What is Digibyte?
DigiByte is one of the many cryptocurrencies that have been created to improve upon Bitcoin in some way. Specifically, DigiByte is faster than Bitcoin and it has an architecture that is more supportive of decentralization.
In this article we’ll consider Digibyte’s history, what the coin does well, and what the fundamentals of Digibyte tell us about its chance of future adoption.
The Digibyte Project
DigiByte was created by Jared Tate and released in 2014. While the coin is based on Bitcoin’s code, DigiByte has several features that give it an advantage over Bitcoin.
DigiByte can clear up to 600 transactions per second (TPS). If there was more network demand, some DigiByte developers have speculated that DigiByte could be upgraded to handle 2,000+ transactions per second.
Unlike Bitcoin, DigiByte supports smart contracts. DigiAssets is a protocol that sits on top of the DigiByte blockchain and lets users create digital tokens and decentralized applications (Dapps). The DigiByte team believes that smart contracts are an important feature since DigiByte can clear hundreds of TPS. Other smart contract platforms like Ethereum can only clear about 15 TPS.
Similar to what already exists on Ethereum, the DigiByte team hopes to create an entire ecosystem of tokens and Dapps running on top of DigiByte. Just like Ethereum with ETH, on Digibyte the DGB currency is used to pay for transactions and smart contract computation fees.
DigiByte didn’t originally support smart contracts, the developers added the functionality several years after its release. Smart contract functionality is made possible by a three-layer system.
- The top layer adds smart contract functionality for decentralized applications and tokens
- The middle layer represents the public ledger. This is the part of the network that supports the DigiByte native token
- The bottom layer includes base level infrastructure, like client software and node support
Some random facts about DigiByte
- DigiByte was the first blockchain to integrate SegWit, a technology that helps to speed up transactions by reducing the amount of information that has to be stored in each block. Bitcoin only adopted SegWit after DigiByte did
- Just like Bitcoin, DigiByte also uses a UTXO scheme to keep track of transactions. This is different than Ethereum which uses an account system
- DigiByte adjusts the mining difficulty in real-time, as compared to Bitcoin which only adjusts the mining difficulty once every two weeks. The DigiByte team claims that their difficulty adjustment mechanism is superior to Bitcoin’s
Digibyte DGB Coin and Mining
There is a maximum supply of 21 billion DigiByte (DGB). On the Bitcoin network the last coins won’t be mined until about halfway through the 22nd century. Digibyte has a much shorter supply schedule, and the last coins will be mined in 2035.
Although DigiByte is a proof of work (POW) cryptocurrency just like Bitcoin, DigiByte uses a very different mining algorithm. Actually, DigiByte doesn’t use one mining algorithm, it uses five algorithms. These include,
The five different algorithms are intended to decentralize the mining network, so that one specific type of hardware cannot dominate mining. For example, Bitcoin mining uses the SHA256 algorithm and all of Bitcoin mining is completely dominated by ASIC miners. DigiByte attempts to avoid this by employing different algorithms.
While the Bitcoin block time is about 10 minutes, on DigiByte the miners produce a new block once every 15 seconds. This is one of the features that allows DigiByte to process transactions faster than Bitcoin.
What Digibyte Does Really Well
The biggest feature that sets DigiByte apart from other cryptocurrency projects is the number of nodes. With more than 10,000 nodes running worldwide, DigiByte is one of the most decentralized cryptocurrencies in the world. Bitcoin has about 11,000 nodes online, so even though Bitcoin is much more popular, the two currencies are both very decentralized.
Similar to Ethereum, DigiByte has a good community of developers who are continually improving the protocol. For example, DigiAssets was a recent addition to the DigiByte blockchain. The DigiByte developers also implemented SegWit well before the Bitcoin community.
Concerned about privacy, the developers also implemented Dandelion++ in 2019. Dandelion is a privacy tool that hides the IP address of the person sending a transaction. This helps to keep a sender’s identity anonymous, making DigiByte safer to use.
Tech vs Brand Recognition
DigiByte is an interesting example of something that happens in crypto from time to time: the project with the best tech doesn’t win. With its 5 mining algorithms, real-time difficulty adjustments, smart contract support and fast transaction speeds, you could make the argument that DigiByte is more technologically sophisticated than Bitcoin.
Despite the tech, Bitcoin is number one and not that many people have even heard of DigiByte. In crypto it’s not just the tech, it’s also brand recognition, the network effect and money flows. While DigiByte is a really cool project with a great goal of ultimate decentralization, it will take a lot of work to get more people to realize the coin’s value.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.