Bytecoin is an untracked cryptocurrency that uses CryptoNote ring signatures to secure anonymous transactions. Being predominantly a peer-to-peer (p2p) payment system, Bytecoin faces the same problems as Bitcoin.
Being created back in 2012, Bytecoin is one of the oldest cryptocurrencies in existence. The team working on the coin, until recently, was completely anonymous. However, now Bytecoin developers have opened several channels for communication, removed some layers of anonymity and created several local communities in their support.
This coin has a long history of relations with Monero, another popular private coin that is a fork of Bytecoin.
How does Bytecoin work
With similar coin functionality, the Bytecoin team is working on many of the problems that Bitcoin has. This is especially true for privacy issues. Along with this, the team hopes to make its coin more scalable and flexible in today’s constantly changing financial environment.
Bitcoin transactions occur in the public registry, making it easy to track transfers between wallets. The only way to preserve transaction anonymity is to use a trusted third party to randomize these transactions. Although Bitcoin also plans to improve its privacy, it is still far behind Bytecoin in this.
Bytecoin, in turn, runs on CryptoNote, which makes transactions untraceable and anonymous. Each transaction uses a one-time public key, even if there are several transactions in the direction of one recipient. Actually, this is what eliminates the problem of address reuse and significantly reduces the ability to track transactions.
To hide the connection between the transaction and its participants, Bytecoin uses one-time ring signatures. When using ring signatures, your signature on sending funds is mixed with the total mass of accounts working on the network.
You yourself control your level of anonymity using ring signatures. The more input you include, the more hidden your transaction becomes (however, the commission also increases).
Bitcoin’s Proof-of-Work (PoW) consensus algorithm favors miners using powerful GPUs and ASIC miners rather than CPUs. This creates the likelihood of centralizing the network around more powerful miners.
Bytecoin is trying to narrow the gap between these two classes of miners using a new algorithm – Egalitarian Proof-of-Work (PoW).
Egalitarian (egalitarian) PoW uses a script variation similar to the hashcash function used by Bitcoin. The difference between the two is that the Bytecoin script is not tied to memory, which makes it possible to use CPU mining rigs efficiently and cheaply. However, GPUs will always be about 10 times more efficient anyway.
This feature also helps to balance the dynamics of power, since expensive GPUs can surpass the CPU only linearly, and not exponentially, as before.
Bitcoin mining rewards are split in half every 4 years. In the past, this instantly caused a powerful drop in network hash rate. With a lower hash, the network is more susceptible to malicious activity such as double-spending attacks.
Bytecoin, on the other hand, reduces the block reward with each new block. This allows you to smoothly reduce block rewards, in contrast to the less balanced function of Bitcoin.
The mining reward is calculated using the following equation:
Base Remuneration \u003d (MSupply – A) / 218
Where MSupply is 1 atomic unit (the smallest indivisible BCN fragment equal to (2 ^ 64)). A is the number of previously generated coins.
Unfortunately, since Bytecoin has been around for a long time, it is no longer as profitable to mine as other PoW coins. More than 99% of the coins are already in circulation.
There are several hard-coded constants in the source code of Bitcoin, the change of which can be very difficult. In an ever-changing world where it is impossible to fully predict the future needs of the system, this can be a serious problem. We have already seen this in the debate over block sizes.
With this in mind, the Bytecoin team added flexibility immediately to three parameters:
- Size limit
- Oversize Penalty
The complexity of mining changes with each block of Bytecoin while the hash of the network rises and falls. This helps to maintain a constant block frequency, even when traffic in the system jumps, or vice versa, sharply loses miners.
Each Bytecoin user can vote for the size of the blockchain, and each miner assigns their own “soft limit” for the size of the blocks that they mined. A “hard limit” is assigned by the system itself and is equal to twice the average size of all previous blocks. These limits leave room for block growth if such a need arises as the network grows.
Transaction sizes are not limited, but the commission increases with the size of the transaction.
To prevent the creation of too large blocks that inflate the blockchain, Baytcoin introduced a fine for oversizing. This penalty reduces the reward for too large blocks according to the following equation:
New reward \u003d Base reward * ((Block size / MN) – 1) ^ 2
Where MN is the average size of all previous blocks. This is not the simplest equation, but it does an excellent job of the task.
Another advantage of Bytecoin is its incredibly simple and inexpensive mining. This cryptocurrency is absolutely undemanding to the capabilities of the equipment. For mining, you do not need to buy an expensive ASIC miner or build a farm. All you need is a regular PC or laptop.
The Bytecoin mining algorithm is very simple:
Step 1. Create a wallet for Bytecoin;
Step 2. Download the program for mining. Here the developers offer us 2 options:
- XMRig – for mining on the processor;
- XMR – Stak – AMD – for mining on video cards.
Step 3. Set the required program settings:
The percentage of computing power that the processor will give in favor of the miner program;
The address of your Bytecoin wallet;
Pool address (if used).
It should be noted that due to the use of CryptoNote technology, GPU miners do not have any advantages over CPU miners. Therefore, the efficiency of Bytecoin mining on the processor or video cards will be approximately the same.
For the most effective mining, you can also use mining pools.
Team and Progress Bytecoin (BCN)
At the time of its appearance in July 2012, the Bytecoin project was rather heterogeneous and fragmented. Prior to this, several isolated teams worked on it, which almost did not interact with each other. This led to the emergence of several new forks and versions of the coin over time.
In July 2017, the team decided to change their image and provide their community with more information. Although the team still remains pseudo-anonymous, only once having shared the names of key participants on its website without any biography or links to pages on social networks. However, this is understandable: it is difficult to expect more from a project whose main goal is privacy.
Today on the site there is absolutely no information about the team members. All the information that users have is a contact page where the email address and name of the community manager are indicated.
At the beginning of 2018, the team was busy refactoring their code, releasing a new public API in March 2018. Continuing to fulfill the goals set for the project, in the first quarter of 2018 the team entered the Asian market. Apparently, the promotion to Central Asia and Africa is slightly behind the plans.
With a primary focus on privacy, Bytecoin competes with other private coins like Monero, Zcash and Dash. In general, Monero is a fork from the original Bytecoin code. Monero supporters argue that the original BCN coins (80%) could have been mined 2 years before the public release, however this issue is still being discussed by both parties.
Where to buy Bytecoin (BCN)
Although the Bytecoin roadmap promised BCN listing on a bunch of new crypto exchanges back in the third quarter of 2018, we still have just a few options.
You can buy BCN for BTC on the HitBTC and Poloniex exchanges. Before trading on these platforms, you first need to buy Bitcoin on another cryptocurrency exchange such as Yobit or Exmo.
- Desktop wallet
- Online wallet
- Mobile wallet
Mobile wallets are currently only available to Android users. The team has not yet announced a release date for iOS wallets.
Using all these wallets, you will need to go through two-factor authentication. These additional measures will provide additional security for your wallet.
Despite constant comparisons with Bitcoin, the whitepaper of the team makes it clear that BCN is not a replacement for BTC. Instead, the creators of the project see only the pros in the simultaneous existence of several strong cryptocurrencies.
The team’s recent appeal to transparency and closer contact with the public is credible with the project, which many considered highly doubtful. However, the project is still criticized for some points such as the situation with the pump-and-dump on Binance.
As governments around the world continue to get involved in the cryptosphere, interest in private coins will only grow. However, it is not yet clear whether Bytecoin will become the most popular of all existing private coins.