Bytecoin aims to become the number one anonymous alternative to bitcoin.
Bitcoin, and most other altcoins, provide better anonymity than transactions with fiat currency (for example, paying with credit cards). Still, with enough analysis, a wallet’s transactions can be tracked. This has led to the creation of Bytecoin, a cryptocurrency with anonymity as its core philosophy.
What is Bytecoin?
Bytecoin is a peer-to-peer digital cryptocurrency released in July 2012. Since then, its value has been slowly on the rise, putting it in direct competition with other leading and widely used cryptocurrencies like bitcoin and Ethereum.
|Icon||Symbol||Initial release date||Algorithm type||Max. supply|
|BCN||4 July 2012||CryptoNight||~184.47 billion BCN|
For a long time, a more secure and anonymous cryptocurrency has been asked for by the digital currency community. Bytecoin gives users that additional layer of security and anonymity by obfuscating the transaction addresses of senders and recipients of BCN.
When a user sends another user some cryptocurrency, a transaction is created. This transaction contains the wallet addresses of the sender and the recipient, and notes how much coin was sent. For example, if Alice sends Bob 0.01 BTC, a transaction is created containing their addresses, the amount of 0.01 BTC and the key used to verify the integrity of the transaction. A collection of these transactions is then verified by miners, and transmitted to all users of the cryptocurrency as a block, to be stored on the chain known as a blockchain.
The issue a lot of users have is that, if anyone knew Bob’s public wallet address, for example, that person would also know that someone sent Bob 0.01 BTC. Tracking an address in this manner is possible with coins like bitcoin because addresses are public and someone could use services that track these addresses to figure out who’s sending cryptocoins to a particular address.
This openness is both one of the biggest advantages of current cryptocurrencies on the market, and one of their biggest disadvantages.
How is Bytecoin different from bitcoin?
Bytecoin’s highest value comes from advances in the way bitcoin’s blockchain stores transactions and the public addresses of the senders and recipients. Here is the issue that Bytecoin seeks to address, along with the solution:
- The issue
Many users want to resist blockchain analysis. When one user sends cryptocoins to another, both their addresses are stored on the blockchain as part of a transaction, along with the amount of cryptocurrency sent. The blockchain’s open philosophy then presents a problem: If you know people’s public addresses you can track how many transactions they’re receiving and how much currency they’re getting.
- The solution
Bytecoin is the solution to this openness of transactions. By wrapping the addresses using a ring signature algorithm called CryptoNote, analysts of transactions and the blockchain would be unable to precisely pinpoint the members involved in a transaction. Since ring signatures are shared by multiple users, one would be able to discern which group of users made a transaction, but not which specific user in that group.
Where can I use BCN?
As of September 2017, some merchants and online service providers have started accepting BCN as payment alongside more common cryptocurrencies, but the vast majority of users are early adopters and traders.
How do I purchase Bytecoin?
Buying Bytecoin works like any other foreign exchange purchase: Buy BCN at a low value and sell it if it gains in value. Starting April 2017 at the low price of US$0.000174/BCN…
…quickly rose to US$0.004179/BCN in less than two months, for an increase of 2,400% in value.
As with other altcoins and bitcoin itself, Bytecoin has since decreased in value and, as of September 2017, its value has settled at approximately US$0.0015, while the market figures out this cryptocurrency’s future.
Using Bytecoin to transfer money
Just like other altcoins, sending Bytecoin requires both you and the recipient of BCN to own a Bytecoin wallet. Once you have the wallet installed, sending BCN is the same as other altcoins because the algorithm for anonymity works behind the scenes.
- Install a Bytecoin wallet. Some wallets allow users to send and receive multiple cryptocurrencies but, as of October 2017, only Bytecoin’s official wallet lets you send and receive Bytecoin tokens.
- Get the recipient’s address. The recipient must provide you with an address, usually a series of letters and numbers, which you then enter into the Bytecoin wallet.
- Send agreed-upon BCN amount. After verifying that you have the necessary funds, enter the amount of BCN previously agreed upon with the recipient and send the coins. The transaction will show up immediately, but it might take a couple of minutes until the transaction is verified by a miner on the blockchain, which unlocks the funds for use by the recipient.
How to get Bytecoin
- Get paid in BCN
There are already many users holding BCN in their wallets and willing to use it to pay for products and services online. Whether you’re a website developer or a marketing consultant, accepting BCN as payment alongside other cryptocurrencies and fiat currencies like USD and CAD costs nothing and gives customers the ability to pay using their preferred method. These Bytecoin assets can then be converted back to fiat currency in online exchanges.
What to watch out for
Bytecoin is still young in September 2017, and its value is still undecided. Traders will need to decide whether purchasing Bytecoin is riskier than buying other, more stabilized cryptocurrencies.
What’s next for Bytecoin?
Bytecoin’s roadmap for the future is clear. While work on the anonymity of the cryptocurrency remains at the forefront of the development team’s priorities, Bytecoin aims to introduce more features in the future, including a more lightweight wallet (for smartphones, for example) and a scripting language that allows users to create smart contracts.
Smart contracts are scripted by users on top of the blockchain of a cryptocurrency. They are then automatically fulfilled when the requirements of the contract are met.
Smart contracts can be used, for example, to send an amount of cryptocoins to another user on the first of every month.
Frequently asked questions
Image sources: Shutterstock, CoinMarketCap