The MimbleWimble scheme was proposed somewhat mysteriously on the Bitcoin IRC channel and since then has gained a lot of popularity. MimbleWimble extends the idea of confidential transactions and CoinJoin, which allows aggregation of transactions without requiring any interactivity. However, it does not support the use of Bitcoin scripting language along with various other features of standard Bitcoin protocol. This makes it incompatible with existing Bitcoin protocol. Therefore, it can either be implemented as a sidechain to Bitcoin or on its own as an alternative cryptocurrency.

This scheme can address privacy and scalability issues both at once. The blocks created using the MimbleWimble technique do not contain transactions as in traditional Bitcoin blockchains; instead, these blocks are composed of three lists: an input list, output list, and something called excesses which are lists of signatures and differences between outputs and inputs. The input list basically references to the old outputs, and the output list contains confidential transactions outputs. These blocks are verifiable by nodes by using signatures, inputs, and outputs to ensure the legitimacy of the block. In contrast to Bitcoin, MimbleWimble transaction outputs only contain pubkeys, and the difference between old and new outputs is signed by all participants involved in the transactions.