What is Bytecoin?
Bytecoin is an untraceable cryptocurrency that utilizes CryptoNote ring signatures to make transactions completely anonymous. Like Bitcoin, Bytecoin is mainly aimed at facilitating peer2peer payments. This means that it shares most use cases with Bitcoin.
The cryptocurrency was created back in 2012, but little was known of its founders by then because they opted to operate completely anonymous. However, they started opening up around 2016 by communicating via multiple channels. Bytecoin also has a very close history with one of its forks, Monero.
What is the problem that Bytecoin Solves?
Since 2009 when Bitcoin was developed and released, corporate entities and even the general public have appreciated that digital cash can be simple yet highly convenient for making payments just like notes and credit cards. However, Bitcoin simply opened the lid to the new technology. A few years after establishment, the Bitcoin system has manifested great inflexibility that prevents improvement with new features. For example, unless all new users update their clients, it is impossible to implement new features. In many cases where these flaws cannot be rectified, the option is crafting a completely new project. This is the case with Bytecoin. Here are the main problems that Bytecoin seeks to solve.
- Transaction traceability: The Bytecoin development team created a test that focused on two core components; traceability and linkability. Because transactions at Bitcoin take place in public, it is possible to trace them to the source and recipient ambiguously. An engineered path can still be used to pull the origin and final recipient.
- The proof of work function: Satoshi Nakamoto, the Bitcoin creator, pointed out that the majority decision-making consensus more was “one node one vote.” The security of this model suffers huge setbacks because 51% of the network mining power has to be under the control of honest Bitcoin users. Besides, even minor fixes such as bugs and gaps still require 51% mining power.
- Irregular emission: Bitcoin system relies on a predetermined emission rate. Every solved block releases a specific (fixed) number of coins that halves every four years. Now, what will happen when the breaking point is reached? Though the shift from 12.5 Bitcoins at the start might not seem much in the subsequent 4 years, what about in the subsequent lapses every 4 years?
- Hard coded constants: Bitcoin has a lot of hard-coded limits with some of the natural elements being original designs while others have proven to be artificial constraints. They also act as a point of centralization. Even with the peer2peer outlook of Bitcoin, most nodes utilize official reference client designed by a few users. When this group makes the decision to add changes, many nodes simply accept. It was a source of heated debate at some point with the others even calling for a boycott.
- Bulky scripts: The model of scripting system employed at Bitcoin is very heavy and indeed complex. Users are allowed to come up with sophisticated transactions, though some features are disabled because of security fears. For example, the common script for sender and receiver is 164 bytes long though the purpose is very simple; checking if the receiver has the right key for signature verification. Take a look at the example given below.
<sig> <pubKey> OP DUP OP HASH160 <pubKeyHash> OP EQUALVERIFY OP CHECKSIG.
How does Bytecoin Solve the problem?
a) One-time ring signatures
The standard protocol based on one-ring signature only allows users to achieve unconditional unlinkability. Bytecoin utilizes CryptoNote to keep transactions unlinkable and untraceable. The transactions utilize a one-time public key when there are multiple transactions with the same client. This helps to address the issue of addresses re-use and traceability.
One time ring signatures further help to mix your signature with others in the network to make it completely unlinkable. Besides, you are completely in control of the ring signature’s anonymity. By adding more input, the transactions become more obscure. However, the associated transactions will be higher. Have a look at the ring signatures CryptoNote keys.
b) The Egalitarian Proof of Work
The Bitcoin’s PoW consensus algorithm system strongly favors those with powerful ASIC and GPU miners compared to others using CPUs. This has resulted in centralization around those with powerful machines. To address this problem, Bytecoin closes the gap through the adoption of the Egalitarian proof-of-Work consensus model.
The Egalitarian PoW utilizes skrypt, which is a special function that closely resembles hashcash function used in Bitcoin. The primary difference between the two is that Skrypt is not memory bound. This implies that you can easily create standard CPU mining rigs that are highly effective. The Skrypt model further helps in balancing power dynamics since GPUs are linearly better compared to CPUs.
c) Smooth coin emission
Because of the halving of Bitcoin mining rewards, the miners are heavily demotivated resulting in a sharp decline in hashrate every 4 years. The lower hashrate implies that the network gets more susceptible to double-spend. To address the issue, Bytecoin decreased the block reward with every block. This provides for a smoother decrease in rewards over time compared to that of Bitcoin. The reward at Bytecoin adopts the following equation.
BaseReward = (MSupply – A) / 218
Where MSupply is equal to (2^64) – 1 atomic units,
What makes Bytecoin better than it’s competitors?
With the cryptocurrency niche advancing at a very fast rate, the niche has become very competitive. Here are some of the main reasons for making Bytecoin better than its competitors.
- Bytecoin adjusts the mining difficulty after every block. This makes it better than Bitcoin Cash and Bitcoin that adjusts mining difficulty after 2016 blocks are mined. By adjusting the mining difficulty after every block, it becomes difficult for miners to use a multiplier effect once a difficulty has been established.
- Bytecoin makes it easy for more people to join and use the network. By adopting an Egalitarian PoW that utilizes skrypt, it means that miners cannot take advantage of advanced ASICs to optimize mining.
- It operates as a truly decentralized platform. By drifting away from the standard PoW used at Bitcoin, it implies that more users can now join and mine Bytecoins using their PCs. The model further helps to reduce the risk of 51% attack.
- Bytecoin penalizes miners who target staffing a block above his transaction that attracts zero fees. Though only a few miners have this ability, it is still possible resulting to bloating of the network. This is a major problem for many Bytecoin competitors. To address the issue, Bytecoin introduced a penalty function where miners can only create the usual block size and pay a penalty hen the size is surpassed.
- The transaction scripts are very minimalistic at Bytecoin. This is a great departure from the model employed especially by Bitcoin and Bitcoin Cash. This makes it easy to implement new features and progressively improve the network.
- Bytecoin is attracting a lot of people because of its anonymity that makes discovery by a third party or third party seizures very difficult. This is very important at a time when most administrations have vowed to pass harsh regulations to crack on cryptocurrencies.
- Bytecoin is way cheaper to send payments compared to Bitcoin Cash or even Ethereum among others. With one of the primary goals of going crypto being to cut on transaction charges, Bytecoin allows users to send Bytecoins for free and handles all scaling issues in a great way. However, using a network such as Bitcoin to send funds is very expensive.
- Using Bytecoin to send transactions is really fast. Bitcoin, even with SegWit technology is still very slow to settle a purchase. This implies that many people especially traders prefer Bytecoin to Bitcoins because clients can make payments and get cleared immediately.
- Having been in the market for some time, Bytecoin is considered stable because most of its features are tested and proven to work. This makes a lot of people in the crypto world prefer it to newer competitors that are only entering the market. In most of the cases, a time span of about five years or more is needed before a cryptocurrency network is proven stable and reliable.
How can Bytecoin be categorized?
Bytecoin is a truly anonymous and decentralized cryptocurrency with the potential to become the next Bitcoin. Its design is derived from Bitcoin while the focus ensured that most of the issues reported at Bitcoin were addressed. In different terms, Bytecoin is another improved version of Bitcoin. From transaction anonymity to security, every aspect of Bytecoin is better compared to what users get at Bitcoin or Bitcoin Cash among other networks.
But it is the ability of Bytecoin to address the issue of centralization that has made it win a place in the heart of the crypto community. The Proof of Work consensus algorithm used at Bitcoin drove away many small users leaving the pioneer cryptocurrency in the hands of a few people who could afford the expensive mining ASICs. Now, Bytecoin has helped to completely decentralize the system so that more people including those with CPUs can still mine and contribute to consensus building.
What’s Bytecoin’s vision on Security?
Bytecoin’s vision is to provide users a completely anonymous and secure network that they can use without worrying of losing their assets or discovery by third parties. Bytecoin achieves this in bits by helping to protect users from linkability through CryptoNote.
Bytecoin code is also strengthened to ensure that their signatures remain secure and impossible to forge. This implies that once you join the Bytecoin network, you can work without worrying about your account getting attacked.
Note that even as Bytecoin forges on with its security dream, users are also expected to do their part. It is important to ensure that you keep the computer and client updated all the time to avoid attackers utilizing gaps in old software. Other efforts recommended by Bytecoin to its users include:
- Keeping your private keys as secret as possible.
- Backing up your information at Bytecoin.
- Triple checking the public keys before sending value all the time.
- Trading Bytecoins only on the secure exchanges.
- Moving the Bytecoins to cold storage when not in use.
- Staying away from risky sites if multitasking on the computer used to access Bytecoin network.
Examples of Bytecoin’s use cases / applications?
Many applications of Bytecoin are derived from its ability to keep its users completely anonymous. Here are some of them.
- Most people prefer Bytecoin to save their funds because it is untraceable and they cannot be easily discovered. Whether it is family wealth, company resources or other forms of cash, it becomes untraceable the moment you buy Bytecoins.
- As an anonymous network, Bytecoin is a great option for purchasing products that you do not want to be traced back to you. This is the reason why businesses dealing with products that are not approved by governments are finding solace in Bytecoin.
- Gambling. Many gambling sites around the globe are allowing their clients to make payments in cryptocurrencies. This is seen as a new method of increasing their customer base and diversifying the payment portfolio.
- Paying for goods and services in stores that accept Bytecoin. Unlike in 2009 when very few people knew about cryptocurrencies, the popularity has grown so much. Now, more stores are opening their doors to allow those with cryptocurrencies such as Bytecoin to make direct payments. Bytecoin is emerging as a preferred option because it is cheaper and transactions clear faster.
- Use Bytecoins to pay transaction fees at the exchanges. For people who prefer to trade Bytecoins in the markets, the coins can be used to pay for the transaction fees. Some of the exchanges that list Bytecoin include Poloniex, Bittrex, and Bithumb.
- Bytecoins can be used as a method of enhancing your income. You can do this by trading Bytecoins against other cryptocurrencies such as Ripple and NTX in the markets. The markets operate the same way forex platforms work but deal with cryptocurrencies such as Bytecoins.
- Use Bytecoin to pay taxes. If you live in a state such as Arizona that allows users to pay taxes in cryptocurrencies, you can clear taxes in Bytecoin. In such cases, the Bytecoins are converted to USD immediately after payment and credited to your account.
References
https://coincheckup.com/coins/Bytecoin
https://bytecointalk.org/forumdisplay.php?fid=40
https://bytecoin.org/resources/whitepaper.pdf