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bitcoinadmin June 10, 2020 No comments Cryptocurrencies permalink

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What is DigiByte? The Beginner’s Guide

DigiByte is an old-school cryptocurrency based on the Bitcoin code. It’s one of the oldest projects in the market still developing and going strong. DigiByte has lots of fanatic supporters, but the coin is still unknown to masses and lacks strong exchange support. This is DigiByte beginner’s guide. We’ll go through the key features, history, and future potential.

What is DigiByte?

Let’s begin by understanding the big picture and placing DigiByte to a correct category of cryptocurrencies. We divide the market into three main categories: platforms, tokens, and currencies.

The king of platforms is Ethereum, which is the biggest and the best-known project. Platforms are also called ecosystems and Dapp operating systems. You can think of them as Android and iOS. They provide a framework for app developers. Other known platforms are EOS, Tron, and Tezos.

Tokens are created on these platforms. Most of the tokens are built on Ethereum, which means they use the ERC20 standard. The best-known tokens are Basic Attention Token and Chainlink. Tokens usually have utility inside a specific program, and they do not have a blockchain of their own.

Bitcoin is the number one example of a currency, which also has Litecoin, Bitcoin Cash, and DigiByte. These are meant to act as digital money, P2P currencies. We also have sub-categories like privacy coins and stablecoins.

Below is a short introduction video of DigiByte.

Even if DigiByte has traditionally been considered as a currency, it has started to lean towards platforms. This is due to new features like DigiAssets, which we’ll dive into later in this article.  Many analysts consider DigiByte as “Bitcoin on steroids”, which is a quite accurate description

DigiByte was born in 2013

DigiByte is truly an old-school cryptocurrency. It’s over seven years old and still developing further.

The founder of DigiByte is American Jared Tate. He was first introduced to cryptocurrencies in 2012 when working as a freelance software developer. Tate began with mining and later studied the Bitcoin program code as well.

ASIC miners started to dominate Bitcoin mining in 2013. This made mining with regular computers unprofitable and the development certainly got Tate’s attention as well. He wanted to create a new version of Bitcoin, where many of the issues would be fixed. Tate called his prototype DigiByte.

DigiByte is based on the Bitcoin program code the same way as Litecoin. Both DigiByte and Litecoin have a blockchain of their own and they are not hard-forked out of Bitcoin like Bitcoin Cash was. The genesis block of DigiByte was mined on the 10th of January 2014.

Below is an interview with Jared Tate where he talks about DigiByte history.

Jared Tate founded DigiByte for the same reason many competing currencies were born in the early 2010s. He wanted to create a faster and cheaper version of Bitcoin.

One interesting point is the fact that there is no white paper available on DigiByte. If you think this is weird, read this Reddit post.

”So whitepapers are specifically something that ICO’s peddle, because they have no product 99% of the time. In fact if you look at many of them on coinmarketcap.com some of them don’t even have a functioning testnet, so you’re relying on the whitepaper as a ”measuring stick” to gauge where they see their future.

With ICO’s you’re often literally buying the hopes and dreams of a team, hence the need for a whitepaper.

DigiByte is not an ICO! DigiByte is a fully functioning Blockchain, the longest in the world to my knowledge (We’ve just broken the 6 million block mark as of a few minutes ago), and so what would a ”whitepaper” actually contain that would be of any benefit, that cannot be found within the roadmap on the website? ”

As it is stated in the quote, DigiByte has reached an interesting milestone. It has the longest blockchain in the world. This is due to two major factors: DigiByte blockchain has been running since 2014 and new blocks are created every 15 seconds.

DigiByte in recent years

It’s important to understand, that DigiByte has been a community-driven project from the beginning. There was never an ICO and ICOs weren’t really a thing in 2014 anyway. The big ICO boom started in 2017.

This means that there is no tech company behind DigiByte running the show. The development is done by its community members. There is no CEO or ICO funding either. Jared Tate has been the face and voice of the project in the past.

However, there has been a major change recently. Tate announced his new plans in May 2020. He has stepped down and won’t be the leading figure of DigiByte any longer. Tate will be working with other tech projects based on the DigiByte code.

Tate is liked by many, but his principles and opinions have also created some extra drama. Tate has been fighting with the Binance founder Changpeng Zhao and Tron founder Justin Sun. This is why DigiByte is not listed on Binance and it was also kicked out of Poloniex (owned by Sun).

DigiByte has a large community supporting and developing it. This is quite rare, but not entirely unique. Monero and Verge are also examples of such projects, not to mention Bitcoin, which doesn’t have a CEO either.

The project has gone forward in recent years as well. DigiByte has added a new Odocrypt mining algorithm, Digi-ID, and DigiAssets. We’ll soon check these features in detail. You can check all DigiByte milestones from this article.

There have been three major runs on the DGB price. The first was in early 2017, where DGB moved from 0,001$ to 0,06$ in about one month. The biggest rally was in December 2017 and January 2018, which led to DigiByte’s ATH price of 0,14$.

The third rally took place in the spring of 2020 when DigiByte went up almost 400% in a short period of time.

Next, it’s time to look at DigiByte from the tech point of view.

DigiByte is UTXO-based and mineable cryptocurrency

As mentioned earlier, DigiByte is based on the Bitcoin code. This means that many technical features are similar – even if DigiByte has gone through half a dozen hard forks and soft forks since its inception.

DigiByte is UTXO-based cryptocurrency. UTXO comes from the words Unspent Transaction Output. In practice, it means that that the balance of each address is calculated from the sum of unspent transactions. An alternative is to use an account-based system as Ethereum does.

The idea of UTXO is as follows. Let’s assume that you have 100 euros worth of currency in your pocket. It could be one 100€ bill, two 50€$ bills or several 20€ bills with some coins included. If you’d pay a purchase of 22€ you’d typically combine a 20€ bill and 2€ coin. If you’d pay a 19€ purchase you’d use a 20€ bill and get a 1€ coin in return.

This is how UTXO transactions work as well. Even if your wallet balance shows a single number, for example, 5 bitcoins, it might consist of dozens of different smaller units meaning unspent transactions. If you’d send 0.1 bitcoins to your friend, your wallet might build this from your smaller “change” or send for example “a coin” of 0.2 bitcoins and then 0.1 bitcoins back to you.

This 0.1 bitcoins you receive back is an unspent transaction. Each UTXO account balance is calculated from these. Below is a great video explaining UTXO with further details.

An UTXO-based system prevents double-spending very effectively because every unit you have in your wallet must have come from an unspent transaction.

Another major similarity comes from the consensus mechanism. DigiByte is also using a Proof of Work consensus algorithm, which means it can be mined with physical mining devices. We’ll go deeper into this subject in the next chapter.

DigiByte has always been marketed as a faster and cheaper version of Bitcoin. That, it surely is. Even if the block size is 1MB on both, DigiByte creates a new block every 15 seconds. Bitcoin and all its forks (Bitcoin Cash, Bitcoin Gold, etc.) have a 10-minute block time and Litecoin has 2.5 mins.

DigiByte has also SegWit soft work activated, just like Bitcoin and Litecoin. This means that DigiByte’s 1MB block is actually like a 4MB block. With the current tech in place, DigiByte can handle about 1000 transactions per second (TPS).

There is a maximum supply in DigiByte too. There will be no more than 21 billion DGB created, exactly 1000 times more than Bitcoin. DigiByte will reach this supply in 2035.

DigiByte has five mining algorithms

Jared Tate didn’t only want to create a cheaper and faster version of Bitcoin, but he also wanted to solve the mining issues.

ASIC devices have dominated Bitcoin mining since the early 2010s. The majority of these devices are produced by the Chinese company Bitmain. Most of the hashing power is also located in China. There are many people who don’t like this development.

bitmain antminer s9
An ASIC miner manufactured by BitMain.

Almost all new cryptocurrencies use Proof of Stake consensus algorithm instead of Proof of Work. This means no physical miners are required and the network validators are staking coins instead. DigiByte made a different solution.

There are five different mining algorithms (hashing algorithms) on DigiByte: Scrypt, SHA256, Qubit, Skein, and OdoCrypt. This makes it possible to do GPU mining as well, which has been recently replaced more and more by FPGA mining.

Check this Twitter thread by Jared Tate.

One major change took place in early 2019 when DigiByte released the Odocrypt update. It replaced the Groestl mining algorithm. This was the 6th official DigiByte hard fork and a true anti-ASIC feature. Odocrypt algorithm updates itself every 10 days making it impossible for ASICs to keep up with it.

According to Jared Tate, DigiByte is the leading blockchain in three out of five of these mining algorithms. Bitcoin is the number one in SHA256 and Litecoin dominates the Scrypt.

If you want to learn more about DigiByte mining, there is lots of information available online. Just use Google or Youtube and you’ll find tons of articles on the subject.

The DigiShield technology

Let’s introduce an update called DigiShield, which is also connected to mining. This is a feature developed by DigiByte and used nowadays by other currencies as well, such as Ethereum, Dogecoin, and Bitcoin Cash. See this Reddit post for a detailed description.

In short, DigiShield is developed as a protection against big mining pools. When a new cryptocurrency comes to the market, big mining pools can rush to mine it and claim a huge hash rate to themselves.

When these pools would move to mine the next coin, they would take a huge percentage of the hash rate with them. This would leave the remaining miners with an impossible task of mining blocks with the current difficulty adjustment.

“So DigiByte comes up with DigiShield in Feb 2014, which retargets after each individual block, so the difficulty can go up and down a lot faster, and any drop in hashrate on the network is minimized by an order of magnitude when compared to traditional difficulty retargeting as we see in Bitcoin etc.” (Source)

As it says in the quote, DigiShield is changing the mining difficulty after every single block. This means that a drop in hash rate doesn’t cause any problems to the network. In Bitcoin and Litecoin this adjusting is done every 2016, which translates to two weeks and 3.5 days, respectively.

DigiByte implemented this technology already one month after its launch. The more developed version of this tech is called MultiShield, which gives the same protection for all five DigiByte’s mining algorithms. MultiShield was the third official hard fork of DigiByte.

DigiAssets and Digi-ID

DigiByte has started to lean towards the platform category, as mentioned at the beginning of this article. This is due to Digi-ID and DigiAssets, which bring a lot of interesting features on the table.

In short, DigiAssets make it possible to create a digital representation of any real-world assets. According to DigiByte:

”DigiAssets can be used to securely represent anything we find in the physical world. From tangible assets such as real estate or cars, through to scarce digital pieces of art. Signed documents such as deeds and medical bills can be protected.”

If you are thinking of NFTs (Non-Fungible Tokens), you are not far off. This is all about tokenization, which will take place in the next 10 years. This development can be seen in the DeFi sector, which is mostly built on Ethereum right now. You can already buy tokenized stocks of Apple or Amazon.

DigiAssets offer similar features. You can create your own digital assets with your own rules. These can be stored and sent with your DigiByte wallets. There are also exchanges, where DigiAssets can be traded. In practice, DigiAssets will also bring smart contracts to DigiByte.

Check this video below for a detailed description of DigiAssets, Digi-ID, and the Odocrypt algorithm.

Digi-ID was introduced in 2018. This technology has also lots of different use cases. In short, Digi-ID enables end-users to log in with a digital signature. This means no more usernames and passwords. Digi-ID could be used on a website or an app.

Such a system would be also protected against data thefts. Since no usernames and passwords are used, there is nothing hackers can steal from the system.

When you look at the DigiByte.io website, both DIGIASSETS and DIGI-ID are on the top menu. These are important updates for the project.

DigiByte Beginner’s Guide – investing and future

DigiByte has been branded as a “sleeping giant” by so many analysts over the years. Many investors, who like Bitcoin and Monero, like also DigiByte. This is due to the distributed community that runs the project.

The community behind DigiByte is truly active – this coin has lots of fans and supporters all over the internet. You’ll see it fast after some Google or Youtube searches. There is so much material available with new posts and videos coming every day.

DigiByte has been out there for a long time. There are also lots of proof that the project is going forward. Yet, it’s still not part of the mainstream buzz and the coin is largely unknown to masses. This is probably because DGB is not where tens of millions of crypto investors are: in the top exchanges.

An interesting feature: try googling “buy DigiByte” and you’ll see first an ad by Coinbase – even if you cannot even buy DigiByte from Coinbase yet. Jared Tate also tweeted about it recently:

The DigiByte community has been requesting Coinbase to add DGB for years but in vain. An even bigger issue is the fight between Tate and Changpeng Zhao, which prevented DigiByte from being listed on Binance.

It’s easy to see DigiByte having similar issues as Dash. Both coins have some killer features compared to Litecoin and Bitcoin Cash, for example. Yet, Bitcoin Cash is five times bigger than Dash and DigiByte combined.

One should also think if coins designed to be P2P currencies are good investments in general. If a coin is meant to be used and it actually gets adoption, it means lots of selling. People tend to hold a coin in large amounts, which is seen as a store of value and digital gold (Bitcoin).

Proof of Stake -based currencies are currently becoming more and more popular. Many investors prefer staking over mining, which helps to cut the supply and puts upward pressure on the price. Staking will also give you nice yearly returns on top of the value increase of the actual currency.

DigiByte price and how to buy DigiByte

If you want to buy DigiByte, go to Binance (Note: U.S. citizens must use Binance US). It is the leading cryptocurrency exchange in the world. DigiByte was finally added to Binance in 2020. You’ll have the best liquidity and several different currency pairs.

Buy DigiByte from Binance

For those needing alternative options should go to Bittrex. This is a reliable operator in the market, which offers DGB/USD pair as well. You can make fiat money deposits to Bittrex.

You can also buy DGB from KuCoin, which is a crypto-crypto exchange. You can convert your fiat money to bitcoins on Coinbase first and send bitcoins to KuCoin. There you can convert BTC to DGB.

If you purchase DigiByte, it can be stored in dozens of different wallets. You’ll find all the alternatives at digibytewallets.com. There are wallets built by the community and then generic wallets, which support dozens of other altcoins too.

Popular options include Exodus, TrustWallet, and Coinomi. Different Ledger and Trezor hardware wallets offer ultimate safety.

The official website can be found at digibyte.io. You’d also follow the Reddit page and Twitter handles @jaredctate & @DigiByteCoin. Check also the DigiByte Awareness Team (DBAT) website at dgbat.org.

There’s so much information available about DigiByte since it’s a favorite coin of many altcoin investors. Just search from Youtube and you’ll find lots of quality videos and interviews. Here’s a good video by Coin Bureau from 6 months ago you can check.