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What is Bytecoin?
Bytecoin is a blockchain that specializes in anonymous transactions. Bytecoin was created to solve Bitcoin’s shortcomings in user privacy. On the Bitcoin blockchain, a transaction trail is formed in the sense that you can see which account sent and received money; however, on Bytecoin, transactions are virtually impossible to trace or link back to their senders or recipients.
How does Bytecoin Work?
Bytecoin is built on CryptoNote technology, a blockchain that serves as the foundation for other privacy- and anonymity-focused cryptocurrencies to use the blockchain as an underlying protocol. There are three key components to CryptoNote technologies like Bytecoin: scalability, untraceability, and unlinkability.
The Bytecoin blockchain has no hard-coded limitations. Instead, the Bytecoin blockchain has an adaptive hard limit for block sizes; this means that a developer on the Bytecoin blockchain can create cryptocurrencies or decentralized applications with parameters that are custom-fit to their software and capabilities.
On Bytecoin, it is virtually impossible to trace transactions back to their senders or recipients. One way that Bytecoin accomplishes this is through the use of ring signatures to sign transactions.
When transactions are signed with a ring signature instead of a standard schnorr signature, individuals with private and public keys are placed into a group. Because the individuals on the network are grouped, the only information a transaction verifier can obtain from verifying the transaction is that one of the members in the group was involved. However, the verifier is not able to pinpoint the specific group member that was involved, because their identity will be indistinguishable from the other users in the group. On Bytecoin, the only information it is possible to see is the amount of money sent in a transaction; it is virtually impossible to see who sent or received the money.
Bytecoin makes it virtually impossible for a third party to link transactions back to wallet addresses.
One of Bytecoin’s goals is to give its users a higher level of privacy; this is why Bytecoin prevents outside parties from being able to check the transaction history for Bytecoin wallet addresses that are not their own. Bytecoin accomplishes this by generating multiple one-time-use keys that are derived from a user’s public address. Compare that to typical blockchain networks like Bitcoin where investigators can isolate the identity of a counterparty, and you see that Bytecoin’s one-time “throwaway” scheme prevents this issue.
BCN and Mining Bytecoin
Bytecoin (BCN) is the digital currency native to the Bytecoin blockchain. BCN can be used to transfer monetary value in anonymous transactions and to make payments.
BCN is mined through an egalitarian proof-of-work consensus algorithm called CryptoNight. The CryptoNight algorithm uses a memory-bound function based on an algorithm known as scrypt, which has also been utilized on the Litecoin Network. However, the Bytecoin variant (CryptoNight) increases its calculation speed exponentially — enabling greater scaling through faster transactions.
CryptoNight was designed to give CPU’s and GPU’s an equal opportunity at unearthing blocks and to deter the use of ASIC miners. However, ASIC miners for the CryptoNight algorithm have since been discovered on the Bytecoin network.
Unlike most blockchain networks, the Bytecoin blockchain adjusts the mining difficulty at every block, and blocks are generated every two minutes. The block reward on the network decreases with each block and is calculated using the formula BaseReward = (MSupply- A)/2^18-where Msupply represents the money supply, and A represents the amount of previously generated coins.
Bytecoin was created to address some of the setbacks on the Bitcoin network when it comes to ensuring user-privacy.
If you believe that your blockchain network or decentralized application requires payments to be processed in a way that is anonymous, secure, and fast, then you might want to look into building on the Bytecoin blockchain.