What is BEAM? A privacy coin explained!

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When I first heard the suggestion of making a video about BEAM, I couldn’t help myself but to think of the legendary Casey Neistat and the company who he sold to CNN but then failed miserably at making it a success. However BEAM is also a privacy coin, and even if both have nothing to do with one another, in this post I’m going to tell you all about it. My name is Rico Richardson, and let’s enter the world of privacy coins!

Background

Privacy and anonimity helped crypto currencies become more popular. But crypto like bitcoin is pseudonymous. Which means it’s not completely anonymous like Zcash, Monera, Dash or BEAM. Now 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 runs on the Mimblewimble platform and was founded in 2018 by its CEO Alexander Zaidelson, the CTO Alex Romanov and their COO Amir Aaronson. Beam can be bought at more than 20 exchanges. You can find the available exchanges on their homepage or on coinmarketcap. BEAM can also be mined individually or through a mining pool. Their wallet runs on Windows, MAC and linux, and they offer mobile wallets for Android and IOS. On their website they also state that they are working with several hardware wallet manufacturers to develop one.

Other privacy coins

As said before, Beam is not the only privacy coin. There’s also the likes of Zcash and Monero. The question is, what makes Beam different? On their website they link to a medium page, in which they go over the differences which they’ve split in three parameters. First the confidentiality, secondly the scalability and lastly the auditability. I will give you a summary of that article and tell you what they believe seperates them from the others.

Let’s look at Monero first, then Zcash, and then Beam again. Monero enables confidentiality by using Ring Confidential Transactions and Stealth Addresses. In addition, Kovri (currently in pre-alpha) is used to obfuscate peer-to-peer communication. Confidential Transactions hide the transferred amounts. Six decoy coins are added to each transaction when using ring signatures, which makes it nearly impossible to trace the transaction. However, there have been claims that there are ways to trace them anyway. It’s a 22 page long report that goes very in depth and way over my head. However, it starts by saying that about 62% of transaction inputs with one or more mixins are vulnerable to “chain-reaction” analysis — that is, the real input can be deduced by elimination. Second, Monero mixins are sampled in such a way that they can be easily distinguished from the real coins by their age distribution; in short, the real input is usually the “newest” input. The reporters estimate that this heuristic can be used to guess the real input with 80 % accuracy over all transactions with 1 or more mixins. Monero’s scalability has a handicap in which the more adopted it becomes, the more stress this delivers on the blockchain. They are however, trying to implement bulletproofs to enhance scalability by up to 80% which is still 5 times faster than bitcoin. Audability is something that’s kind of missing with Monero, because you can only see the incoming transactions and not the outgoing ones.

Now let’s look at Zcash, the transactions being done on this network aren’t private by default and user statistics show that currently only 1% is fully shielded. The reason for this is that the transactions on the Zcash network are computational heavy to create. There is a sapling network upgrade underway, which should improve this but the ZK snarks technique that Zcash uses still requires a special key too. If that key leaks out, the perpetrator can print money and destroy the coin. The average transaction is 5.3kilobytes, and even though this is 9 more times than bitcoin, it still brings concerns when it comes to scalability. When it comes to its privacy, I’ll link an article that explains the transaction process. What it basically comes down to is that incoming transactions can be viewed. In addition, there is a “payment disclosure” feature, beneficial when proving that a payment to an address was sent but there aren’t any receipts however.

Right, so how does Beam score on the topics of confidentiality, scalability and audability? Unlike the other two, the blockchain size doesn’t grow alongside the number of transactions. It uses the mimblewimble protocol which is a blockchain protocol that allows for a completely private transaction platform through a unique security framework. Mimblewimble’s transaction structure is derived from “confidential transactions” which Monero uses as well.

private transaction where the amount of a given token a sender wants to process is encrypted by way of “blinding factors.” Blinding factors refer to random values chosen by a sender which a receiver has to choose from. If the receiver selects a similar value, then the transaction is deemed valid.

Beam is built on Mimblewimble, a protocol that allows confidentiality and scalability. The amound, sender and receiver are hidden using Confidential Transaction. Each user just holds a private key to the UTXO’s they own. Privacy is enabled by default in BEAM.

In Mimblewimble, blinding factors have to be chosen by a sender. This way, it functions like a proof of ownership for the receiver, authorizing them to use the coins. CoinJoin is a factor of Mimblewimble and a controversial (to some) cryptographic system developed by Blockstream’s Gregory Maxwell. Basically what it comes to down are transaction batches like you would have with direct debt authorization. Companies can roll out batches containing multiple transactions. The same goes for CoinJoin. This makes it harder to detect individual transactions. Another feature of the Mimblewimble protocol is cut-through. The easiest way to explain it is this: A sends 1 BTC to B, and B sends 1 BTC to C. Mimblewimble unifies these transactions into a single in- en output each. It is hrough transaction kernels that ownership of assets is confirmed and validated. This kernel holds the public key, mining fee and signature.

Right, so now let’s have a look at the audability of BEAM. Beam users can create so called Auditor keys which can then be shared with the parties of their choice. For instance the IRS, or your accountant. With an Auditor key, this party can check your transactions recorded on the blockchain. So all of these factors combined in comparison to the other tokens, makes BEAM a very good competitor on paper.

Some facts

There was one question on their website being addressed which I liked in particular: What is BEAM their Model of Governance. Their answer is The Core Team and Beam Development Ltd. do not have any intentions to govern Beam in the long run. There is no point to having a cryptocurrency governed in a centralized way by a corporation. Therefore, we offer our solution to our community. We are opening the code, welcoming Open Source Developers and setting up a non-profit foundation that will be unconditionally funded by the Treasury. Which makes sense for a token that’s focused on privacy.

Beam transaction types

Beam offers three different transaction types, which are Online transactions, Offline transactions and max privacy transactions. Online transactions have the lowest fees, are created interactively by both the sender and receiver and both need to be online within 12h of creating or sending the transaction. Offline transactions allows the sender to use a previously received wallet address and send the funds there. As soon as the receiver comes online the funds will be in his or her wallet. The max privacy transactions offer the best privacy possible, but they do take up to 72h before they are completed. Which means that if you try to move your money right before or while the market collapses, this might not be the best option possible.

Beam Addresses

Beam addresses are not recorded on the blockchain and are only used to communicate with other wallets to create different transaction types. Beam supports three kinds of addresses: Regular ones, Max privacy ones, and public offline ones. The regular ones will function for on- and offline. If the receiver shares a max privacy address, the sender cannot change the transaction type. Public Offline address is a unique address connected to your Beam wallet that never expires. Public Offline addresses are a little less secure in one aspect: the Sender can potentially see when the Receiver spends the funds sent to this address. They can’t oviously see to whom or how much.

Engagement

Beams website looks very slick, and well designed. First thing you see is a banner saying that staking BEAM will be available soon and that you should follow their Twitter and Instagram for the latest news about the release of their DAO. Their homepage shows the development roadmap in an organised manor and also tells you where you can buy beam. Beam is active on Twitter with over 23.000 holders and their latest post is about a day old so it’s an active page too. Their Redditpage has 2700 members but isn’t very active when it comes to new post. The latest one is from more than a week ago. I couldn’t find the number of holders that hold the beam token, except for a low number on Etherscan but since I can’t verify it I will leave it out of this video.

and that’s it for this video, that’s all I have to say about Beam. Let me know which privacy token is the token of your choice in the comments down below. My name is Rico Richardson, thank you for reading, and I’ll see you next time. DOEI!