Bitcoin (BCN), the first cryptocurrency, was introduced in 2009. But the general masses only took a note of existence around 2015 when it started rising. By the time people started knowing about cryptocurrencies and blockchain technology, the market was already filled with several digital currencies claiming to be an improved version of Bitcoin.
While none of the cryptocurrencies have been able to replicate the popularity of Bitcoin and it is still the largest digital currency, there is no denying the fact that several crypto projects are actually better than Bitcoin.
Privacy has always been an important consideration for the crypto community. While Bitcoin was the first to start the blockchain revolution, not every individual or organization are in favor of the open network of Bitcoin. While the exact identity of a person sending or receiving BTC cannot be known, if you know someone’s BTC address, you can easily trace their transactions.
This open nature was considered one of biggest drawbacks of Bitcoin. Several competitors focused on this flaw and created digital currencies with zero traceability. While projects like Monero and ZCash are popular for their privacy, it was Bytecoin (BCN) that first fixed this flaw. As a matter of fact, Monero is forked from Bytecoin’s blockchain.
Apart from being the first cryptocurrency built around privacy, Bytecoin was also the first project to implement CryptoNote technology. How does this technology make Bytecoin better than Bitcoin and other digital currencies? How does Bytecoin work? Who founded Bytecoin? Is Bytecoin a good investment now? All of this and much more in this Bytecoin guide.
What is Bytecoin (BCN)?
As per Bytecoin’s website, it is a private, decentralized cryptocurrency which has an open source code to allow people to be a part of its development. It was introduced in 2012 and is also known as a “totally anonymous cryptocurrency” as it uses ring signatures and generates a one-time address for transactions to make them untraceable. While a lot of popular cryptocurrencies use Bitcoin’s source code, Bytecoin is one of the oldest cryptocurrencies to have its own source code.
If you are looking for a cryptocurrency that can keep your financial transactions completely private, Bytecoin can be a great choice. It offers instant transactions all over the world without any additional fees. As per CoinMarketCap, it is currently the 23rd largest cryptocurrency with a market cap of $706,821,682.
What is CryptoNote Technology that Powers Bytecoin (BCN)?
Bytecoin is the first cryptocurrency to implement the CryptoNote protocol to keep the transactions unlinkable and untraceable. As per CryptoNote’s official website, the features of the protocol are as follows-
- Unlinkable transactions
- Untraceable payments
- Egalitarian PoW
- Adaptive parameters
- Blockchain analysis resistance
The protocol uses ring signature technology to ensure complete anonymity. With the help of technology, only one person from a group is required to sign the transaction. While the signature will prove that someone from the group has created the transaction, it is impossible to know who created it.
It also uses Diffie-Hellman exchange protocol with the help of which receives can generate multiple one-time addresses from their public key. This ensures that the transactions can never be linked to a particular address and also eliminates the problem of cross-linked payments.
How is Bytecoin Different From Bitcoin?
While the main goal of creating Bytecoin was to fix the lack of privacy in Bitcoin, it also has more scalability and flexibility as compared to the largest cryptocurrency. Some of the most important ways in which Bytecoin is different from Bitcoin are-
All the Bitcoin transactions are available on its blockchain and you can easily track the exchange of BTC between wallets. As discussed above, Bytecoin uses the CryptoNote protocol to make sure that the transactions cannot be traced. Users get to select the anonymity level of their ring signatures. By paying a higher transaction fee, the transactions can be made more obscure with Bytecoin. Bitcoin does not have any such features.
PoW (Proof of Work)
The consensus algorithm of Bitcoin favors miners who have high-end ASIC and GPU machines. As per the current difficulty level and reward of Bitcoin, mining BTC through CPU is not profitable anymore. In other words, Bitcoin’s network is more centralized around powerful miners. On the other hand, Bytecoin uses Egalitarian PoW, a version of skrypt function which is just like the hashcash function of Bitcoin.
But one major difference between the two is that Bytecoin’s PoW is not bound by the memory. As a result, there are super efficient CPU-based mining rigs available to mine Bytecoin. While GPU mining of Bytecoin would definitely be always a far better choice, the mining is not as centralized as Bitcoin.
With Bitcoin, the mining reward is halved every 4 years. The network hashrate often declines sharply whenever this occurs. When the network hashrate is low, it is highly susceptible to attacks like double-spending attacks. The block reward for Bytecoin decreases with every block. Unlike the piecewise halving of Bitcoin, this gradual decrease in rewards prevents the problem of the hashrate falling significantly.
But as Bytecoin is one of the oldest cryptocurrencies, more than 99% of the coins are already in circulation. As a result, Bytecoin mining is not really very profitable when compared to other PoW currencies.
Many of the constants are hard-coded in the source code of Bitcoin and are very difficult to alter. While the blockchain technology is still very new and companies are still trying to figure out ways in which it can be used, the hard-coded nature of Bitcoin severely limits its capabilities. To make sure that Bytecoin is ready for the future, the team has made significant changes to parameters like difficulty, size limits and penalty on excess size.
Not only the block reward as discussed above but even the mining difficulty constantly fluctuates with every Bytecoin block. This helps in ensuring that the block rate remains constant even if the hashrate falls or increases. Every user of Bytecoin has the right to vote for blockchain size and even the miners get to fix their own block sizes that they want to mine. Twice the average of all the previous blocks is considered as the hard limit of the blocks. With the help of these limits, the block size can be easily increased when the network starts growing.
Even the size of transactions is not limited if you are paying the associated fee. To make sure that miners do not create block sizes which the network cannot handle, there is also an excess size penalty. With this penalty in place, the reward for mining large blocks is significantly reduced.
The Bytecoin Team
While Bytecoin is one of the oldest cryptocurrencies, it hasn’t been able to be as popular as other older coins. A major reason for this was the anonymous team behind Bytecoin. Since its inception, many different teams have individually worked on Bytecoin. Due to this, Bytecoin has been forked more than 15 times in the past and many different versions of the coin are available.
In July 2017, when the crypto space was in the limelight, the team behind Bytecoin decided to rebrand themselves. They updated their website, introduced their team members and started being more transparent about the developments. But while the official website now has names and photos of all the important team members, you can’t really find their bios or links to social media which is kind of a norm now in the crypto world. Guess you cannot expect more from a project that is built around privacy.
Price Fluctuations of Bytecoin (BCN)
The price fluctuations is another controversial topic for Bytecoin. When Bytecoin was launched in 2012, it was priced at 10 satoshis. The price remained almost the same until May 17, 2017, when it surprisingly reached 109 satoshis. Similarly, in the first week of May 2018, Binance, one of the largest crypto exchanges, listed BCN on their exchange.
As soon as BCN was listed on Binance, its withdrawal and deposits were disabled on almost every exchange. This reduced the number of BCN available on Binance and its price rose almost 32x from around 70 satoshi to 2320 satoshi on the exchange. Binance and Bytecoin team later released a statement in which they said that an unusually heavy load crashed the system and the users were advised to not move their holdings.
However, a lot of investors have claimed that this was nothing but a “pump-and-dump scheme. As per CoinMarketCap, the current price of 1 BCN is 58 satoshi or $0.0030 with a 24-hour volume of $7,897,580 and a total market cap of $552,272,766 . The coin has a maximum supply of 184.47 billion BCN and 183.89 billion BCN are already in circulation.
As a matter of fact, more than 80% of the total supply of BCN was already in circulation soon after the coin was first launched. This raised a lot of red flags in the crypto community which ultimately resulted in the forking of Bytecoin network and creation of Monero and many other cryptocurrencies.
While Bytecoin has been accused of shady dealings in the past, things have changed for good. The team is now more transparent and regularly keeps the investors updated about the latest happenings. A detailed roadmap is now available on the official website and the team has been able to reach almost all the milestones until now.
While the price of BCN has fallen considerably in the past couple of months, all these developments are expected to result in a spike soon as soon as Bitcoin starts recovering.
Should You Invest in Bytecoin?
Bytecoin has been a controversial cryptocurrency but the team has done a commendable job of transforming its image. It is now one of the largest cryptocurrencies and the team is working religiously to further improve the features. But with respect to its past, it might probably not be the best cryptocurrency for investment.
While the price of 58 satoshi is very tempting, traders and investors are not advised to invest a lot of money in BCN. While you can invest may be 5%-8% of your portfolio, avoid investing all of your money in BCN as it can be very risky.
Where to Buy Bytecoin?
Bytecoin is not a very popular cryptocurrency and is only available on a few reputed exchanges. You can visit exchanges like Poloniex, HitBTC, Binance, Crex24, and Stocks Exchange if you want to buy BCN. Once you’ve purchased BCN, you can send to your BCN wallet. Web wallet, mobile wallet, and desktop wallet are available on Bytecoin’s website.
Bytecoin was one of the few coins which actually improved Bitcoin and had great potential. But the shady manner in which the team operated and the sudden price spikes had made BCN highly unreliable. But as things have significantly improved now, you might invest some part of your money in BCN.
If the development continues at this pace, more individuals, businesses, and merchants would accept BCN and this would definitely help increase its price. Once you purchase BCN, make sure that you closely follow Bytecoin news as they might again result in a huge price spike which can help you earn some excellent profits.
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