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Bytecoin, the original anonymous cryptocurrency which successfully implemented Bitcoin Core developer Greg Maxwell-endorsed Cryptonote, the technology used by leading anonymous cryptocurrency Monero, has made a strong comeback with a 250% percent increase in its price.
In merely three days, Bytecoin experienced a 5x increase in its market cap, increasing from around $80 million to $400 million. Such abrupt growth in market cap and value isn’t organic and the inconsistency of Bytecoin’s growth is evident in its trading volume. For years, Bytecoin hasn’t seen much trading across exchanges and trading platforms. By May, Bytecoin daily trading volume increased from $340,000 to a staggering $48 million.
Despite being the first and the original anonymous cryptocurrency, Bytecoin is relatively unknown to the modern cryptocurrency community, in comparison to Monero. This is because Monero is a forked and evolved version of Bytecoin, which deviated from the original Bytecoin software and Cryptonote over time.
2015 was one of the most active years in terms of development for Monero, with over 904 commits and 268,630 newly modified lines of code. Thus, although Monero almost entirely inherited the code of Bytecoin in the past, currently, it shares limited similarities with the actual Bytecoin software.
Prior to the existence of Monero, Bytecoin was heavily criticized due to its premine scheme and for that reason, the Monero development team refused to collaborate with the Bytecoin development team. In 2015, Monero lead developer Riccardo Spagni, better known as FluffyPony, stated:
“The reality is that 82% of the coins were already mined before its ’public’ release. Even if the premined coins weren’t done so maliciously, it still means 82% of the coins in the hands of persons unknown and invisible. It basically centralises a decentralised currency.”
The fact that 82 percent of the supply of Bytecoin was premined grants its founders, developers and stakeholders to massively influence the price of the digital currency solely with their holding of Bytecoin. More importantly, it opens the possibility of a pump and dump, during which the premined supply of Bytecoin can be dumped to the market and cause the price to drop significantly.
At the time, FluffyPony emphasized the danger of pushing a premined cryptocurrency. He wrote:
“Even if you take the fact that Monero is clearly leading the innovation race, I would think it dangerous to touch a coin where 82% of it is held by unknown actors who were not publicly observed during the period where they supposedly mined the coin. Having a shady history does not set a good precedent.”
The premine aspect of Bytecoin is essential to understand its recent price surge as it hasn’t made much progress in terms of user base and market cap growth in the past few years, mostly upon the launch of Monero. Suddenly, after maintaining a relatively small market cap of $5 million for a few year, within a two-month period, Bytecoin’s market cap increased from $10 million to $350 million.
To Bytecoin’s credit, prior to the introduction of Monero, Bitcoin Core developer Greg Maxwell previously praised its development work and the success it had with Cryptonote. Maxwell stated:
“The privacy achieved by Bytecoin is better than any existing-in-production privacy tools (e.g. CoinJoin) and also as good as or better than every theoretical system I’ve heard proposed except for Zerocash. Relative to ZeroCash, Bytecoin exists today and has simpler cryptographic assumptions, better performance for signers, and no requirement for trusted initialization.”
However, the market cap of Bytecoin is already starting to decline and after reaching it peak earlier today, it has fallen by over 100 percent.
Featured image from Shutterstock.
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