What is Bytecoin (BCN): Is oldest privacy coin shady, or shy?
Questions surrounding Bytecoin remain, with historical accusations of unfair premining practices
- Is Bytecoin really a privacy coin?
- The mysterious CryptoNote project
- Pre-mine controversy
- Can Bytecoin be mined?
- Is Bytecoin a deadcoin?
Bytecoin (BCN), established anonymously some time between 2012 and 2014, was the first cryptocurrency to be released as a privacy coin.
It was one of a number of cryptocurrencies (others being ZCash, Monero, Dash and BitcoinZ) to implement features that allow for anonymous transactional activity. Today Bytecoin lives up to its privacy philosophy, offering little transparency in its ownership development team structure.
So what is Bytecoin (BCN) and how does Bytecoin work? Join us as we attempt to figure that out below.
Is Bytecoin really a privacy coin?
Most newer digital currencies tend to use zero-knowledge proof technology to achieve privacy, a system gaining traction even with Etheruem’s co-founder, Vitalik Buterin.
Bytecoin, being an older cryptocurrency, operates in a different way to zero-knowledge proof. Through the implementation of CryptoNote protocols, Bytecoin (BCN) allows for private transactions through the use of unlinkable public keys and untraceable ring signatures. The popular privacy coin Monero is also based on CryptoNote protocols.
While the Bytecoin cryptocurrency and CryptoNote enjoy their share of controversy, their privacy credentials are sound. CryptoNote protocols are peer-reviewed and even its detractors applaud the robustness of the technology. This is undoubtedly why Monero is reportedly the coin of choice for cyber criminals.
The mysterious CryptoNote project
Just like Bytecoin, the privacy coin Monero has its origins in CryptoNote, having launched off CryptoNote open-source protocols in 2013 as BitMonero (only one year later, the community would fork again into Monero). Other CryptoNote-based projects to crop up around this time included Quazarcoin, Fantomcoin and Boolberry, none of which exists today.
Little is known about “Nicholas van Saberhagan”, the pseudonymous founder of the CryptoNote white paper, of which Monero released an annotated version. As always, this anonymity comes with theories, and many on Reddit have suggested that CryptoNote and Bytecoin were created by the same development team.
There is some legitimacy to this claim. In a rare interview from a member of the Bytecoin development team, Harry Ullman said: “A little more than three years, around the spring of 2012, I first heard about CryptoNote and needless to say, I became obsessed with the technology.” However, the CryptoNote white paper is dated October 2013, more than one year after Bytecoin supposedly began development.
Adding to the controversy, community activists accused CryptoNote of forging another white paper with a false release date of 2012, possibly as a hedge against allegations of collusion with Bytecoin.
Riccardo Spagni. the founder and former lead maintainer of Monero, went on record numerous times denouncing Bytecoin as an illegitimate project. In a heated Reddit exchange, Spagni said: “The Bytecoin developers absolutely are scammers. They purposely launched multiple coins simultaneously in order to create a Bitcoin-like environment (at a time when Litecoin, Feathercoin, and other Bitcoin clones were all the rage).
“Additionally, they launched multiple attacks directly against Monero to try and make Monero fail and their coins succeed… Just because their scam was sophisticated doesn't make it less of a scam.” Spagni himself was indicted for fraud in 2021 in relation to his role as IT manager for Cape Cookies, and more recently served time over contempt charges.
Despite various community-run investigations, no official proof of collusion between Bytecoin and CryptoNote to dilute the cryptocurrency market with spam coins (the accusation levelled by Spagni) exists, but it is still a hot topic of debate. Currency.com reached out to Spagni, Bytecoin and CryptoNote for further comment.
Pre-mining occurs when a small group of insiders are privy to a pool of coins before a public initial coin offering (ICO) or mining system is in place. Once a coin is live, these insiders can effectively release their reserves when a desired price point is reached. Consequently, the coin’s price could plummet while the insiders walk away with a tidy profit.
Bytecoin’s early investors were allegedly gifted with an 80% pre-mine, which if true – and the allegations are a long way from being proved – would be suggestive of unfair, possibly corrupt, practices.
Can Bytecoin be mined?
For the moment, Bytecoin (BCN) uses proof-of-work (PoW) protocols for mining, although the mining cap is approaching and will likely be reached midway through 2022.
BCN coin will probably switch to a proof-of-stake (PoS) system once the mining limit is reached. Any further information regarding staking requirements is subject to speculation.
While there is logic in buying BCN while its value is flatlining, to take advantage of future staking opportunities, please bear in mind that Bytecoin’s long-term viability is questionable.
Is Bytecoin a deadcoin?
Bytecoin’s blog has not been updated since December 2019, although a Telegram chat is still in operation. The Twitter page consists of two Tweets since 2019, both to address issues with the broken Bytecoin wallet. Unsurprisingly, any semblance of roadmap or white paper has been scrubbed from the website (although the CryptoNote white paper is linked).
BCN coin is still available on some exchanges, including gate.io and HitBTC. However, BCN cannot be purchased on major exchanges with fiat. Binance delisted BCN back in 2019.
What is Bytecoin coin used for, you ask? Not a great deal it seems. Trading volume is negligible. A recent high of $29,000 constituted only 0.0006% of market capitalisation.
It is safe to say that the Bytecoin cryptocurrency is not looking healthy. Should the remaining community rally around the project to save it from annihilation, it may have a future, but with a disengaged, absent development team, the odds are not in Bytecoin’s favour.
There are currently 184.07 billion BCN in circulation, against a maximum supply of 184.47 billion. BCN will probably mine its last coin in the middle of 2022, where it will switch to a proof-of-stake (PoS) method.
No one really knows who created Bytecoin. The initial developers remain anonymous, with some theorising that the same developers were responsible for CryptoNote. CryptoNote is also subject to the theory that it was the brainchild of Satoshi Nakamoto. So could Bytecoin be another of Nakamoto’s children? Perhaps …
Bytecoin has been accused of unfair pre-mining tactics and collusion with CryptoNote to give a competitive advantage in the privacy coin market. Bytecoin also lacks any true engagement from the development team. While no genuine proof of illegal activity has been uncovered, no spokesperson from Bytecoin has refuted these claims.