Alexey Voronin, the founder of the decentralized project scoring service Smart Valley, analyzes the recent Bytecoin controversy in this op-ed:
In the last few days, Bytecoin (BCN) has launched a real tidal wave of hype across the crypto community, blasting past altcoins right and left. This is a fascinating series of events, but before we delve into them, let’s say a few words about our feature’s main character.
Bytecoin is an anonymous cryptocurrency, a second-tier altcoin created in 2012 by a user known as AMJUAREZ. Its symbol is BCN, and it uses the CryptoNote algorithm, meaning that this altcoin aims for increased anonymity and maximum mining decentralization.
Oh, and Bytecoin was once infamous for its huge premine.
A Seemingly Glorious Beginning…
Our story starts on May 8, 2018, when crypto news outlets announced that Bytecoin got listed at the world’s largest digital exchange, Binance. After this, the plot unfolded like a classic Hollywood action movie – fast and furious.
Once listed, BCN’s price quickly increased by over 100%, but nobody had the time to benefit from the spike — quite the opposite, actually. Interestingly, the price differed tenfold at different exchanges. The thriller ended in a complete crash and huge losses for all Bytecoin holders… but let’s not get ahead of ourselves.
Once the hype (and the price) reached its peak, it turned out that all the largest exchanges — Poloniex, HitBTC, Binance, etc. — froze withdrawals by Bytecoin holders. What happened to this presumably great coin? Different sides tell radically different stories.
Digital exchanges claim that the Bytecoin network simply stopped working: there was nowhere to send withdrawals to since the Bytecoin blockchain stopped processing transactions and switched its status to “out of service.”
Bytecoin developers eventually admitted — after a long period of dignified silence — that their network wasn’t feeling too good. Then they said that the network was overloaded by the sudden spike in transaction volume. Finally, they started blaming evil-minded miners who had presumably used some severely outdated software, which overloaded the network.
Users could not agree either, and versions ranged from collusion between exchanges to freeze superprofitable transactions (since many BCN holders would have received fantastic profits in the hundreds of percentage points in just one day) to a planned pump that would provide profits only to a selected group of insiders.
In short, it was a mess. And it is still unclear what happened and who is to blame.
Investors who were left holding BCN when the network stopped are unable to move their coins (others funds were likely lost forever) since the network is not working. As I’m writing this, the issue still hasn’t been solved; and if you are planning a BCN transaction, be warned – an attempt to transfer Bytecoin between wallets can have unpredictable consequences, and you may lose your BCN permanently.
Late in the evening on May 8, BCN reached number 15 on CoinMarketCap’s rankings, but soon Bytecoin fell to the 1594th in line before being deleted altogether. Now users have no way of knowing its real price, trading volume, or even market capitalization. At some point, the coin lost almost 50% of its value, according to Coingecko, but now it is being traded at a price that is higher than the original value.
There are lots of BCN transactions placed on hold on Binance. Some funds never reached recipients’ wallets or got lost in withdrawals while the network was not functioning. Other users simply lost access to their assets and are waiting for the network to come back.
So what are we left with? The story is really weird, especially the fact that, according to CoinMarketCap, there was no spike in day trades that normally accompany such pumps.
We probably have to wait for the grand finale of this action thriller: an updated version of the software is already available at the Bytecoin website, and the users are eagerly waiting for the update to the nodes (which is proceeding without much vigor).
When looking at this scene of desolation, it is hard not to think that the long-term prospects of many altcoins may be equally grim. The Bytecoin story reminds the huge mess caused recently by yet another darling of anonymity fans – Verge, which fell victim to a classic 51 percent attack (which before had been considered unlikely, impossible, and generally a myth). This series of scandals can serve as evidence of most altcoins’ sad fate: if you play cheap, you’ll end badly.
Related: Bytecoin’s Price Surges Over 100% Following Binance Listing Before Traffic Slows Network to a Crawl
Follow us: Telegram | Twitter | Newsletter
Disclaimer: The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official position or opinions of SludgeFeed. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.