I’ve been a long time ‘HODLer’ (Hold On For Dear Life) of DigiByte having mined a few back on 2017. They’re not worth a great deal – though in the past few weeks they’ve become worth a bit more than they were. But what is DigiByte and why should you care about it? And what is Digi-ID and why should you care about that?
Much of this article will be my own personal opinion. Absolutely none of this article constitutes any kind of financial advice even if you think it does. Do Your Own Research. This article is an opinion piece not research. The value of DigiByte (and any cryptocurrency) can go up as well as down. Yada yada yada.
Before you read this bear in mind I am not a cryptocurrency expert. I do not understand the low level mathematics involved in it, and I can only give you a high level overview. Look at the whitepapers of each cryptocurrency you’re interested in if you want technical in depth details.
By now, you have probably heard of Bitcoin, and possibly have heard about the term Blockchain. Bitcoin and DigiByte are digital currencies, also known as cryptocurrencies, built on a technology called Blockchain. I’ll outline the details of Blockchain in a later article for those who are interested in the nitty gritty (well, overview) of it all.
A (very) Quick Overview of Blockchain
In brief though, a blockchain records a set of transaction in a block of a certain length of time. That block is then attached to the previous blocks in a cryptographic way that links the block in a way that is based on some fancy mathematics that I don’t understand but that cannot be tampered with once it’s linked. In this way, once a block is added to the chain it cannot be changed and you know that is an accurate reflection of the transactions that went on in that timeframe.
In this way, the blockchain is a public ledger of every single transaction that has occurred on that platform. The DigiByte blockchain is a different entity to the Bitcoin blockchain, which is a different entity to the Litecoin blockchain etc. Although the term cryptocurrency suggests the transactions are hidden, they are not. The crypto part refers to the linking between the blocks, not hiding the transactions.
That’s Nice, But What Is DigiByte?
According to DigiByte.io it was built in 2013 and released to the public in early 2014. It is an open source blockchain, which means all the computer programming code that runs the blockchain is available for anyone to see and inspect. If you understand it. I wouldn’t.
Digibyte claims to be the one of the fastest, most secure and most de-centralised of all the blockchain ledgers currently in existence. In my experience it’s true to its word on the speed front, generally taking only a matter of seconds for transactions to appear on my wallet.
Historically a bank or building society would take a piece of paper (a bank note, or money) from you and record the transaction into a large leather book called a ledger. The ledger for each branch would be stored at the branch and would have to be tallied at the end of each day by someone who worked at the branch. When the ledger book became full a new book would need to be started with all the balances carried forward. Ideally the pieces of paper you had given to the teller would be stored in the vault until you requested it be sent to someone else.
Digibyte is a digital way of transferring money from one person (technically digital wallet) to another. No persons are involved in the actual transaction except the person doing the sending. There is no need for a bank because the blockchain ledger into which all transactions are stored is publicly available on the internet. With the right software application, the ledger can be read from beginning to end and every single transaction can be seen. There’s no need for someone to balance the transactions because the cryptographic block chain takes care of that.
With the advent of computers the leather ledger book is no longer in use and the transactions that are entered onto the ledger almost never reflect the actual movement of physical money. When you pay someone with your online banking application, the amount is deducted from your balance on your account and is added to someone else’s balance. No notes, or gold are moved in the process. Even between banks. There is a little more to it than this I am sure, as I am no banker or economist, but the banking system pretty much all exists within computers. But it is controlled by a few select players in the industry.
DigiByte is De-Centralised
The term decentralised means that no one individual or organization can control the ledger. It cannot be manipulated by a bad actor to transfer funds from one account to another. More importantly it cannot be manipulated to contain a larger balance than the transactions that have already happened. Money cannot be materialised out of thin air (or paper) as they can in the banking system. The blockchain record contains every transaction immutably (unchangeably) since the blockchain was first created.
With DigiByte there was no pre-mining of the blockchain, no Initial Coin Offering where some coins were created and then given away. There was an initial coding person who created the software initially to run the blockchain – and his name is Jared Tate. Jared Tate is still involved with the DigiByte project but less so these days. But Jared was never a CEO of the project, it was always open source and created by many volunteers. It is truly a global effort.
DigiByte is More Secure
Most cryptocurrencies block chain is maintained through one mathematical cryptographical means which hold the blockchain together. Blockchain miners are involved in performing mathematical computations that cryptographically tie the current block to the previous blocks.
DigiByte uses 5 different cryptographical means by which the blockchain is held together. This is done because there is one potential vulnerability in a blockchain arrangement and that is when an actor can control more than 51% of the computing resources by which the blocks are appended to the chain. It’s unlikely in any cryptocurrency that has plenty of individual miners, but if someone develops a way of excluding the average person from mining, then it becomes easier for them to control more of the network because they have much higher computing power than the average person.
This is known as ASIC mining – whereby a piece of dedicated hardware whose only purpose is to mine the network. If someone controls enough pieces of this hardware they can attach new blocks to the chain in a fraudulent way.
But to do this, they need to control 51% or more of the network. Because DigiByte is split across 5 different mining algorithms, and those algorithms are themselves resistant to an ASIC being produced (it’s not worth it or even possible because the algorithm changes) it’s almost impossible for someone to ever control more then 51% of the block chain mining power and so they cannot fraudulently attach blocks to the chain.
The computational load of each of the 5 algorithms is automatically shifted around by the network so that one algorithm doesn’t become dominant at solving the mathematics needed to confirm a transaction.
DigiByte Is Fast
Because a fundamental tenet of transacting money is to know that the transaction actually really took place, it’s important that there can be no fraudulent transactions. It’s important that any transactions which result in the movement of goods for example, cannot be reversed by a bad actor.
Imagine selling a new computer to someone for $750. You accept the payment but after you’ve handed over the computer, the buyer walks out of the store chuckling and noting that they’ve just reversed the transaction because it didn’t meet the requirements of a transaction. You’d think you had been paid but in fact you hadn’t.
These transactions are only able to be confirmed once the current active block is attached to the chain. The transactions that occur within the current active block are unconfirmed. They’ll probably go through, but they might not. They’ll show up on the ledger as unconfirmed transactions. So if someone pays you with Bitcoin or Litecoin you’ll see that you should get the money. But until it’s confirmed it’s not guaranteed.
New Bitcoin blocks are added to the Bitcoin blockchain every 10 minutes. If your transaction occurs at the beginning of the new block, you’ll wait at least 10 minutes for just one confirmation. Many transactions require more than one confirmation to be sure they’re legitimate – though that is up to the transactee to determine. If they’re comfortable with only one confirmation then in theory you should wait less than 10 minutes to receive the first confirmation.
It gets a bit more complicated though because transactions initially occur in the ‘mempool’. That is, they show up in the current block but aren’t written to that block unless the network fee is enough to make it worthwhile to write to the chain. When there are lots of transactions all vying to get their place in the block there has to be some form of ordering happening and the transactions with higher network fees paid will get onto the blockchain first. So if your transaction didn’t pay enough in network fees and there’s lots of transactions in front of you with higher fees, your transaction may not even make it into the next block and therefore can’t be added to the chain. It remains unconfirmed. Until it’s confirmed it can be reversed easily – or worse, can be spent again. If you’re the unlucky recipient of a double spend then the network will reject it when the transaction actually makes it into a block. You’ll have sent your goods out the door and have no money in exchange.
Digibyte on the other hand adds a new block to the chain every 15 seconds. This means that your transaction is likely to make it onto the blockchain within 15 seconds. It’s confirmed (or rejected) within 15 seconds. You may still like to wait for more confirmations to be sure, but either way, DigiByte will confirm your transactions up to 40 times faster than the Bitcoin network, and 10 times faster than Litecoin.
For smaller, more retail like applications this is important because nobody wants to wait in a queue while their payment for coffee is confirmed. Particularly if it could take 20 minutes! DigiByte is the cryptocurrency for retail applications of this I am certain.
Digibyte Is More Than Just A Cryptocurrency
The facilitation of the transfer of money is DigiByte’s primary use case and one it is very good at. But there are other applications that can be operated across the DigiByte block chain. The primary one I’m going to look at in this article is the Digi-ID application as it’s the other use case I’ve personal experience with.
What Is Digi-ID?
Digi-ID is an authentication system which operates across the DigiByte blockchain. This means it has all the cryptographic security built in, along with the speed of the network and the resilience to attack that comes with DigiByte’s currency use case.
Digi-ID uses the same technology as the DigiByte wallet system to ‘identify’ you. When you create an account on a website, or a building entry or any type of system where you need to authenticate yourself as being allowed to use the system, you can create a Digi-ID associated with that account if the system supports it.
If the system you’re using supports Digi-ID then it will create a QR code which the Digi-ID Authenticator application can understand. The created QR contains a code which the Authenticator will use to place a transaction onto the DigiByte blockchain. Don’t worry, this transaction doesn’t move any of your DigiBytes – it’s just a way for some data to be sent and read by the system.
Once the system – let’s say the WordPress site – sees the transaction on the blockchain it uses the data within the transaction to record a unique ID against your username on the application. This application is the same as a DigiByte Wallet ID – but you cannot send or receive DigiBytes to or from this address. Generally you won’t even know what it is. But the system and the Authenticator will.
When you arrive at the website next time, a QR code will be generated which identifies that web site to your Authenticator so that the Authenticator knows which information to place into the transaction. Each website or system that you use Digi-ID to gain access will have its own Digi-ID identification. This is so that you can’t login to all the systems you’re signed up to by scanning a QR code from an unrelated system. Obviously it would not do to be trying to login to a WordPress website but have your front door unlock at the same time even though you’re not home!
So, the unique code within the QR scanner code is read by the Authenticator App which then places a small amount of data onto the blockchain. The system requiring authentication can read the blockchain and will see a transaction assigned to it. If it’s come from your Authenticator it knows it’s you who wants to login and so it lets you.
If your Authenticator is on your phone and you cannot verify that you’re the own of the phone (for example by using your finger print or PIN), the transaction is never placed onto the blockchain and the system never lets you.
With Digi-ID you no longer need to remember usernames and passwords. You don’t even need to store them in a password wallet such as LastPass for example. There’s no need to receive a text message to authenticate it’s really you wanting access because your Digi-ID cannot be faked. No need for an authenticator app. No need for a Google or Facebook login (dear God, how many people use those and unwittingly tell Google and Facebook exactly which websites they’re logging in to and when. Profiling yourself to these big data slurpers).
And if you lose your phone (or just decide you want Digi-ID on a second device) you can just re-create your wallet on a new device so long as you haven’t lost the seed phrase.
I’ve started using Digi-ID on all my websites (try to login to this site for example) because I’m keen for this technology to take off. It would make my internet banking so much easier if my bank used Digi-ID for example. As for Amazon or PayPal who constantly bombard with me SMS messages when I try to login to ‘make sure it’s really you’ – they could save a fortune on SMS costs by simply implementing Digi-ID instead. They’d know it was me because it could only be me.
If you’re looking for a cryptocurrency with a real future and real use cases, do yourself a favour and get DigiByte. The rest (apart from the major ones like Bitcoin, Ethereum and perhaps Litecoin) have a limited future in my opinion. DigiByte is here to stay and has the fundamental technology to make cryptocurrency useful in the retail sector.
Indeed, it can already be used on Travala.com as you can see in the image below!