What is DigiByte? The Fastest UTXO Blockchain Explained
DigiByte is a decentralised blockchain network that allows users to send and receive funds quickly and securely. Invented by Jared Tate in 2014, it has.
DigiByte is a decentralised blockchain network that allows users to send and receive funds quickly and securely.
Invented by Jared Tate in 2014, it has many similar qualities to already existing blockchain payment networks, such as Bitcoin. Additionally, it has been upgraded to allow developers to build decentralised applications on top of the Digibyte network, the way they could on Ethereum.
At its core, the DigiByte blockchain uses a Proof of Work algorithm to verify transactions and mine new DGB tokens, the native cryptocurrency of DigiByte. Specifically, DigiByte uses a UTXO distributed ledger system exactly as Bitcoin uses it.
With the security model inherited directly from the world’s oldest cryptocurrency, DigiByte does not suffer from scalability issues as the network can run 120 times faster than Bitcoin at 560 transactions per second. This makes DigiByte the fastest UTXO blockchain in the world, and one of the fastest blockchains that uses mining and Proof of Work.
In short, DigiByte is something that Bitcoin could have become if it had continuously evolved to meet the demands of modern-day blockchain developers and more complex use cases.
Learn more: What is Proof of Work? A Closer Look.
What makes DigiByte technologically superior to Bitcoin?
Bitcoin wins the heart of many crypto investors, particularly for its extensive network effect as well as an unbroken record for being the longest-running network that has yet to be hacked. The decentralised payment system that Satoshi Nakamoto has envisioned has been wildly successful.
However, Bitcoin has a limited throughput of about 4 to 5 transactions per second. Bitcoin simply uses too much energy per transaction, even if a large portion of the energy is taken from underutilised renewable energy, such as Iceland’s geothermal power.
Efficient power usage per transaction
DigiByte, on the other hand, utilises Proof of Work and computational power (or hash rate) in a more efficient manner. In his Medium blog, Josiah Spackman had estimated that DigiByte only uses up to 2.5% of the energy that Bitcoin consumes per transaction.
Even so, given that DigiByte processes more transactions per second compared to Bitcoin, DigiByte “has more watts-per-dollar of market cap securing the blockchain,” meaning that the electric bills that DigiByte miners are charged contribute much more to producing more blocks than Bitcoin does, making DigiByte a “green proof-of-work blockchain”.
Resistant to centralised hash power
These days, it is almost impossible to mine Bitcoin without the use of expensive hardware known as ASICs. Although this could mean a more secure network, in reality, this threatens the decentralised nature of Bitcoin.
Many Bitcoin mining companies raise funds by profit sharing with investors in a “mining pool”. Theoretically, if three major mining pools collude, they would already have more than 51% of the hash rate, and could potentially be successful at manipulating the block generation process.
DigiByte solves this by providing not only one way to mine DGB, but five different ways with five distinct Proof of Work algorithms. Apart from Bitcoin’s SHA-256 algorithm, DigiByte can also be mined using Scrypt, Groestl, Qubit, and Odocrypt algorithms.
Most ASICs are designed for SHA-256 and Scrypt, but the rest of the algorithms are resistant to these hardwares. This means that the mining process for DigiByte is more democratised and fair and that more variety of mining pools are available, reducing the ability for collusion.
Currently, 10,000 mining nodes are run worldwide for DigiByte, closely following Bitcoin’s 11,000 mining nodes.
Smart contracts available on top of DigiByte
Bitcoin does not currently support smart contracts. Smart contracts are special programmable wallets that can hold and send funds given that certain conditions are met. Think of vending machines that can hold items and automatically trade them if cash is inserted into the machine.
Ethereum is the first blockchain to introduce smart contracts, at the time when DigiByte’s mainnet was gaining traction. Although DigiByte was invented before Ethereum was launched, DigiByte did not add smart contract functionality right up until April 2019.
The DigiAssets protocol is now the top-most layer of the DigiByte infrastructure. What this means is that developers can now build decentralised applications (DApps) and can issue crypto tokens, such as the digital representations of a flight ticket, company shares, property deeds, and many more.
These tokens are represented in the DigiByte public ledger on the second layer, and DGB can be used as a small fee for miners to process DApp data and for using the network’s total computing power. This model is similar to how Ethereum works in general.
Why is DigiByte still not as popular as Bitcoin?
Despite the fact that DigiByte is more technologically advanced and that it is one of the oldest cryptocurrencies in existence (nearly as old as Litecoin), it is not well known. However, this is due to the fact that the decentralised simple payment network was already saturated by the time DigiByte was first released.
Ever since Ethereum was launched, the crypto space has changed. It was no longer just about transaction speed, but also functionality. Smart contracts increased the base value of Ethereum, as more and more developers chose the platform to create decentralised financial services (DeFi).
It was only long after the 2017 ICO boom that the DigiByte community decided that it would be best if DigiByte adapts to the current standards of what blockchains should be, by introducing smart contract functionality.
In early 2020, DigiByte Foundation, a non-profit organisation was launched to help organise fundraising activities. Unlike a great majority of existing blockchains, there was no ICO funding nor pre-mining, as in the case of Ethereum.
The foundation shows how strong the community commitment is towards keeping the blockchain well-developed and adaptable. The foundation’s integrity is also apparent in the way they remain transparent with their financial statements. The community does not depend on the supervision of the original creator Jared Tate, and runs autonomously.
To further empower the brand recognition of DigiByte, the DGB Awareness Team (DGBAT), an independent organisation apart from the DigiByte Foundation, runs campaigns to help promote DGB to the general audience.
Should you invest in DigiByte?
In June 2021, the cost of 1 DGB is US $0.05, which is very affordable when compared with Litecoin ($158/LTC). If DigiByte’s marketing campaign is successful in the future, then investing in DigiByte will be highly rewarding.
DigiByte has been time-tested like Bitcoin but has also been adaptable to fulfill the demands of today’s decentralised ecosystem.
If the community enthusiasm for DigiByte is sustained, it could well become on-par with Bitcoin for as long as technological superiority is something that is being taken into consideration when investing in cryptocurrencies.
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Disclaimer: This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated December 27, 2021