Note: the following interview was conducted with Bytecoin developer Harry Ullman via e-mail, as a recorded audio interview was beyond the privacy considerations of the Bytecoin development team. The author does not currently possess any Bytecoin.
When did you discover Bitcoin?
Unfortunately, I can’t tell you that I’m one of the first people who discovered Bitcoin from Satoshi’s whitepaper. But I might as well be seen as an early adopter. I joined the community long before Bitcoin’s price skyrocketed to $10.
How long have you been with the Bytecoin project?
A little more than three years. Around the spring 2012 I first heard about the CryptoNote and needless to say, I became obsessed with the technology.
However, joining the Bytecoin team was not easy in any way: part of the core Bytecoin team deals with the privacy issues and that force us to avoid disclosing important information. Besides, I proved my worth and my competence over and over before I was officially on the team.
I have to say that I’m very proud that the Bytecoin website states “Ullo is one of the first Bytecoin team members.”
Tell us about Bytecoin, what’s new in the new wallet?
As you correctly stated previously — recently we’ve released a new e-commerce solution, Bytecoin RPC Wallet. RPC Wallet provides third party services with an effective, convenient way to work with Bytecoin network via RPC. With release of RPC Wallet Integration with Bytecoin just got even easier than it was before.
Bytecoin RPC Wallet supports approximately 10000 connections and can process up to 60 transactions per second. These are the raw numbers that we’ve acquired during our testing process. We are confident that this should meet the requirements for any business that is willing to accept Bytecoin.
With the recent 1.0.4 release we also have update Bytecoin Wallet. It is a user-oriented, graphical wallet which features modern design and intuitive interface. It allows users to access and operate in anonymous Bytecoin network without any obstacles like command line interface.
“Egalitarian Proof of Work”
What would you say are the core features that differentiate Bytecoin from Bitcoin and others?
It might be easier to describe their similarities rather than differences. CryptoNote and Bytecoin were created from scratch as a response to Bitcoin’s main drawbacks that became apparent after its release.
Bitcoin and Bytecoin have absolutely different codebases. There is a number of things that make Bytecoin stand out. I’ll cover the most significant features that are important for our users. The rest can be found in CryptoNote whitepaper, which is written as a comparison to Bitcoin.
First of all, Bytecoin has a very different proof of work, called CryptoNight. If you remember, Satoshi’s whitepaper states that one CPU should be equal to one user vote. However, his assumption did not hold, since FPGA farms and ASICs were soon to emerge and provided their holders with extreme advantage over other users. There have been several unsuccessful attempts to address this issue with new proof-of-work functions, but up to this date only CryptoNight satisfies Satoshi’s original vision.
We call CryptoNight an egalitarian proof of work, since it was designed to equalize CPU and GPU mining efficiency. It is inefficiently computable on GPU, FPGA, and ASIC architectures. As a result, any user can still join Bytecoin mining with a desktop PC.
Secondly, Bitcoin is admittedly pseudonymous. Its blockchain is a ledger open to anyone, which makes any payment traceable and linkable. However, we believe that financial privacy is an important feature of electronic cash. Your transactions history should not be accessible to third parties, no matter if it’s government or marketers.
To address this issue Bytecoin has made sophisticated adjustments to the original cryptocurrency design. We were first to introduce both ring signature and one-time private keys (stealth addresses for each of the transaction’s outputs).
Ring signature is a special type of digital signature that can be created by someone of the group of users, but it is unknown who exactly the signer is. Imagine a letter that is signed by a group of 10 users. You know that someone of them did sign the letter, but there’s no way to identify who that was (you may only guess). This introduces untraceability property, which means that for any Bytecoin payment there is a number of equiprobable senders.
Ring signature works differently from coin mixers and coinjoin schemes. The latter depend on other users that are currently making a payment that you can mix yours with. On the other hand, in Bytecoin you mix your unspent inputs with absolutely random ones from any time period. As a result, it creates extra barriers for blockchain analysis with each transaction.
What’s more, each transaction is sent to a unique one-time address (stealth address) which is derived from the recipient’s public address and random data. As a result, only the recipient is able to tell that the payment was made to him. This provides the unlinkability property, which makes it impossible for any party except for the wallet owner to link any transaction to this wallet or evaluate its current balance.
There are also other important differences, such as adaptive maximum block size, smooth emission curve, and two private keys for each wallet instead of one. There are plenty of other differences some of which were more or less summarized in this infographic from the Bytecoin community website:
Independence is Crucial
How does Bytecoin development fund itself?
We are entirely self-funded. Some of us have day-jobs, while others depend on their entrepreneurial ventures or earlier investments. As I’ve mentioned earlier, Bytecoin team is very strict with privacy protection, so it would be unethical to go deeper into our personal data and backgrounds.
For me personally Bytecoin is not a way to earn for a living. To excel in financial privacy solutions, it is crucial for Bytecoin team to stay independent from any sponsors, stakeholders, or revenue streams.
What is your take on the Bitcoin block size debate?
The current debate has two important issues. Firstly, is it sufficient to increase the maximum block size, or should an adjustable parameter be introduced? Secondly, what particular decision should be utilized?
We believe that Bitcoin community should find an optimal solution for both users and miners. There are quite a number of great proposals that are being discussed at the moment. Some of them are similar to adjustable max block size limit that was originally introduced in Bytecoin; some of them are very different. I personally believe that the solution should not simply put off the debate for the next couple of years.
In any case, Bitcoin has strong developers. I am confident that they will arrive at an optimal decision. However, only the time will show how it goes.
You mention that it’s privacy-centric, but aren’t there Bitcoin solutions for that, such as DarkWallet?
It is inspiring to see that there are other developers working to improve financial privacy of the users. I believe this means that we are currently working on the front frontier of the cryptocurrency technologies.
There are various approaches to anonymity in cryptocurrencies. I’ve mentioned that one of the issues of mixing technologies is the necessity to mix the transactions in real-time. Another one is dependency on a centralized mixer or service provider. Finally, even though DarkWallet offers a robust scheme that is free of these disadvantages, it protects privacy of a relatively small set of Bitcoin transactions.
On the other hand, Bytecoin offers an anonymous financial system out of box where all the transactions harness mixing and stealth addresses from day one. As a result, the complexity of blockchain analysis increases with each transaction that is going through the system.
What is the fundamental reason that privacy is very important when it comes to money? Censorship? WikiLeaks illustrated a case where the institutions knowing who was receiving and who was sending made it very difficult for free speech to rule the day. Is that the kind of thing you’re talking about?
In the contemporary world the informational flows about each of us are overwhelming. The access to them can hardly be controlled. This means that any piece of data about any user that has ever been available online can be exploited by almost anyone and anytime.
This implies that 3rd parties can interfere with the life of almost any human. It may be relatively harmless interventions such as spam mail lists or tiresome context ads. It may well present more dangerous issues such as social engineering, fraud, or compulsion of you or your family members to certain actions.
While it is relatively easy for a user to control what data and photos are posted on Facebook or Instagram, it is not the case for financial privacy. The banks, online stores, and various services that are related to payments or financial institutions require revealing tremendous amount of personal data. Who knows where this data can leak and who may take advantage of such knowledge?
We believe that it is crucial for privacy-centric solution to work seamlessly and out of box. Bytecoin helps you avoid risks that your financial data is used against you.
I read somewhere once that Bytecoin would eventually be the preferred currency for DarkNetMarkets. How do you feel about that statement?
The widely spread belief about darknet is that it is the place for immoral and dirty activities related to drugs, weapons, and porn. This is definitely not the whole story. Deep web offers a variety of other opportunities, such as community boards with no governmental censorship, libraries with access to different point of views, and projects that are not interfered by the Big Business or the Big Brother. Darknet is after all a free territory that can boast with less censorship, surveillance, and pressure on individuality.
Coming back to your question, Bytecoin is free software so anyone can use it as a tool for his own purposes.
What are the short and long-term goals of the Bytecoin project?
Bytecoin is strictly following its technology roadmap, which is the main priority at the moment.
As we are introducing new tools to the market, our short-term goal is to enhance Bytecoin ecosystem and continue integrating with various cryptocurrency services. There are a couple of large projects that we are currently working with; this is a good test for our improved e-commerce solution and technology vision.
As for the long term, our ultimate goal is to help Bytecoin evolve into a very sophisticated financial system. We are already finalizing smart assets and aliases, which should be released later this year. The next huge step is going to be Bytecoin’s smart contracts that we are already working on.
We believe that cryptocurrency as a form of digital money is only a humble start for the Cryptonomy. It may be hard to say how exactly the global financial system will evolve in the next decade, but we definitely intend to make our contribution.