What is 0xBitcoin?
“Everyone likes to think 0xBitcoin as Bitcoin on Ethereum, but a better way to think about it is that it is a version of Bitcoin with all of the added features of Ethereum.” – Discord user “blazehuntley”
0xBitcoin is NOT a fork of Bitcoin. It is an ERC-20 token that combines the token-economics of Bitcoin but also the scalability and network features of an ERC-20 token. 0xBitcoin is NOT a fork of Bitcoin. It is an ERC-20 token that combines the token-economics of Bitcoin but also the scalability and network features of an ERC-20 token. As a reminder, ERC-20 is a standard developed after Ether was released that establishes a consistent way for how tokens on the Ethereum blockchain interact with each other. Ether is not an ERC-20 token.
What problem does 0xBitcoin solve?
- Bitcoin currently does not scale as well as Ethereum and may not be as scalable as Ethereum in the long run.
- Bitcoin cannot interact with smart contracts.
- Although it can be used as a currency, Ether’s purpose is to pay smart contract fees. ERC-20 tokens are better currencies than Ether because they follow an ERC-20 protocol, which lets them interact with each other and smart contracts.
- To trade Ether directly with ERC-20 tokens, one has to turn their Ether into an ERC20 version of Ether. To do that, users “wrap” Ether by using a smart contract to trade Ether for an equal token called W-ETH. Converting ETH into W-ETH requires gas and is an inefficient process.
- Some people think the original distribution of Ether was unfair because it had an initial coin offering. Additionally, some people are concerned about the legality concerning Ethereum’s ICO.
- Bitcoin’s creator, Satoshi Nakamoto, has disappeared and could potentially hold 10% of the coin’s entire circulating supply.
How does 0xBitcoin solve those problems?
0xBitcoin is the first ERC20 token that can be mined using proof of work. It has many of the same characteristics of Bitcoin (no ICO, 21 million hard cap supply, its mining algorithm automatically adjusts with PoW hashrate, and reward decrease as more tokens are minted).
Note that ordinarily mining serves two purposes – 1) to offer network security and 2) to distribute tokens. That is NOT the case with 0xBitcoin. It uses PoW mining to distribute new tokens, but it does not use mining to secure its network. Because it is an ERC-20 token, it uses Ethereum’s blockchain to secure its network. This means that to 51% attack 0xBitcoin, you would need to 51% attack the Ethereum network, which is nearly as expensive as attacking the bitcoin network and 5.5x more expensive than bitcoin cash according to https://www.crypto51.app/ .
Specifically, it solves the problems mentioned higher above:
- Because it is an ERC-20 token, 0xBTC will scale as Ethereum scales and currently offers faster transaction processing than Bitcoin.
- Because it is an ERC-20 token, 0xBTC can interact with smart contracts.
- Because it is an ERC-20 token, 0xBTC does not need to be converted into something else for it to interact with smart contracts and other ERC-20 tokens or microraiden off-chain ethereum scaling strategies
- 0xBTC was not pre-mined and it did not have an ICO. Its whitepaper claims that those characteristics make it more fairly distributed, as well as compliant with security laws.
- 0xBTC’s lead developer (Infernal_toast) participates in 0xBitcoin’s community discussions and is still active. Also, initial miners cannot have proportionally as many coins as Satoshi because more users 0xBitcoin had more users mining it closer to its inception than Bitcoin. 0xBitcoin has no pre-mine, whereas with Bitcoin, Satoshi kept several coins before it was publically mined. At the time of writing this article, only 2.66 million 0xBitcoin have been mined. This page provides a brief timeline for 0xBitcoin.
How Does it Work?
0xBitcoin is the first ERC-20 token to use proof of work to distribute its tokens. Using proof of work to distribute a token on the Ethereum blockchain merges the desirable characteristics of Bitcoin and ERC-20 tokens.
Why not just use Ether?
Ether is not an ERC-20 token and does not interact with smart contracts and other ERC-20 tokens as easily as ERC-20 tokens. Additionally, raiden is Ethreum’s lightning network solution, but Ether is not compatible with raiden. 0xBTC is compatible with raiden.
0xBitcoin is a fully functional coin that is already suited to accomplish what is described in its whitepaper. However, the 0xBitcoin team is working on what they call the Lava Network, which would create additional value for its token.
In the status quo, there is a big problem with ERC-20 tokens because they require users to pay gas fees in the form of Ether. Some users may not want to hold Ether.
To simplify the Lava Network, users can pay smart contracts gas fees with 0xBitcoin instead of Ether. Through a trustless smart contract, somebody can pay a different user a bit of their ERC20 token (0xBitcoin) so that the different user will pay the Ether gas fee for them. For more technical details, visit the offical Lava Network forum post, but here is an example:
Alice wants to trade 0xBitcoin for OmiseGO using a decentralized exchange but Alice has no Ether to pay for her smart contract. Through the Lava network, she could give Bob enough 0xBitcoin, so that Bob pays her Ether gas fee for her.
0xBitcoin is an ERC-20 token, which means that if Ethereum ever becomes obsolete, 0xBitcoin will be obsolete.
0xBitcoin excites BlockWolf because it provides valuable innovation to Bitcoin. It is not a fork of Bitcoin, but it is an iteration of Bitcoin that features the best characteristics of Bitcoin and ERC-20 tokens. There is no concern about 0xBitcoin developers committing an “exit scam” because 0xBitcoin is a functional token that already lives up to its whitepaper. As the first ERC-20 token to distribute its coins through proof of work mining, Blockwolf thinks 0xBitcoin will be an influential token for future cryptocurrencies.