All the things you wanted to know about Bitcoin and the other cryptocurrencies

Bitcoin Garden Guide: What is Bytecoin?


An Introduction to Bytecoin and Cryptonote Technology

Bytecoin was created back in 2012, during the first wave of crypto development, when the blockchain was well outside of mainstream consciousness. In the early days of crypto, buoyed by the possibilities they saw with the emergence of Bitcoin and blockchain technology, and wanting to further the progress of this technology, a team of developers identified some drawbacks inherent with Bitcoin, in particular those concerning anonymity and traceability, and devised a means of ameliorating them. The problem with Bitcoin, from their vantage point, was that, though hailed as a revolutionary means of payment that was decentralized and which protected the identity of its users, the currency was actually traceable and not as secure as it was esteemed to be. These developers wanted to establish a method of payment akin to Bitcoin, with all the doors that it had opened, but also improved, with a further opening of doors thought shut, a method that pronounced more clearly the ideas that comprised the philosophy of the decentralization movement. Out of this attempt to improve upon the preexisting, CryptoNote Technology was born.

Bytecoin built upon what CryptoNote established in those early days, refining itself with the help of a generous and active community, and rising to meet the successive challenges that have faced the cryptocurrency community as it weaves itself into the financial fabric of the modern world.

What is the philosophy behind Bytecoin?

BCN was created as a means of ensuring the privacy and anonymity of those wishing to take part in decentralized p2p network. Whereas public opinion can be fickle in this industry, and there is a never ending train of flavor-of-the-month projects built upon the newest technological fad, Bytecoin is a privacy institution, and as such is committed to its principles. The philosophy behind Bytecoin can be summed up as follows: Bytecoin seeks to be the most advantageous solution for those looking to enjoy the decentralized and privacy-oriented network as it was originally envisioned, with additional privacy features. The decentralized economy was to operate along the lines of egalitarianism and autonomy; in whichever way Bytecoin can adapt to provide its users with equal opportunity or increase the level of autonomy they enjoy by its use, it seeks to do so.

How does Bytecoin maintain anonymity?

Bytecoin gives its users the opportunity to maintain its anonymity through the technological basis of its platform. The main threat to anonymity is the ability for outside parties to track transactions back to addresses. If one takes Bitcoin as an example, although addresses and transactions are not explicitly tied to user identities, it is not impossible for outside parties to use information publicly available to locate the sources of transactions and even the identities behind wallets. This is due to the fact that transactions made over the Bitcoin network are completely transparent and traceable by specialists. Using the transparency of the network, outside parties can gather information on transactions and determine where multiple addresses and transactions are clustered together. In turn the clustering can reveal sensitive data via the analysis of transaction networks, taint analysis, timing analysis, and amount analysis. These methods are all fairly easy to do, only requiring curiosity and some degree of technical proficiency. For example, if you see an input transaction on the blockchain ledger of 5.15515 bitcoins and then see an output of 5.15515 registered one block later, it is almost certainly the input and output pair of the same transaction.

From its inception, Bytecoin has attempted to resolve these issues. The way Bytecoin does this is via its technological foundation which was based upon CryptoNote Technology.

What is CryptoNote Technology?

CryptoNote Technology provided an intricate means of protecting the identity and data of transaction senders and receivers by disguising their addresses. Bytecoin was the first cryptocurrency to adopt the Ring Signatures and Unlinkable Transactions techniques developed by CryptoNote to ensure that transactions on its network are untraceable.

What are Ring Signatures?

Ring Signatures is a sophisticated scheme of encrypting transactions. When transactions are sent in a Ring Signature system, the public keys of various members of the Ring Signature group are used to sign off on transactions that may not directly involve them. In this way if a group consists of Bob, Susan, and Luke, and Bob wants to make a transaction, he is authorized to make that transaction but the signature used to verify it may actually be Susan’s or Luke’s. In this way an outside observer is prevented from knowing who the actually source of a transaction is.

And Unlinkable Transactions?

If you have a public address that usually means that anyone can look you up and see all of the transactions you have completed with that address. To avoid being tracked in this fashion you can create thousands of different keys and do all of your transactions separately, but, due to how inconvenient that would be, this isn’t really a viable option.

What Bytecoin has done, via CryptoNote, is implemented a unique address generator, that, though linked to one permanent address, creates an unlimited amount of new addresses to be used for your transactions. The keys produced during this process are all one-time keys that prevent unwanted parties from tracing back transactions to their sources.

What does Bytecoin have planned for the future?

There have been significant changes to the Bytecoin platform over the years, and the roadmap today is packed with events scheduled for the near future. The last hardfork has enabled the rollout of hardware wallet support that now allows Bytecoin users to take advantage of Ledger Nano S, the long anticipated deployment of the Bytecoin Gateway Project, the introduction of the hidden amounts feature, and the addition of encrypted messaging functionality to the Bytecoin platform.

What is the Bytecoin Gateway Project?

The Bytecoin Gateway Project is something that came about through a separate edition to the Bytecoin platform. Not long ago, Bytecoin developers were able to add the auditable wallet feature to the Bytecoin platform. In exploring the possibilities presented by the addition of auditable wallets, it was discovered that blockchain bridging would theoretically be possible. Bytecoin gateways will be formed in a similar way to that of stable coins. To create a gateway a certain amount of Bytecoin will be used as the anchor to a new coin on another blockchain. The value of the new coin will be inherently linked to the Bytecoin used to generate it, but the new coin will be able to operate within the new set of parameters dictated by its own blockchain.

A potential Bytecoin Gateway would be composed of three parts: an auditable wallet, an Ethereum smart contract (or an analogical entity on another blockchain), and a public interface that would bind the two assets together and serve as a transparent window on the process.

Where can users get Bytecoin?

On the Bytecoin website there is a page with an extensive list of all of the different exchanges and mining pools that offer Bytecoin. There is also a list of multi-currency wallets that support Bytecoin on the same page.

References and Further Reading:

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