Yesterday, Binance announced the inclusion of Bytecoin into its trading menu. The announcement caused the value of the Bytecoin blockchain to temporarily spike to $3.4 billion, meaning that for a matter of minutes the small-scale altcoin trailed only Bitcoin and Ethereum in value. The price spike can be seen in the graph below.
However, now deposits and withdrawals are marked as disabled on all relevant websites. Is this an honest malfunction or a scam?
What is Bytecoin?
Created in 2012, Bytecoin is one of the oldest cryptocurrencies. It has forked more than 25 times since its inception. According to bitcoinwiki.org, the coin’s history is “completely covered in mist: countless puzzles, unknown developers names and secret messages.”
It is an anonymity-focused cryptocurrency, offering theoretically untraceable transactions because it uses temporary public keys for each one. Users can control how private their transactions are by selecting the number of filters for them to pass through. The more privacy selected, the higher the transaction fee.
Bytecoin uses a consensus system called ‘egalitarian-proof-of-work’, which means that it registers blocks using programming language which is not reliant on memory. This means that it can be mined with cheap and efficient machines, which avoids the tendency towards monopoly of the proof-of-work system. It is also more flexible than Bitcoin, as block size is set by each miner (although there is a hard limit).
The Bytecoin development team announced yesterday that an unusually heavy load caused the system to lag and strongly recommended that users not touch their holdings until the issue is fixed. Binance published a similar notice on its own website. A Reddit user called Satekroketje claims that these announcements came only 11 hours after the issues happened, and claims a pump and dump scheme.
He said that prior to the announcement from Binance, Bytecoin was trading at 72 Satoshi on the exchanges HitBTC and Poloniex:
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As soon as the announcement broke and the price shot up, it was noted that Bytecoin withdrawals didn’t work anywhere. This means that there was only a small supply of Bytecoin actually on Binance, which caused the price to jump to 2320 Satoshi – a 32-fold rise in price.
According to Jenny Goldberg, Bytecoin’s community manager, speaking in an interview with cryptocurrency news outlet Coin Bureau, the coin can be used to “book a room at a luxury resort in Montenegro [specifically, Dukley Hotels], buy a bottle of French wine [Domaine de Cromey], wash your car, buy domain names, and a variety of other products without showing your identity, which gives you absolute freedom regarding your finances.”
The official website, re-launched in July 2017, does list the names of developers, although they are mostly only first names and there are no links. It says that the team intends to enter “the Asian, Middle East, and African markets throughout 2018.” Its social media account is also active:
Bytecoin Development team is working hard to fix all the network issues. Most of the problems have already been fixed. The fixed software is going online so be prepared to update your Bytecoin clients.
We will update you right after the software will be available for download.
— Bytecoin BCN (@Bytecoin_BCN) May 9, 2018
So is Bytecoin a legitimate cryptocurrency or a scam? Is Binance up to something shady? What do you think?