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Bytecoin

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://bytecoin.org/

https://bytecoin.org/blog

https://bytecointalk.org/forumdisplay.php?fid=40

https://bytecoin.org/resources/whitepaper.pdf

 

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Steem

What is Steem?

Steem is a cryptocurrency that powers the Steemit platform – an incentivized blockchain-based social media platform created by Dan Larimer in 2016. Larimer is also the founder of BitShares.

The Steemit blockchain allows users on it to create and curate content, the same way it happens in other platforms such as Hacker News and Reddit, and get rewarded in Steem.

Unlike other social media platforms, Steemit is built on blockchain technology that allows it operate in a completely decentralized manner. In his words, Larimer indicated that there is no censorship, no central authority, no data vulnerability, no downtime, and no data abuse. But how does Steem, interact with the Steemit platform to deliver complete decentralization? Steem is guided by three core principles;

  • Every person who contributes content should receive payment for it. This is the same principle used in many startups to reward shareholders when they go public. In the Steem network, all the contributing members are rewarded. When a user creates content that delivers great value and attracts a lot of people, he is rewarded with Steem.
  • The second principle is that every form of capital is highly valuable. This implies that people who contribute their time, resources, and attention to generating and curating content are as valuable as those who contribute cash. Call it sweat equity principle.
  • The third principle used at Steemit is that the community generates value to serve its members. This is the same ideology demonstrated by health sharing plans, food co-ops, and even credit union that serve community members as opposed to selling services outside the respective communities.

What is the problem that Steem Solves?

To have a clear grip of what Steem is, you need to take a closer look at the problem it solves. The problem that Steem seeks to solve has plagued the content niche since the discovery of the internet. The publishers have always found it very difficult to monetize their work articulately.

For many years, content creators were left with limited opportunities to raise cash from their work. In many cases, they were forced to engage advertisers, affiliate marketers, and sales funnels for financial rewards. These middle-entities have become so competitive to the extent that content creators have been left with very small margins.

The overall impact is that the content generator is demotivated so much and no longer commits to delivering high-quality work. Publishers are forced to bow to corporate interests in order to eke a living. In the same way that Satoshi Nakamoto crafted a solution against banks with his Bitcoin, Larimer coined a creative solution to the content marketing problem using Steem.

How does Steem Solve the problem?

To address the problem, Steem came up with a simple yet highly effective idea of decentralizing content. This means eliminating the middle entities so that publishers and viewers can enjoy a peer2peer association.

  • Posting: When you create content and upload it on the Steemit platform, the community upvotes it and earn you a reward from the Steemit Reward Pool. Note that if the content is not valuable, it can also be downvoted.
  • Voting and curating content: As a reader in the Steemit network, discovering content that goes ahead to become popular will also earn you a reward from the reward pool. Note that for curation and voting, the rewards that one can get depends on the stake he holds on the network.
  • The Steemit platform employs a meritocratic model where those with a greater stake have the opportunity to cast more votes.

To make the idea of content generation, discovery, voting, and reward work, the Steemit platform uses three main types of currencies. The three forms of coins that help to extend the Steemit beyond the blockchain niche.

  • Steam: This is the primary coin in the Steemit network, and the other two options fully depend on it. The cryptocurrency was released in 2016 and is increased every year with 100%. Steem can be bought in the main crypto markets.
  • Steem Dollars (SD): This is the coin considered to be more stable in the Steemit network. The value of one Steem Dollar to the conventional USD is 1:1. The content creators and curators are paid in Steem Dollars.
  • Steem Power (SP): This is the third coin on the network that is used to symbolize how much influence that one has on the Steemit platform. The more the Steem Power you hold, the more the votes you can cast for content in the network.

What makes Steem better than it’s competitors?

The blockchain network niche has been growing rapidly resulting to stiff competition. However, Steem stands taller than many other cryptocurrencies because of its unique architecture and application. Here are the main things that have kept Steem well ahead of others in the industry.

  • There are three coins operating in the same network

The idea of running three coins in the same networks is perhaps that most unique think that makes Steem better than all. While people can still use Steem (the principle coin) for standard operations the same way they are used to with Bitcoin, Ripple, and NEO among others, the additional coins have helped to drive greater value to the network.

For example, the Steem Dollar helps to stabilize the value and protect users against high volatility. This implies that you can save in Steem Dollars without worrying that the coins will lose value in the highly volatile crypto market. Most competitors such as Bitcoin and Ethereum only feature one coin.

  • It employs Delegated Proof Of Stake

The Steem network employs Delegated Proof of Stake (DPoS) which is an advanced model of Proof of Stake (PoS). Some of the top competitors that employ POS include NAV Coin, Stratis, and Reddcoin. The issue with POS is that a lot of weight is placed only on those who have a lot of the funds. This can raise the danger of 51% attack, lower the speed of transactions, and even raise the cost of transactions. Steem addresses this by improving PoS to Delegated Proof of Stake where those with stake select delegates to be involved in adding new blocks to the public ledger.

  • It has addressed the issue of volatility to attract more users

One of the primary problems faced by many cryptocurrencies is high volatility. The prices of most cryptocurrencies are highly volatile responding to issues in the market with extreme swings. For example, partnerships, new laws, entry of new operators, and other factors easily send the price of cryptocurrencies up or tumbling. Steem introduced the Steem Dollar whose value is tied to the USD at a ratio of 1:1 to address the problem of volatility.

  • It focuses on a niche that is less explored

Unlike many cryptocurrencies such as Bitcoin Cash and Litecoin that were primarily designed to help with sending value, Steem has a new role; to disrupt the content generation, discovery, and use. Now users can come to Steem to send value, save, publish content, discover content, invest, and vote for posts.

  • Sending value on Steem network

Most cryptocurrencies were created to help pull down the cost of sending value. They have achieved this target with a great margin. However, Steem has managed to cut the cost to nil. If you are sending value on the Steem network, you will not be charged.

How can Steem be categorized?

Steem is a fully decentralized and next-generation cryptocurrency that foresaw and crafted workable solutions to most blockchain issues. As early as 2014, Larimer had already noted the dangers that faced the content marketing niche. But he took the opportunity to also address the future threats of high volatility in cryptocurrencies.

  • The network does not have a central authority controlling its operations.
  • Its blockchain network relies on nodes spread in the system which implies that data vulnerability is fully eliminated.
  • The solutions adopted by Steem have addressed issues such as volatility and cost of transactions that were not at critical stages by 2016 the way they are today. In his view, Dan Larimer believes that Steem has the solution to most issues being experienced in the crypto world.

Steem and Security?

Steem was created when major blockchain security issues, scams, and threats were hitting the peak.

In 2011, Mt. Gox was hacked and over 740,000 Bitcoins stolen while Cryptsy Exchange was attacked in 2014. While one might argue that most attacks were perpetrated in the exchanges, they greatly irked Dan Larimer and his development team forcing them to work on lasting solutions.

  • Timing attacks: The Steem development team understood very well that users access to information online is faster compared to the blockchain because the latter relies on the nodes adding content to it. This implies that people who have access to this information can use it for their benefit at the expense of the community. To address this, a sort of playing field was created.

Steem requires that all conversion requests are delayed with 3.5 days. What this implies is that neither the blockchain nor the trader will have an added advantage over the price at the time of coin conversion.

  • 51% attacks: The open nature of acquiring coins in some decentralized platforms, especially those employing PoW (Proof of Work) consensus models have resulted in domination by a few individuals. This raises the threat of 51% attack. However, Steem has addressed this problem by adopting the Delegated Proof of Stake consensus model that helps with equal distribution of the coins. This model in eliminating the threat of 51% attack completely.
  • Voting abuse: In the Steem system, those with more Steem Power have more votes. But this can easily be abused through negative voting. To address the issue, Steem uses Rate Limited Voting that allows users to only read and evaluate a given quantity of work in a day. If they go beyond that rate, it is considered a red flag for automation.
  • Advanced encryption: Encryption is the bottom line of cryptocurrencies targeted at making it extra difficult for attackers. Whether it is the nodes spread in the Steem network helping to confirm transactions or attackers, it is very difficult to break into users’ accounts to steal their identity.
  • Regular core code updates: Like other cryptocurrencies, Steem is not immune to targeted attacks through bugs and malicious codes. The development team appreciates that its code is closely followed by hackers targeting to crack and siphon away the user’s assets. To fix these gaps and keep the network as safe as possible, Steem development team releases regular updates. Some of these updates include Steem 0.19.3 released on March 15th, 2018 and Steem 0.19.10 of 11th July 2018.

When you join the Steem network, it is prudent to appreciate that the revered model of total decentralization also comes with one disadvantage; there is no consumer protection. Everything is done through consensus. Therefore, mistakes such as sending Steem to a wrong address are irreversible. This implies that you will also need to do your part to stay safe in the Steem network.

  • Never share the private keys with a third party.
  • Ensure to triple check the public address of the target recipient when sending Steem.
  • Pick the cryptocurrency exchanges for trading Steem with a lot of care. Only go for those that have advanced security measures such as 2-factor authentication and use of cold storage.
  • Avoid visiting risky sites from the same computer used to access Steem network.
  • Do not forget the rule of the thumb when working online; backup everything.

Examples of Steem’s use cases / applications.

When Steem was created, there is no doubt that Larimer had a clearer grip of the blockchain niche than most developers and users. This applies even today. Steem comes with the following use cases.

  1. You can use Steem to purchase other cryptocurrencies especially in crypto-to-crypto only platforms such as Bittrex and KuCoin.
  2. Use the coins to make direct purchases either in online or conventional stores downtown. Most e-commerce stores are embracing cryptocurrencies and you should be able to make directly when you see a label such as; Steem Accepted Here.
  3. Steem has become a great option for investment. Most people opt to buy and hold waiting for the price to go up before selling for a profit.
  4. Some people have resorted to Steem and Steemit as sources of income. They create content for a pay, discover content for pay, and trade Steem in the markets for profit. However, it is important to appreciate that trading is based on prediction and price can move either up yielding profits or down resulting in losses.
  5. Steem is a great place to save or hide investment from third-party seizures. Because the value of Steem Dollar is tied to that of USD, you can rest assured that it will not be affected by price volatility.

References

https://smt.steem.io/smt-whitepaper.pdf

https://coinmarketcap.com/currencies/steem/

https://coincheckup.com/coins/Steem

https://smt.steem.io/smt-whitepaper.pdf

https://steemit.com/faq.html

https://steemit.com/