# Mimblewimble transactions explained

## A high-level overview

Mimblewimble is a privacy-oriented cryptocurrency technology. It differs from Bitcoin in some key areas:

• Completely private. Every transaction is confidential.
• Compact blockchain. Mimblewimble uses a different set of security guarantees to Bitcoin, which leads to a far more compact blockchain.

# Transactions explained

Confidential transactions [1] were invented by Dr. Adam Back and are employed in several cryptocurrency projects, including Monero and Tari - by way of Mimblewimble.

Recipients of Tari create the private keys for receiving coins on the fly. Therefore they must be involved in the construction of a Tari transaction.

This doesn't necessarily mean that recipients have to be online. But they do need to be able to communicate, whether it be by email, IM, or carrier pigeon.

## The basic transaction

We'll explain how Alice can send Tari to Bob using a two-party protocol for Mimblewimble. Multiparty transactions are similar, but the flow of information is a bit different and takes place over additional communication rounds.

Let's say Alice has 300 µT and she wants to send 200 µT to Bob.

Here’s the basic transaction:

Inputs Outputs
300 200 90 10
Alice's UTXO To Bob Change fee

If we write this as a mathematical equation, where outputs are positive and inputs are negative, we should be able to balance things out so that there's no creation of coins out of thin air:

$$-300 + 200 + 90 + 10 = 0$$

This is basically the information that sits in the Bitcoin blockchain. Anyone can audit anyone else's transactions simply by inspecting the global ledger's transaction history. This isn't great for privacy.

Here is where confidential transactions come in. We can start by multiplying both sides of the equation above by some generator point H on the elliptic curve (for an introduction to elliptic curve math, see this presentation):

$$300.H = 200.H + 90.H + 10.H$$

Since H is a constant, the math above still holds, so we can validate that Alice is not stealing by checking that

$$(3.H) - (2.H) - (1.H) - (f.H) \equiv 0.H = 0$$

Notice that we only see public keys and thus the values are hidden. Cool!

Technically only scalar integer values are valid for elliptic curve multiplication. This is why we use µT in the transactions so that the amounts are always integers.

There's a catch though. If H is constant and known (it is), couldn’t someone just pre-calculate $n.H$ for all reasonable values of n and scan the blockchain for those public keys?1

In short, yes. so we’re not done yet.

1

"This is called a pre-image attack."

## Blinding factors

To prevent a pre-image attack from un-blinding all the values in Tari transactions, we need to add randomness to each in- and output. The basic idea is to do this by adding a second public key to each transaction output.

So what if we rewrite the inputs and outputs as follows:

$$C_i = n_i.H + k_i.G$$

where G is another generator on the same curve.

This completely blinds the in- and outputs so that no pre-image attack is possible. This formulation is called a Pedersen commitment [3].

The two generators, H and G must be selected in a way that it's impossible to convert values from one generator to the other [2]. Specifically, if G is the base generator, then there exists some k where $$H = kG$$

If anyone is able to figure out this k, the whole security of Confidential Transactions falls apart. It's left as an exercise for the reader to figure out why.

For a semi-gentle introduction to these concepts, Adam Gibson's paper on the subject is excellent [5].

## Alice prepares a transaction

Alice can now start to build a transaction.

Type Formula Name
Input $$-300.H - k_1.G$$ C1
Change output $$90.H + k_2.G$$ C2
Fee $$10.H + 0.G$$ f
Total spent $$200.H + 0.G$$ C*
Sum $$0.H + (k_2-k_1).G$$ X

The $k_i$-values, $k_1, k_2$ are the spending keys for those outputs.

The only pieces of information you need to spend Tari outputs are the spending key (also called a blinding factor) and it's associated value.

Therefore for this transaction, Alice's wallet which tracks all of her Tari unspent outputs, would have provided the blinding factor and the value "300" to complete the commitment C1.

Notice that when all the inputs and outputs are summed (including the fee), all the values cancel to zero; as they should. Notice also that the only term left is multiplied by the point G. All the H terms are gone. We call this sum the public excess for Alice's part of the transaction.

We define the excess of the transaction to be

$$x_s = k_2 - k_1$$

A simple way for Alice to calculate her excess (and how the Tari wallet software does it) is to sum her output blinding factors and minus the sum of her input blinding factors.

Let's say Alice was trying to create some money for herself and made the change 100 µT instead of 90. In this instance, the sum of the outputs and inputs would not cancel on H and we would have,

$$X^* = 10.H + x_s.G$$

We'll see in a bit how the Mimblewimble protocol catches Alice out if she tries to pull shenanigans like this.

Alice actually also prepares a Range Proof for each output, which is a proof that the value of the output is between zero and 2^64 µT. Without range proofs, Alice could send negative amounts to people, enriching herself, and not breaking any of the accounting of Tari.

In Tari and Grin, the excess value is actually split into two values for added privacy. The Grin team has a good explanation of why this offset value is necessary [4]. We leave off this step to keep the explanation simple(r).

Alice also chooses a random nonce,

$$r_a$$

and calculates the corresponding public nonce,

$$R_a = r_a.G$$

Alice then sends the following info to Bob:

Field Value
Inputs C1
Outputs C2
Fee 10
Amount paid to Bob 200
Public nonce $$R_a$$
Public excess X

The message metadata is some extra bits of info that pertains to the transaction (such as when the output can be spent, for example).

## Bob prepares his response

Bob receives this information and then sets about completing his part of the transaction.

First he can verify that Alice has sent over the correct information by checking that the public excess, X, is correct by following the same procedure that Alice used to calculate it above. This step isn't strictly necessary since doesn't have enough information to detect any fraud at this point.

He then builds a commitment from the amount field that Alice is sending him:

$$C_b = 200.H + k_b.G$$

where $k_b$ is Bob's private spend key. He calculates

$$P_b = k_b.G$$

and generates a range proof for the commitment.

Bob then needs to sign that he's happy that everything is complete to his satisfaction. He creates a partial Schnorr Signature with the challenge,

$$e = H(R_a + R_b \Vert X + P_b \Vert f \Vert m)$$

and the signature is given by

$$s_b = r_b + ek_b$$

Bob sends back

Field Value
Output (Commitment and Range Proof) $$C_b$$
Public nonce $$R_b$$
Signature $$s_b$$
Public key $$P_b$$

## Alice completes and broadcasts the transaction

After hearing back from Bob, Alice can wrap things up.

First, she can now use Bob's public nonce and public key to independently calculate the same challenge that Bob signed:

$$e = H(R_a + R_b \Vert X + P_b \Vert f \Vert m)$$

Alice then creates both her own partial signature,

$$s_a = r_a + e.x_s$$

and the combined aggregate signature, $$s = s_a + s_b, R = R_a + R_b$$.

Alice can now broadcast this transaction to the network. The final transaction looks as follows:

Transaction Kernel
Public excess $$X + P_b$$
Signature, $$(s, R)$$
fee 10
Transaction Body
Inputs with range proofs $$[C_1]$$
Outputs with range proofs $$[C_2, C_B]$$

## Transaction verification and propagation

When a full node receives Alice's transaction, it needs to verify that it's on the level before sending it on to its peers. The node wants to check the following:

• All inputs come from the current UTXO set,
• All outputs have a valid range proof,
• The values balance,
• The signature in the kernel is valid,
• various other consensus checks (such as, is the fee greater than the minimum)

#### All inputs come from the current UTXO set

All full nodes keep track of the set of unspent outputs, so the node will check that C1 is in that list.

#### All outputs have a valid range proof

The range proof is verified against its matching commitment.

### The values balance

In this check, the node wants to make sure that no coins are created or destroyed in the transaction. But how can it do this if the values are blinded?

Recall that in an honest transaction, all the values (which are multiplied by H) cancel, and you're left with the sum of the public keys of the outputs minus the public keys of the inputs. This non-coincidentally happens to be the same value that is stored in the kernel as the public excess.

The summed public nonces, R are also stored in the kernel, so this allows the node to verify the signature by checking

$$s.G \stackrel{?}{=} R + e(X + P_b)$$

where the challenge e is calculated as before.

Therefore by validating the kernel signature, we also prove to ourselves that the transaction accounting is correct.

If all these checks pass, then the node will forward the transaction onto its peers and it will eventually be mined and be added to the blockchain.

## Stopping fraud

Now let's say Alice tried to be sneaky and used $X^*$ as her excess; the one where she gave herself 100 µT change instead of 90 µT. Now the values won't balance. The sum of outputs, inputs and fees will look something like

$$10.H + (x_s + k_b).G$$

So now when a full node checks the signature:

\begin{align} R + e(X^* + P_b) &\stackrel{?}{=} s.G \\ R + e(10.H + x_s.G + P_b) &\stackrel{?}{=} (r_a + r_b + e(x_s + k_b)).G \\ R + e(10.H + X + P_b) &\stackrel{?}{=} (r_a + r_b).G + e(x_s + k_b).G \\ \mathbf{10e.H} + R + e(X + P_b) &\stackrel{?}{=} R + e(X + P_b) \\ \end{align}

The signature doesn't verify! The node can't tell exactly what is wrong with the transaction, but it knows something is up, and so it will just drop the transaction silently and get on with its life.

# Transaction summary

To sum up: A Tari / MimbleWimble transaction includes the following:

• From Alice, a set of inputs, that reference and spend a set of previous outputs.
• From Alice and Bob, a set of new outputs that include:
• A value and a blinding factor (which is just a new private key),
• A range proof that shows that the value is non-negative.
• The transaction fee, in cleartext,
• The public excess, which is the sum of all blinding factors used in the transaction,