The What, the Why, and the How of 0xBitcoin
0xBitcoin is an open source, community driven project, with no marketing team, nor any marketing budget to help bring attention to this new token. It relies solely on word of mouth for exposure. To that end, this article was written by a community member as an introduction and an open invitation to all to check out the 0xBitcoin project.
What is 0xBitcoin?
Simply put, 0xBitcoin is Bitcoin, for Ethereum.
0xBitcoin remains true to Bitcoin in both technical specifications and philosophical underpinnings, but by being deployed as an ERC20 token it can utilize the advanced functionality of the Ethereum network. This allows 0xBitcoin to improve on Bitcoin in a functional manner, while also enabling it to address some of the problems currently plaguing the Ethereum ecosystem.
It almost seems silly at first…. Bitcoin, but on Ethereum? Admittedly, it takes some time to “get it,” but give it some time and it really starts to make a lot of sense. From the white paper:
0xBitcoin (or 0xBTC) combines advantages from both Bitcoin and Ethereum. The asset is decentralized, permissionless, mined and scarce just like Bitcoin which means it shares all of Bitcoin’s use cases and properties as a transparent and permanent digital record of value. However, above Bitcoin, 0xBitcoin has the speed and scalability of the Ethereum network and is compatible with all ERC20 token services. This means it can be stored in any Ethereum wallet, is as secure as Ethereum, and can act as ‘the bitcoin’ for the Ethereum ecosystem. This is important because Bitcoin is not able to communicate with or interact with the Ethereum smart contract ecosystem.
For 0xBitcoin, decentralization and trust are key.
Decentralization is what creates all of the interesting features of Bitcoin,* and 0xBitcoin follows in these footsteps, but by being implemented on the Ethereum network it gains the ability to be traded on decentralized exchanges, to directly interact with other ERC20 tokens, and to be utilized in smart contracts which run exactly as programmed without the possibility of downtime, censorship, fraud, or third-party interference. These additional features allow 0xBitcoin to reach the next plateau of decentralization.
This decentralization is realized through the defining feature of 0xBitcoin: distribution through Proof of Work mining, mining which mirrors that found in Bitcoin. The first PoW-mineable ERC-20 token on the Ethereum network, 0xBitcoin has all the same halvings, total supply, eras, etc. of the original Bitcoin. (You can find more information on how the mining in 0xBitcoin works HERE.)
There is however, one very important distinction to note between mining Bitcoin and mining 0xBitcoin: while mining Bitcoin secures the Bitcoin blockchain, mining 0xBitcoin does not do the same. Because it is an ERC20 token, all 0xBitcoin transactions happen on, and are secured by the Ethereum blockchain. This means that from the minute it was created 0xBitcoin benefited from the same level of security as the entire Ethereum network and because it is on the Ethereum blockchain, 0xBitcoin is not susceptible to targeted 51% attacks. In order to attack it in this way you would have to take control of the entire Ethereum network. One pool or individual miner could have 99% of the total hashing power and even then they would not be able to double spend, prevent transactions, or prevent 0xBitcoin from being generated.
Being on the Ethereum blockchain doesn’t just afford 0xBitcoin with security benefits, there are transactional and scaling benefits as well. Bitcoin currently suffers from 10 minute block times and requires up to an hour to reach finality. 0xBitcoin relies on Ethereum block times which are only 15 seconds, allowing for significantly faster transaction times. 0xBitcoin will always be tied to Ethereum, and as Ethereum grows, so does 0xBitcoin. As Ethereum scales, so does 0xBitcoin. Any future benefits or upgrades to the Ethereum network are directly transferable.
-So if mining 0xBitcoin doesn’t secure it, why mine it at all?! Surely it could have simply had an Initial Coin Offering (ICO) or an airdrop! That would save a tremendous amount of electricity!
It’s exceedingly common to think that all mining does in Bitcoin is secure the network. There is, however, an often missed second feature that is of equal importance: distribution. Distribution through Proof of Work mining is at the heart of Bitcoin. This point cannot be overstated. Distributing Bitcoin in this manner serves as a core function, increasing the overall decentralization of the system.
The Proof of Work mining in 0xBitcoin replicates this second feature. It doesn’t secure the token, it secures the decentralized distribution of it. This is necessary because decentralized distribution is an undeniably indispensable property of any asset which claims to be fair, transparent, decentralized, and ‘trustless.’ The mining in 0xBitcoin imposing an electrical cost on the miners to ensure this decentralized distribution. This electrical cost also brings a baseline value to this token.
Interestingly, the 0xBitcoin contract is non upgradeable.* This is required to ensure no humans have any control over it. It’s autonomous code written in Solidity and running on Ethereum, and no one can do anything to change it. It is finished. Tokens can only be distributed when the smart contract receives a valid nonce from a miner. This distribution method is entirely transparent- all of the code is open and accessible to anyone who wishes to look it over. Just as Satoshi Nakamoto holds no control over the distribution of Bitcoin, the person who deployed 0xBitcoin holds no control over its distribution.
The same cannot be said for any other non-minable asset regardless of its distribution method- ICO, airdrop, you name it. All of these other distribution methods are either gimmicks or introduce central actors into the mix, and with central actors comes centralized problems. The results have been all over the headlines. You don’t need to take my word for it (as you shouldn’t in cryptoland…) type any distribution model that you can think of followed by the word ‘scam’ into Google, now do the same for ‘Proof of Work mining.’ The results speak for themselves over, and over, and over, and over again.
What most people don’t realize is that (with the exception of 0xBitcoin) when ERC20 tokens are created all tokens are granted to the deployer. The deployer will then decide how they want to distribute them. Most will have an ICO which demands that amounts of Ether be sent to them in exchange for those tokens. This is a great way to raise capital for a project …or make yourself incredibly rich before running off with all of it… but it is in no way a good method for distributing any kind of decentralized, trustless asset -this is doubly true for any token acting as a pure currency.
Even if these central actors don’t flat out take your money and run, in crypto all accounts are anonymous. This mean there’s no way to guarantee that the distribution of the asset hasn’t been rigged. If the tokens were airdropped instead of having an ICO …and the developers didn’t openly keep a massive share for themselves… there’s still no way to prove that the assets distributors haven’t set up proxy accounts and are simply funneling the tokens right back to themselves as they dole them out to others. In both of these cases you have to trust that the tokens distributor hasn’t acted in some malicious way …which unfortunately, is all too common in this current ICO craze. Trust in any party runs counter to assets which claim to be decentralized.
0xBitcoin, like Bitcoin acts as a “single party” asset. What I mean by that is, at any given time, it’s just you and the code. Even if you are transacting with another person or business, it’s just you, them, and the code between you. This is unlike the traditional systems of today which require a bank or some other third party intermediary to process that transaction if done through a digital medium.
When it comes to token distribution there is the “single party” method where it’s just you and the code (mining), or you have to rely on some trusted third party for the distribution of that asset (ICO or airdrop). Time and time again we’ve seen this last method lead to scams and outright theft. You can fake email addresses, you can fake account holders, hell, you can even fake people. You can’t fake hashpower.
It’s worth mentioning that there are other “Bitcoin like” tokens on the Ethereum platform. In an almost ironic way these all fail to replicate the core tenets of Bitcoin. At best they’re like Bitcoin in stats and name alone. They are not minable and thus they are not trustless nor decentralized. Unlike 0xBitcoin, they were all created at once and distributed using one of the methods just mentioned above.
Just to make the point a little more clear:
-Imagine that all 21,000,000 Bitcoin had been distributed in one go via some type of airdrop. Do you think it would still be the same Bitcoin we know today?
How about this:
-What if Satoshi Nakamoto had created all 21,000,000 Bitcoin upfront and decided to have an ICO? Selling each and every Bitcoin immediately, first in an ICO to qualified investors and next in a public sale for his own personal gain. What would Bitcoin be then?
If those two scenarios don’t make you hesitate, I don’t know what will. They don’t even touch on the possibility of scams and you can already feel that they’re wrong. Not to mention this article hasn’t even considered the economic benefits of coins (or tokens) being added to the total supply at a consistent rate over time instead of dumping them all at once.
Now, this is not to say that all tokens have to be distributed in this way, but there is some subset of tokens which most certainly do. Especially if those tokens are at risk of being labeled a security by the SEC. Because 0xBitcoin is distributed through Proof of Work mining like Bitcoin and shares all of the same properties, it’s easy to see why 0xBitcoin is a commodity like Bitcoin. It would be hard to argue that one was while the other wasn’t just because of the platform it sits on.
0xBitcoin establishes a new level of trust for the Ethereum platform, a trust not in human actors, but in open, easily verifiable code. Distributing the tokens in this way is a novel idea. One which makes 0xBitcoin the first truly decentralized ERC20 token. It all boils down to the fact that there are no central actors in 0xBitcoin. No one controls it, no one can control it. Anyone can mine it. Anyone can create a pool. Anyone can use it in any way they see fit. It is open, permissionless, transparent, decentralized, censorship resistant and so much more. There is no one single use case for 0xBitcoin, because it is on the Ethereum network, the possibilities are immense.
Like I said at the beginning of the article, I’m just a community member, my hope in writing this article was to bring some attention to this new token and to encourage its readers to give 0xBitcoin a little closer look. As of this writing, it is only a little over two and a half months old with tons of room to grow. It’s only the beginning for 0xBitcoin. By no means is it even close to being finished and since it’s open and permissionless it never will be. New projects and use cases are being thought up all the time and because it’s open source anyone and everyone can contribute. 0xBitcoin opens up a world of possibilities and we’re just getting started. We would love for you to join us in making it a success.
You can find out more information about 0xBitcoin by:
- Joining the Discord https://discord.gg/2Mn5r8B
- Reading the white paper https://github.com/0xbitcoin/white-paper/blob/master/README.pdf
- Checking out all the up-to-date stats https://0x1d00ffff.github.io/0xBTC-Stats/?page=stats&
- Checking out the website https://0xbitcoin.org/
- Stopping by the Reddit pages https://www.reddit.com/r/0xbitcoin/ and https://www.reddit.com/r/Tokenmining/
- You can even check out the contract yourself https://etherscan.io/address/0xb6ed7644c69416d67b522e20bc294a9a9b405b31#readContract
As with all crypto, you should do your own research, but once you’ve done so, you can acquire some of your own 0xBitcoin either by mining some yourself!* or by purchasing some from these fine decentralized exchanges:
*“Decentralization is what creates all of the interesting features of Bitcoin. It allows it to be open, to be borderless, transnational and global, to be neutral, to be open to participation, to be open to access, open to the consensus algorithm, open to participation, and open to innovation without asking permission. It allows it to be immutable, and censorship resistant, and without intermediaries or counterparty risk.” -Andreas Antonopolous https://www.youtube.com/watch?v=404KL6acbhI&t=624s (You can find a lot of the inspiration for and core values of 0xBitcoin in this video)
*It’s important to note that while the contract itself cannot be changed, because it is part of the Ethereum ecosystem the functionality of 0xBitcoin is highly upgradable.
*You can find the most up to date mining information on the Discord chat or 0xBitcoin.org