Bytecoin: A Giant Scam or a Fatal Error?

Within a framework of an op-ed Alexey Voronin, the founder of SmartValley.io, analyzed the recent explosive growth of Bytecoin.

Over the past few days, Bytecoin managed to make a real sensation among cryptocurrency enthusiasts by provoking a full-fledged massacre in the crypto industry of altcoins. Before we talk about the dramatic events of the last days, however, a few words about the hero of our review.

Bytecoin is an anonymous cryptocurrency. In simple terms, this is an altcoin from the second league, created in 2012 by a man named Amjuarez. The trade ticker is BCN, and the algorithm used is CryptoNote. The latter suggests that this altcoin is focused on increased anonymity and maximum decentralization of mining. This coin previously became scandalously infamous for its excessively large pre-mining volume.

It All Started off so Well

The whole story begins on May 8, 2018, when the news declared about the listing of this coin on Binance, the world's largest crypto exchange. The plot then thickens and develops as rapidly as an avalanche, as in any classical action movie.

After listing, an instant price hike of over 1000% occurred for the altcoin, but almost nobody had the chance to take advantage of it. Everything ended in a complete collapse and a loss of all funds for this cryptocurrency’s investors. But, let's not run ahead of the train and examine everything in order.

After the price and excitement peak was reached, it suddenly turned out that all the largest exchanges, such as Poloniex, HitBTC, Binance, and others, froze the withdrawal of Bytecoin users' funds. What happened to this "remarkable" coin?

And here the versions of what really happened are diametrically different for all sides involved.

Crypto exchanges report that the Bytecoin network simply broke off, that is, it stopped working. There was nowhere to withdraw the funds to as Bytecoin's blockchain company simply stopped servicing transactions and declared the "out of service" status.

The developers of Bytecoin (BCN) acknowledged that the network "precipitated.” True, at first, they majestically remained silent. They later said that the overload was associated with a sharp spike in popularity (which the network simply could not support), and finally, the latest version hinted at malignant miners, who used some vulnerable ancient software, which overloaded the network as a result.

The opinions of the users were also divided. The versions of what happened ranged from a conspiracy of exchanges in cahoots and the freezing of extremely profitable operations (after all, many BCN holders would have made an incredible profit equivalent to hundreds of percent of their asset growth per day), to a preplanned pump scheme assuming that only the chosen would withdraw their profits (the chosen ones remained in the shadows, of course).

The Steeds, the Men, All Disassembled

Be that as it may, it is still unclear as to what happened and who is to blame.

All the money of the investors is currently frozen (or disappeared) because the network itself does not work anymore. At the time of writing, the problem has not yet been resolved, and all daredevils should be warned that attempts to transfer Bytecoins between wallets can lead to unpredictable consequences, and will most likely lead to an irreversible loss of these funds.

The day before yesterday, CoinMarketCap placed BCN on the 15th line of its table. Later, however, Bytecoin fell by as much as 1,594 lines on this popular rating, and then was completely removed from the listing. Users are now unable to find any information about the coin’s value, market volume, and even its market capitalization. According to unofficial information, the coin has already lost about 50% of its value (according to CoinGecko, for example).

Most users with "suspended transactions" have rallied to the Binance exchange. Some part of the funds did not reach the wallets of the recipients or was "lost" in transit that led nowhere when the network malfunctioned. Another part of the unlucky ones simply lost access to their assets and are waiting for the restoration of the network to "continue the feast."

The Bottom Line

In conclusion, it is worth mentioning that the story is riddled with peculiarities. For example, it is suspicious that in this case, according to CoinMarketcap reports, there was no hike in intraday trading volume, which almost always accompanies any impulsive growth.

In any case, it is best to wait for the end of the action movie and tally the results. The updated version of the software has already been posted on the Bytecoin website, and people are waiting for the update of the nodes of this network.

In general, sitting by the edge of this entire saga’s smoldering heap of ashes, one involuntarily starts thinking that the long-term fate of popular altcoins is unforeseeable. This story is somewhat reminiscent of a pogrom arranged in the blockchain of Verge, another marketing star of "maximum anonymity,” which has recently suffered a spectacularly successful and classic "51 percent attack," which in itself clearly demonstrates the ideals of the majority of altcoins, many of which develop according to the well-known principle of "cheap and sturdy.”