In our beginner’s guide to Monero and that of ZCash, we have explained the concept of a privacy coin: a cryptocurrency that emphasizes heavily on privacy. Another interesting addition to the list of privacy coins is Bytecoin, which, by virtue of its privacy features and use case similarities with the pioneering cryptocurrency Bitcoin, commands our interest. In this beginner’s guide, we take a look at what Bytecoin is, how it works and what makes it an important part of the crypto world.
What is Bytecoin?
Bytecoin is a cryptocurrency that allows for carrying out transactions which cannot be traced. If makes use of incredibly secure CryptoNote ring signatures to preserve the anonymity of transactions. Since it is otherwise an ordinary cryptocurrency built along the lines of Bitcoin, it serves as a peer-to-peer payment network. Bytecoin was launched back in 2012 and is one of the older cryptocurrencies that have been around for a while now. Although the team behind this crypto coin had kept their respective identities under wraps for a long time, they are gradually choosing greater interaction with community members. Bytecoin has close links with fellow privacy coin Monero as well. The official website describes Bytecoin as:
“The first private untraceable cryptocurrency”
How does Bytecoin Work?
In the working of Bytecoin, the privacy aspect is ensured by using the CryptoNote technology which basically generates single-use public keys everytime a user wants to make a transaction. This is unlike Bitcoin, where the same public key is repeatedly used, making one vulnerable to attacks and privacy breaches. Ring signatures are used where the user’s signature is muddled up with other signatures to make sure attackers that confused. Higher the number of inputs, higher is the amount of mix-up and hence greater the extent of security. However, the user does have to incur a much higher cost for implementing higher-privacy ring signatures.
We know that there can be different consensus protocols used in blockchain. Of them, Bytecoin uses the Proof of Work or PoW variety but makes it less power-consuming than it is in Bitcoin’s case. It utilizes the Skrypt function which is actually very power-saving as it is not memory intensive at all. This helps to ensure that GPUs become more efficient.
Key Features of Bytecoin
The following are some of the salient features of Bytecoin that set it apart from other cryptocurrencies:
1. Anonymous Payments with Bytecoin
Bytecoin makes sure no transactions can be traced back to their origin and tracked at their destination. As a result your privacy needs are effectively taken care of. This makes it a privacy coin at par with well-known players like Monero or ZCash.
2. Bytecoin is Secure From Attacks That Seek to Establish Links Between Transactions
With Bytecoin, transactions are assigned single-use public keys. Much like the OTP or one time password we use everytime we make an online payment, these single use keys ensure that the various transactions of one user cannot be linked together. As a result, security vulnerabilities are significantly reduced.
3. Bytecoin is More Scalable that Bitcoin
We are well aware of the problem of scalability that has been plaguing Bitcoin for years now. Bytecoin tackles that somewhat by generating a fresh block every 2 minutes and making sure that flexibility is maintained. As it declares on its website, it avoids “hard-coded constraints”.
Now, if this beginner’s guide has gotten you interested in Bytecoin and has made you want to invest in it, then do arm yourself with the knowledge of things to know before investing in cryptocurrencies before you go ahead!