This project implements some exceptional new technology, and is doubtless destined for big things.
Last week we gave an overview of MimbleWimble, the new blockchain protocol that we believe is one of the most exciting things to come out of the crypto space in the last year or more. As a brief summary, MimbleWimble manages to combine both privacy and scalability – a tricky circle to square – and does so in a completely new and very powerful way. Some impressive cryptography ensures that no addresses or transaction amounts are stored on the blockchain, while simultaneously guaranteeing the integrity of the system (i.e. that no new coins have been created). Transaction cut-through, which prunes unnecessary transactions from the record, both reduces bloat and improves privacy. Where other privacy-focused blockchain solutions obscure transactions in various ways, MimbleWimble goes a step beyond this by ensuring privacy by not recording sensitive information at all. It is, in short, extremely impressive and very promising.
Beam is one of two projects that have implemented MimbleWimble, launching a network and blockchain. The other is Grin, which we’ll be looking at next week. Both of these use MimbleWimble, and the tech is similar in each case. Consequently, we will focus on the major differences between the two, which broadly come down to economics and culture.
Beam is a VC-funded Israel-based project. Thanks to its backers, it’s well capitalised, well organised, and is making rapid headway in its roadmap – which is ambitious. It’s a Proof-of-Work mined coin that employs the known and well-tested Equihash algorithm.
One of the biggest differentiators for Beam when compared to Grin is its emission schedule. ‘Beam emission schedule is largely inspired by Bitcoin’s. The main differences are that there are 10 times more blocks and that Beam’s first-year emission is 100 Beam coins per block. The first halving occurs after 1 year, and then halvings occur every 4 years, 33 times in total.’
Beam therefore has limited supply, with a total of 262,800,000 Beam. 52,560,000 of these will be mined in the first year, or 20%. Then there’s an early halving, and a four-year period at the next emission frequency. After year 5, 60% of all Beam will have been mined. Beam is therefore designed very much as a ‘store of value’ coin, though the high inflation of the first year may have short-term price implications. There was no pre-mine, but there is a significant treasury share – 20% of each block for the early period – that will be used to fund development. A share is also distributed to the VC backers. Again, this theoretically has implications for the market, though in the grand scheme of things it shouldn’t be overly problematic.
Beam is actively mined, but currently has few exchanges. The places you can buy Beam tend to be small, less well-established exchanges, where liquidity – and, frankly, trust – are lower. This is likely because Beam has plenty of funding, and therefore could choose to buy exchange listings if it wanted. Paradoxically, this has meant it has not been listed by larger and more reliable exchanges; no doubt that will come in time, when Team Beam are ready. For now, price is between $1 and $2. Given Beam’s emission schedule, that would mean a $50-100 million market cap by December and $250-500 million by December 2023. Such is the promise of Beam that this seems like quite a good deal at this point – though as ever, this is not trading advice and readers should do their own due diligence.
For further background, see Beam’s position paper.
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