Bitcoin 2 (BTC2) the technical background and why you should care!
The cryptocurrency of the next decade with several improvements to Bitcoin, Bitcoin Cash, Dash and more.
You may have heard of cryptocurrencies called Bitcoin (BTC), Bitcoin Cash (BCH) or Dash (DASH). Three of the top #30 listed CoinMarketCap coins with the biggest one, Bitcoin, at its top. Bitcoin was the first cryptocurrency ever created by Satoshi Nakamoto back in 2007. Since then many more digital currencies launched and tried to revolutionize and improve the online payment system. One of them is Bitcoin 2 (BTC2), a 2018 launched Bitcoin fork created by Jackles and Hiromono. Why we need it and you should take a look in it is simply explained below and upcoming articles! So dont be concerned if you read words or things you dont know. This will be a series of articles about BTC2.
The complete comparison and the Maximum Supply in detail
Lets start with a simple comparison. Bitcoin 2 has the same maximum supply of 21 million coins as the first Bitcoin. Which causes a limited supply and thus a steadily increasing increase in value through block reward cuts (so called halvings). Unlike Bitcoin the Bitcoin 2 block reward cut takes place once every month instead of every four years and can bring the inflation rate down to a whopping 0.59% by July 2022. For comaprison, the US Dollar devaluates on average 3% every year. For example, in 2018 100$ equalled 103$ in 2019. So at the moment Im writing this article, Bitcoin 2 already has a smaller inflation rate of just 1,18% getting lower and lower every month (fun fact: its even lower then the Bitcoin inflation rate of currently 2,56%)! What is also very interesting is the current supply of money. The US monetary supply increased by over 20% in the last year!!
The current Bitcoin 2 supply can be found here.
The Algorithm
Bitcoin, Bitcoin Cash and Dash use Proof of Work (POW). Bitcoin 2 instead uses the Proof of Stake (POS) algorithm. One of the major differences is the huge energy consumption caused by PoW which urges the miners to sell their coins to pay the electricity bill (fun fact: Bitcoin uses 77,78 TWh this is more energy then the country Chile. A single transaction needs the equivalent to the power consumption of an average U.S. household over approximately 24 days)! With PoS the mining power is based on the percentage of coins held by a miner. This leads to a very, very low energy consumption. For comparison, you can run a Bitcoin 2 wallet with any amount of coins (which gives you a passive income of BTC2) on one of the smallest PCs in the world, a Raspberry Pi. To start mining Bitcoin you need hundreds if not thousands of dollars to buy the hardware you need. In addition, there is the high energy bill!
The Block Interval
The creation time of a block differs from cryptocurrency to cryptocurrency. Bitcoin and Bitcoin Cash have a block interval of one block every 10 minutes. Dash is much faster with just 2,5 minutes but gets simply beaten by Bitcoin 2 and its 1 minute block time! What does this mean? If you want to send a transaction, it must first be processed in a block and thereby confirmed. The lower the block time and the larger the block size, the faster the transaction. Bitcoin has an initial block size of 1MB while Bitcoin 2 uses 4MB.
The maximum amount of transactions per day
The block interval and block size define the transaction speed. Bitcoin can handle up to 500.000 transactions a day, Bitcoin 2 approximately 20.000.000. Thats a 40x increase!
The privacy feature (zBTC2)
Note: zBTC2 is currently disabled while a new privacy protocol is being worked on.
zBTC2 was implemented to fix the anonymity problem of Bitcoin, the public ledger system. In the further explanation I have to quote the developers, as my knowledge is insufficient about this point. Much more about zBTC2 can be found on the official website.
“An address may seem like it is fully anonymous but if you made a transaction with an address that is generated by the exchanges and/or other merchant services, you have essentially linked your anonymous address with an address that may lead to your identity.
Such transparency may not always be an issue. But it could become a serious problem if the coin that you hold was once associated with an undesirable history or if your address was being targeted by potential thieves.
To overcome this issue, Bitcoin 2 has implemented a well known highly-vetted protocol called Zerocoin with many custom enhancements allowing blockchain-level transaction anonymity in the way of unlinkability.
We call this zBTC2, where BTC2 is a unit of Bitcoin 2 and z prefix is for Zerocoin.
What zBTC2 provides is a protocol-level coin mixing service using zero knowledge proofs to sever the link between the sender and the receiver with 100% anonymity and untraceability. This means that each coin that gets sent using zBTC2 is now 100% fungible as it has no determinable history attached to them.
The use of zBTC2 also means your balance can be masked to avoid being targeted by potential thieves. This is a very unique feature that nearly no other cryptocurrency currently in the market possesses.
Bitcoin 2 zBTC2 accumulators are encrypted using RSA-2048[1] challenge generated keys which negates the need for a developer trusted setup and means that no individual knows the factors. This means that everyone’s privacy is ensured through the use of zBTC2.”
The instant transaction feature (SwiftTX)
Note: The SwiftTX feature is currently disabled due to lack of current use cases.
The SwiftTX feature is made for Point of Sale situations in the real world. Lets say you are in a store and you want to buy a new pair of shoes. In the current world you can pay with a credit card or cash, both methodes work directly and are immediately confirmed. If you want to pay with Bitcoin instead you need to wait for the transaction to confirm. This can take multiple minutes up to hours. This is where SwiftTX comes in. Just like the “InstantSend” feature in Dash a user can choose to send a transaction as SwiftTX. “The transaction will be sent to Masternodes to process and it gets verified and guaranteed by them almost instantly.”
As soon as the implementation of BTC2 occurs in real world scenarios, this function can thus be activated to enable direct transactions. At the current moment, with the average confirmation time of one minute, there is no real use for this.
The Masternode Yield
The current masternode yield is at approximately 25%. What does this mean? If you have 1000 BTC2 (the required amount to run a masternode) you will get 25% back every year. So in one year your 1000 BTC2 will turn into 1250 and so on. Keep in mind: the more masternodes there are, the lower the yield rate gets. Currently the BTC2 network has 210 active masternodes. So just for owning these coins and thus adding speed, connectivity and redundancy to the network you get a certain amount of your investment back, thats pretty cool! As soon as the SwiftTX feature is activated again, a masternode also processes and confirmes these transactions.
The Staking Yield
Just like the masernode yield you get a staking yield for helping to support the blockchain with your coins. You can switch on staking directly in the wallet and without much effort. You can stake with any amount of BTC2. Lets say you have 450 BTC2, these 450 will give you a revenue of about 0.5 BTC2 a day. Just like with masternodes: the more people stake, the less you get back yourself.
And much, much more interesting technology…
In the next posts you will get an idea how to set up the BTC2 wallet, operate a masternode, enable staking, and so on…
Sounds interesting to you, you want to learn more or you have a question?
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The end:
Big thanks to BTC2BULL (leave a like on Twitter!) providing these great pictures ❤
Thank you Jackles and Hiromono for creating such a great currency and lots of love to the Bitcoin 2 community supporting this project!
Note: Im not a developer, every theme can be read in detail in the Bitcoin 2 whitepaper.
