secrecy, which allows carrying out transactions that are theoretically untraceable by an external agent. If, for example, bitcoin operations are publicly recorded on the blockchain, in the case of Monero’s ledger, the information is not accessible to everyone

Zcash

Zcash (ZEC) defines itself as “If Bitcoin is like HTTP for money, Zcash is HTTPS,” underlining its enhanced security and privacy features. Zcash has implemented a cryptographic tool called Zero-Knowledge Proof and grants participants an option to shield transactions. It allows participants to transact without any of them revealing their addresses to the other(s). Zero-Knowledge Proof also obfuscates the transaction amount. Zcash ranks at number 42 in the list of cryptocurrencies with a market cap of $654 million and trading at $60.50 per ZEC as of December 24, 2020.

Beam is a security-focused token with core features that include complete control over your privacy. All transactions are private by default and no addresses or other private information are stored on the blockchain. It claims superior scalability due to its compact blockchain size, opt-in auditability, support for online and offline transactions, atomic swaps, and hardware wallet integration. As of December 24, 2020, Beam tokens were trading at $0.28, with a total market value of $21.9 million, making it the 294th most valuable cryptocurrency.

Confidentiality Comparison

Monero

Monero enables confidentiality by using Ring Confidential Transactions (a combination of Confidential Transactions and Ring Signatures) and Stealth Addresses. In addition, Kovri (currently in pre-alpha) is used to obfuscate peer-to-peer communication. Confidential Transactions hide the transferred amounts. With Ring Signatures, at least six “decoy” coins are added to each transaction, each looking equally likely to be the actual one spent in the transaction, thus making the actual source and destination next to impossible to trace. That said, there are certain claims (see this study, for example) stating that there are ways to trace transactions on the Monero network. We do not aim to confirm or contradict those claims.

ZCash

Zcash uses zk-SNARKs — a novel and very advanced form of zero-knowledge cryptography. Some people call zk-SNARKs “Moon Math” — that’s how arcane and presumably beautiful they are. With zk-SNARKs, all transaction amounts, inputs, and outputs on the blockchain are entirely hidden. However, transactions on Zcash are not private by default. Since zk-SNARKs are computationally heavy to create (it takes 1–3 minutes on a regular PC to create a private transaction on Zcash), most users do not enable them, hurting the overall privacy of the network. At the time of writing, the percentage of fully shielded (i.e., entirely private) transactions on Zcash is below 1% (see here).

The upcoming Sapling network upgrade should make the performance of shielded transactions much more efficient, and hopefully, increase the amount of private transactions on the Zcash network.

In addition, zk-SNARKs require a special secret key to set up the entire system. If this key leaks, the perpetrator can print money and thus destroy the coin. Zcash carries out intricate multi-person ceremonies to create this key, and we have no reason to doubt the integrity of the people involved. However, this is still a valid concern.

Beam

BEAM is built on Mimblewimble, a very elegant protocol that allows for both confidentiality and scalability. Transaction amount, sender, and receiver are hidden using Confidential Transactions, and there are no “addresses” in the system — each user just holds private keys to the UTXOs she owns.

Privacy in BEAM is enabled by default. Actually, there are no “open” transactions at all. Reading the blockchain would not yield any information to the observer.

In addition to Mimblewimble’s default privacy, BEAM also implements Dandelion, a networking policy that significantly improves anonymity. Dandelion prevents someone from observing the network traffic to infer any valuable information.

Scalability Comparison

Monero

Due to the use of Ring Signatures, additional data is attached to each transaction, significantly increasing the size of the blockchain. At the time of this writing, Monero blockchain size is around 48GB and will continue to grow with wider adoption, hurting usability. We estimate that in Monero, the size of an average transaction is about 14Kb which is almost 25 times greater than in Bitcoin. Simply put, when Monero reaches Bitcoin’s current scale concerning the total number of transactions, its blockchain will be about 5 terabytes — hardly sustainable for a regular PC, let alone on smaller devices. It should be noted that Monero team is currently implementing bulletproofs that should improve scalability by up to 80% (which is still about 5 times more than Bitcoin)

ZCash

At the time of writing, Zcash blockchain size is around 19GB, while the total number of transactions is approximately 3.5 million, giving an average of 5.3KB per transaction — almost 9 times higher than Bitcoin. While it is better than Monero, it is still much heavier than Bitcoin, which is also not scalable enough in that respect

Beam

In BEAM, the Mimblewimble cut-through mechanism is used to keep the blockchain small. The cut-through removes all the intermediate states of UTXOs, essentially leaving only unspent outputs on the blockchain. Thus, the blockchain size does not grow with the number of transactions, but with the number of UTXOs, which is overall much slower.

We estimate that BEAM Blockchain size will be around 30% of Bitcoin’s, so the blockchain size should be below 70GB when BEAM reaches Bitcoin’s scale, making it possible to run a full node on smaller devices. We are actively researching additional improvements to Mimblewimble to make the blockchain even smaller (see Eliminating Transaction Kernels).

With widely touted claims of anonymity and privacy, many Bitcoin users believed the currency’s transactions to be anonymous. But in recent times, that belief is being shattered as more users realize that their transactions can be linked back to them. Anyone with enough resources and use blockchain analysis to track down who initiated what transaction and the end receiver of that transaction.

Crypto exchanges, merchants, and over-the-counter deals all represent possible data leaks on transactions. Bitcoin’s public and transparent ledger doesn’t help either. Once a user’s identity is known, all their transactions’ history, as well as their balance, can be directly linked to them.

When you think about how personal privacy is a big deal these days, it’s hard to reconcile with this situation. Anyone, organizations, and individuals alike, would prefer their transactions to remain confidential, with only they in control of who gets to see them.

Beam is a cryptocurrency that goes all-in when it comes to user anonymity. Based on MimbleWimble, a privacy protocol with an elegant approach to the privacy of blockchain transactions, Beam takes no half measures with your privacy.

What’s Beam?

Founded in March 2018 and officially released in January 2019, Beam is a privacy-oriented cryptocurrency based on the MimbleWimble protocol. The MimbleWimble protocol enables the complete anonymity of transactions by default. With the protocol, Beam provides not only privacy but also reduces blockchain bloating that is prevalent in traditional blockchains and which slows down transactions. To date, only two cryptocurrencies have implemented MimbleWimble, and that is Beam and Grin.

What’s MimbleWimble?

MimbleWimble is a blockchain privacy protocol that was proposed in 2016 by a pseudonymous developer named Tom Elvis Jedusor (the French name for Vodermort, a character on the series) on the #bitcoin-wizards IRC channel. It’s named after a spell the Tongue-Tying Curse that prevents enemies from spilling secrets in the wildly popular and fictional Harry Potter television series.

So, how does the MimbleWimble protocol work? To understand this, let’s first get a look at MimbleWimble transactions. Transactions are based on what’s known as ‘Confidential Transactions,’ developed by a Bitcoin developer Adam Back. Confidential transactions allow users to encrypt their transactions and transaction values using ‘blinding factors.’ A blinding factor is a string of numbers that encrypts the outputs and inputs of a Bitcoin transaction.

MimbleWimble also leverages another anonymizing technology known as CoinJoin, a cryptographic innovation by Gregory Maxwell. CoinJoin obscures an individual’s transactions by mixing it with other transactions from multiple other users. The final output is a ‘pot’ of transactions whose individual origin is difficult to trace.

Proof-of-work (PoW) with ASIC Resistance

For transactions’ consensus, Beam makes use of Beam Hash, which in turn is based on Equihash – memory-hard proof-of-work mechanism in which an individual’s mining is determined by how much RAM they have. In the first 18 months of Beam, the crypto stayed ASIC-resistant so as to promote decentralization. The network has since undergone a hard fork to adjust its PoW algorithm to ward off ASIC miners.

Beam’s Personal Data Protection

Beam is seeking to overhaul the whole way in which a blockchain records transactions. On the Beam network, a transaction’s personal information is removed from the network. In addition, it implements the ‘Dandelion++ Protocol,’ which is a privacy protection that propagates transactions in a way that lowers the likelihood that a sender’s crypto address can be linked to their IP address.

And finally, Beam utilizes the ‘Secure Bulletin Board System’ that allows wallets to exchange encrypted messages with each other even if they’re not connected to the internet at the same time.

Monetary Policy of Beam

Beam clearly states that it’s a store of value more than a transactional cryptocurrency. The Beam coin, known as BEAM, has a maximum supply of 263 million. The coin is deflationary, and block rewards are halved over time just as with Bitcoin.

Initially, block rewards were 80 BEAM, and this will be slashed in half every four years until it tapers to zero around 2152. After that, no more BEAM will be released.

In addition, BEAM utilizes a model similar to the ZCash’s Founder’s reward in which a part of the block rewards goes into the Beam treasury. The funds are then given to the Beam Foundation every month. This is how the Foundation supports the ongoing development of the project.

The Beam Team

CEO Alexander Zaidelson is the founder of the P2P file-sharing company Narrow and desktop dictionary app Wikitup.

CTO Alex Romanov is also Research and Development lead, and he brings to the table years of technical and managerial experience.

COO Amir Aaronson is co-founder of several tech startups with strong entrepreneurial and operation skills.

The Beam Token

The BEAM token plays two roles: a fully anonymous transacting currency and a digital store of value. The token’s distribution was as follows:

2.40% went to the first private sale in May to June 2018
1.20% went to the second private cell conducted between July to September 2018
0.55% went to the 3rd private cell that took place between October to December 2018
4.80% went to the team
2. 40% went to the Beam Foundation
0.65% went to advisors
88% make up Beam’s mining rewards

As of July 30, 2020, BEAM is trading at $0.410838, with a market rank of #150. It has a market cap of $26, 670, 659, a 24-hour volume of $14, 390, 578, a circulating antidotal supply of 64, 917, 680, and a maximum supply of 263 million. The coin’s all-time high was $3.21 (January 28, 2019), at an all-time low of $0.148340 (March 13, 2020).

Buying and Storing Beam

You can purchase BEAM from any of several popular exchanges, including Binance, HotBit, Gate.io, BitForex, BKEX, CoinEx, HBTC, Dragon Ex, CoinGecko, BiKi, altilly, bisq, BITFARE, BITRIBE TradeOgre, and Beaxy. In almost all exchanges, the crypto is available as a market pair with BTC, ETH, BNB, USDT.

For storing BEAM, the team provides a proprietary wallet available for both desktop and mobile, with support for Microsoft, Mac, Android, iOS, and Linux.

Final Words

Beam is one of the cryptos that have implemented the completely anonymous MimbleWimble protocol, affording users safe and untraceable transactions. For a crypto that was released only last year, Beam is doing pretty well. Its current market performance is a testament to how much crypto users value privacy, and it’s set to perform even better as more users become conscious of the need for total confidentiality.