Investigating the Top 50 Cryptocurrencies, Part 28/50: Bytecoin

Bytecoin is a blockchain built on CryptoNote such that all transactions are completely private. Transactions in this system are immutable and decentralized but not transparent.

It is undeniable that CryptoNote, and with it bytecoin, has been a major influence on the cryptocurrency space. The concept of ”ring signatures” allows for cryptocurrency transactions to be private while still being secure and decentralized.

There is some controversy surrounding the origin of the bytecoin blockchain, even though the underlying CryptoNote technology is broadly considered safe. This article will take a deeper look at the history of bytecoin.

About This Series + Disclaimer

This post is part of a new series where I investigate each of the top 50 coins by marketcap (based on coinmarketcap.com's rankings on October 11, 2017). My goal is to help steem’s userbase become the most knowledgable blockchain community in the world.

Disclaimer: I am not an investment expert and will not be providing investment advice. I will teach you about the top 50 coins, and you can do what you want with that info.

Bytecoin = Privacy

Bytecoin was created by an anonymous person under the pseudonym Nicolas van Saberhagen in July 2012. It was the first example of a new kind of blockchain built with CryptoNote.

CryptoNote is notable in a few different ways. It’s a completely new blockchain implementation as opposed to being a fork of bitcoin. The core principle of CryptoNote is that privacy is a fundamental human right. That’s why it makes all transactions completely anonymous.

People transacting in anonymous currencies are asserting a tremendous amount of independence. The government is unable to see this money change hands, which makes collecting taxes nearly impossible. There’s an element of risk involved in using anonymous cryptocurrencies, at least from an American perspective, for this reason.

Some people are fervent supporters of anonymous cryptocurrency. They desire to bring more privacy to the way that digital money is earned and spent, just like with cash. For them, bytecoin represents the level of privacy that everybody should have access to.

The Bytecoin Premine Controversy

There are allegations that bytecoin’s launch date was altered and is fraudulent. The idea is that a large pre-mine took place such that 80% of all bytecoins were pre-mined by a small group of core developers.

Right now with bytecoin sitting in the top 30 of digital tokens, it seems like there is a lot of confidence in the token despite the allegations. We have seen shoddy tokens stay in the top 50 though. Veritaseum has been in the low 40s for a long time despite 98% of tokens belonging to one person, Reggie Middleton.

There’s no way to be sure what happened. But it’s concerning that so many people have been so adamant about this…

There were also reports of a glitch at one point that made it possible for people to mine extra byotecoin tokens beyond the appropriate mining schedule. This is particularly troubling because in an anonymous and opaque system like bytecoin, it is impossible to know if extra tokens are floating around.

Token Distribution

Premine allegations notwithstanding, here is the official word on how bytecoins are issued. It’s the same basic system as bitcoin in terms of economics.

Blocks are mined at a rate of once per two minutes, and each block rewards the computer that mines it with some new tokens. Tokens start out at a high rate of issuance and reduce slowly over time. There are a finite number of tokens to be issued, so the final form of bytecoin will be deflationary.

The Team

There is no clear indication of who is developing bytecoin right now. Browsing the subreddit for bytecoin brings up references to a mysterious “Jenny” and “Team Bytecoin,” but all names are pseudonyms.

Perhaps visiting the CryptoNote Foundation page will give us an idea. After all, CryptoNote is the underlying technology that powers bytecoin:

_{photo from CryptoNote Foundation}

The board of directors should have been announced in late 2015, but, nothing. That is a shame. There are lots of names at the bottom of the chart but who knows how involved any of those people are - especially since the list probably hasn’t been updated in 2+ years.

Market History

Here is the total market history for bytecoin:

Bytecoin held a steady and low valuation for about three years before experiencing a significant bull run in May 2017. Since then the price has declined a lot, but has still retained some of the gains. I have no idea what direction this token is heading next.

Final Thoughts

I don’t know how I feel about this one. It seems like anybody who appreciates the CryptoNote technology would do better to focus on Monero. Monero has the momentum and the most talented developers right now.

It’s hard to have faith in a token where there are serious allegations of a major pre-mine and such scarce information. There aren’t any signs of a large bytecoin community or any significant awareness of the token.

Why is this in the top 30 right now? I can’t figure it out.

What do you think about Bytecoin?