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CoinpediaBHV: Bytecoin

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
04 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.

 HOW DO PUBLIC TRANSACTIONS AND THE BLOCKCHAIN WORK?

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. Because 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.