Crypto Academy Week 16 - Homework Post for @levycore // Beam-A Secured Privacy Coin
Greetings to you, Professor @levycore. Thank you for the lecture on privacy coins. I am here to submit my homework for this week.
My choice of privacy coin is Beam coin and I will be looking at the following:
Fundamental Analysis of Beam Coin
Steps in Creating A Beam Coin Wallet
Why I Choose Beam: Advantages and Disadvantages
Conclusion
Fundamental Analysis of Beam Coin
Beam is a known scalable and privacy cryptocurrency. It is built to be based on MimbleWinble and LelantusMW protocols. These protocols aims to merge confidentiality in transactions with decentralized finanace (DeFi).
At inception, the Beam project raised $5.2 million through presale alone.
The Beam blockchain employs the proof of work (PoW) algorithm to reach network consensus. Through the use of the MimbleWimble protocol earlier mentioned, the Beam project has enhanced fungibility and privacy, thus it reduces blockchain bloating as well as lending a hand in the improvement of scalability.
The ecosystem is built in such a way that addresses which engage in transactions are not stored in the blockchain and transactions are set to be private by default.
For the purpose of maximizing privacy in the network, the Beam project makes use of LelantusMW protocol and as such, it offers anonymity to users to the tune of 64 kilobytes.
The Beam coin is designed to be deflationary in nature possessing a capped supply, with halving taking place every four years and a total stop of emission after 133 years.
In terms of utility, the Beam coin have two types of utility: a confidential store of value and medium of exchange with complete anonymity.
Beam: The MimbleWimble and UTXO Model
The MimbleWimble protocol on which Beam is based employs full blockchain confidentiality in terms of transactions without a compromise of the scalability of the coin. The MimbleWimble protocol is based on unspent transaction output (UTXO) model. Here, no address is displayed and the UTXO values are encrypted by what is referred to as blind factors.
Blinding factors refers to private keys which only the UTXO owners know. An observer can never have access to any ownership information nor the value of a UTXO in the Beam blockchain. Every user hold the key to their UTXOs.
In order to initiate a transaction, both the sending and receiving wallets must first establish a communication channel. When this channel of communication is established, the sender will create a transaction input, thus creating an avenue for both the sender and receiver to create their individual outputs, coupled with proofs to confirm that the values are not under negotiation. At this point, both parties will sign the transaction before it is sent to nodes for completion.
Secure Bulletin Board System (SBBS) on Beam Network
As earlier stated, the MimbleWimble protocol promotes confidentiality and scalability. The protocol does not store addresses; thus transactions are built through interactions between the participating parties.
That brought a challenge, as if Mr. A want to send funds to Mr. B, their wallets must interact through connecting and performing some actions. In order to solve this problem, the SBBS had to be implemented.
The SBBS makes transactions feasible just like every other blockchains like Bitcoin and Ethereum.
The technical architecture of Beam’s SBBS can be illustrated as below:
Dandelion Schematics
Every node on the Beam blockchain work together to ensure that the sum of inputs and outputs equals zero. That is to say that transactions are completed, in that no funds is pending.
Here the ranges of transactions and signatures are made to be correct and saved. The inputs are removed from the current UTXO and the outputs are saved for reference purpose.
The Beam coin is known for its scalability. To improve this, the MimbleWimble makes use of a system called transaction cut-through mechanism. It should be noted that the immediate activities of the blockchain are not saved.
Although the protocol holds recent UTXO, it have a linear record of record of the number of transactions in the blockchain.
Dandelion is an additional privacy mechanism employed by the Beam network. Here, transactions are not published to the nodes instantly, rather every transaction has to pass through several nodes before they are made open to the whole network.
Beam’s Lelantus-MW
This protocol is designed to provide maximum privacy when carrying out transactions on Beam network, through its breaking linkability feature.
This is an additional layer of privacy added the the Beam network, which enables users to unlink any connections they choose to unlink in the course of their transactions. This is geared at strengthening their privacy against hackers.
Offline Transactions on Beam
The Lelantus-MW enable offline transactions in the 5.1 version of Beam wallet. The MimbleWimble protocol does not support offline transactions because of its interactive mechanism.
For more on Beam, you can refer to here.
Steps in Creating a Beam Coin Wallet
The following steps could be followed to set up a Beam wallet using an android phone:
1.Go to google play store and type Beam wallet on the search icon. The app will pop up and you will see install.
2.Click on install and the app will be installed in your phone, provided you have internet connection. After installation, you will see open.
3.Click on the open and the app will open with option to create new wallet.
4.Click to create your new wallet. this will lead you to an instruction page. The instruction is about how to secure your seed phrase, hence your wallet.
5.After reading, click on I understand. The page for the seed phrase will open. Write it down and click on complete verification.
6.You will be directed to a page that require you to write the words according to the correct sequence from what you wrote down in the previous page.
7.After writing, click next and the password page opens. Here you will be required to choose a password and confirm it.
8.After putting your chosen password, click on start using your wallet and now your wallet is ready for transactions.
Why I Choose Beam: Advantages and Disadvantages
In order to really talk about my reason for choosing Beam, I will like to dive into the benefits of using it.
Advantages of Beam Network
1.It is high secured and private, with more than one protocol employed for transaction privacy.
2.Transactions can be done offline through the Lelantus-MW protocol.
3.Highly confidential transactions, with no room for open display of information on the blockchain immediately.
Disadvantages
1.It can be exploited by fraudsters to engage in illegal transactions, since there is no room for regulations.
2.The blockchain is a complicated one with many protocols built on it.
Conclusion
The Beam coin offers a great opportunity for people who are not ready to have their transactions tracked by third party. The highly scalable nature of the project is a great improvement from the problems face by Bitcoin in terms of scalability. Thus, in a fast evolving world of cryptocurrency, Beam is a project to turn to.
Thank you.
Hi @teamg-nigeria, Thank you for taking my class in the 8th week.
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