Bitcoin Diamond was one of the extremely controversial hard forks of Bitcoin from 2017.
At the time there was all kinds of speculation that the coin was a scam. Some said that Bitcoin Diamond was only created to cash in on the Bitcoin name, while others claimed that you could lose your personal information by claiming the Bitcoin Diamond created by the hard fork.
So far there’s no real proof of any scams surrounding Bitcoin Diamond, although we’ll see that pump and dump action from the coin might be a reality. Let’s look deeper into what’s being self-labeled as the “Better Bitcoin”.
History of Bitcoin Diamond
The launch of Bitcoin Diamond occurred on November 24, 2017 when the Bitcoin blockchain reached block 495,866. The problem at the time (or one of the problems) is that the founders of Bitcoin Diamond had released nothing at that point. No whitepaper, no community formed, very little information, and as far as anyone could tell no blockchain because there was no source code released, or even a GitHub account at that time.
Bitcoin Diamond History & Roadmap. Source: btcd.io
Despite all the questions surrounding the new hardfork of Bitcoin, within several days the price had shot up to $94, which was also the all-time high for Bitcoin Diamond. Since then the price has been steadily sinking, although there have been some spikes, which I’ll discuss in more detail later.
The team behind Bitcoin Diamond also released the source code soon after the launch, as well as improving communication and becoming more active on social media. So, many of the concerns over the project that had labeled it as a scam were put to rest.
Who Created Bitcoin Diamond?
Bitcoin Diamond shares a similarity with its parent Bitcoin, and that is in the anonymous nature of the founders. Bitcoin was created by Satoshi Nakamoto, a pseudonym for a programmer or group of programmers. Similarly, Bitcoin Diamond was created by developers using pseudonyms.
In this case there are three, with two identifying themselves as “Evey” and “007”, and the third remaining fully anonymous. It was later mentioned that the names actually referred to development teams, and that the likely location of the Bitcoin Diamond Foundation is Singapore.
How Does Bitcoin Diamond Work?
Like other blockchains, Bitcoin Diamond is a decentralized network aimed at providing users a means to exchange value. Because it was forked from Bitcoin it shares similarities with the parent coin, although it has differences as well.
One similarity is that it uses the Proof of Work algorithm and mining for transaction and block verification. Miners receive a reward for providing the computing power necessary to do verifications. It differs from Bitcoin however because it does not use the SHA-256 algorithm.
The development team moved away from SHA-256 because it has become dominated by specialized ASIC miners that have centralized Bitcoin to some extent. Instead, Bitcoin Diamond uses an algorithm known as X-13 which is ASIC resistant and allows miners to use basic GPUs to help secure the network and provide verifications.
Bitcoin Diamond Compared. Source: Steemit
The aim in creating Bitcoin was to create a completely decentralized digital currency that made transactions faster, cheaper, more reliable, and more private than current financial transactions. While Bitcoin did realize those aspirations, there’s no doubting that it isn’t perfect, and that changes can be made to improve on the original Bitcoin implementation.
One change that was made, and we aren’t sure what the purpose is, is that Bitcoin Diamond was created with 210 million coins. That’s 10 times as many coins as Bitcoin.
The stated goal of Bitcoin Diamond is to fix three shortcomings of Bitcoin:
- Poor privacy protection;
- High threshold required for new members;
- Slow transaction speed.
At the release there were 170 million Bitcoin Diamond released, with the remaining 40 million being held in reserve for mining rewards. It was also stressed by the developers that Bitcoin Diamond was not created as a competitor to Bitcoin, but is rather more of a dividend for Bitcoin holders, and is making an effort to increase cryptocurrency adoption and use.
Where and How to Buy Bitcoin Diamond?
The first thing you’ll need if you want to acquire some Bitcoin Diamond is a compatible wallet to hold it. The Bitcoin Diamond team has said a native wallet will be released in the third quarter of 2018, but in the meantime you can use QoinPro, BitGo, or one of the other handful of wallets listed on the Bitcoin Diamond website.
One you have a wallet the easiest way to get some Bitcoin Diamond is to simply buy it from one of the supporting exchanges. You can get it at Binance, Huobi, OKEx, Gate.io and a number of other exchanges. Just bear in mind that you can’t get it with fiat, but will need BTC or ETH to make the purchase.
Live Exchanges for Bitcoin Diamond. Source: Bitcoin Diamond Website
Also note that you’ll need a trading account at the exchange you choose to use, and in most cases that means you’ll have to submit quite a bit of personal information to meet the KYC and AML regulations upheld by almost every centralized exchange.
If you aren’t fond of the idea of potentially linking your personal details to your Bitcoin Diamond by purchasing them through an exchange you could use a peer-to-peer marketplace instead. LocalBitcoins is one such P2P marketplace, but you might find liquidity quite thin for buying.
Mining Bitcoin Diamond
You don’t have to buy Bitcoin Diamond to accumulate it. If you prefer you can simply mine it.
Mining Bitcoin Diamond first requires you to download and install the core client. Understand that this means you’ll be downloading the entire blockchain to your computer to become a node. You’ll need a good amount of hard drive space to do this. The good news is that Bitcoin Diamond uses a new algorithm called X-13 that is much easier than the SHA-256 algorithm used by Bitcoin. This makes it possible to mine Bitcoin Diamond with your GPU.
Bitcoin Diamond Mining Pools
If you want to have more steady rewards you should consider joining a Bitcoin Diamond mining pool. The Bitcoin Diamond website lists 6 pools you could consider joining. A mining pool combines the hashing power of all the participants, making it easier to find blocks. The block rewards are then split between all the members of the pool.
Advantages of Bitcoin Diamond
Bitcoin Diamond was created to improve certain aspects of Bitcoin, such as network speed and transaction costs. Privacy is also very important to the Bitcoin Diamond team So, what advantages does Bitcoin Diamond have over its parent Bitcoin?
Bitcoin Diamond has helped decentralize mining – The centralization of Bitcoin miners has been an ongoing problem, but Bitcoin Diamond doesn’t suffer from this problem. The main reason is that it split from the SHA-256 algorithm that is controlled by ASIC miners and moved to a GPU-mining friendly algorithm.
Bitcoin Diamond Claimed Advantages
It’s a faster cheaper way to send money– One of the key reasons for the creation of Bitcoin was to make sending money easier and cheaper. Bitcoin Diamond has certainly accomplished that, and it is both faster and cheaper than Bitcoin. In fact, it is cheaper than most cryptocurrencies, primarily due to its low value when compared with other major cryptocurrencies.
BCD tokens let you store your wealth away from possible seizures and prying officials – This is another benefit of cryptocurrencies in general. Unlike traditional bank accounts, there is no way for a government entity or organization to freeze your Bitcoin Diamond funds. In fact, thanks to the privacy aspect of the coin no one will even know that you own Bitcoin Diamond.
The community and trust of Bitcoin Diamond have been growing – When the Bitcoin Diamond fork occurred there was a huge amount of controversy, and many people outright called the project a scam. That is changing, with a community being built around Bitcoin Diamond and trust steadily being restored.
What Are the Risks of Bitcoin Diamond?
Bitcoin Diamond has advantages, but nothing comes without risks, and Bitcoin Diamond is no exception. If you’re thinking of getting involved with Bitcoin Diamond it’s important that you’re aware of potential risks.
Bitcoin Diamond is new – It’s been less than a year since Bitcoin Diamond was created and we haven’t yet seen if the development team will really perform. It’s also far too early to know if the BCD token will appreciate in value and become stable.
The threat of being hacked and losing tokens – This is a risk with any cryptocurrency, and if you’ve been following cryptocurrencies for any length of time you know how vulnerable any coins held at an exchange are. If you’re going to accumulate Bitcoin Diamond make sure to store them in your own wallet, and preferably on a hardware wallet.
The danger of more advanced cryptocurrencies entering the market – Bitcoin Diamond was created to address perceived flaws in Bitcoin. It’s still very early in the cryptocurrency game, so there’s no way to see if an even better alternative will come along in six months or a year, or even 2 years.
BCD Coin Trading
When Bitcoin Diamond was launched it quickly surged to $94, but it’s never returned to that level. In fact, it has been slowly declining and as of July 23, 2018 it has a value of $2.20. Note that on this day it is roughly 50% below the previous session price. Even so it has a market capitalization of nearly $350 million and is ranked #42 on Coinmarketcap.com. The reason for the seeming pump and dump over the past several days is the listing of the BCD token on HitBTC on July 16.
Wild BCD Prive Swings. Source: Coinmarketcap
Otherwise things haven’t looked great in the price action of the token as it’s been seriously depressed since March 2018. Prior to that it experienced several months of great volatility, trading as high as $47.29, and as low as $8.36, all within several weeks. That action did look like the pump and dump the founders have been accused of, but there’s no way to say for sure if that’s the case, or if it was just the usual cryptocurrency volatility.
While it’s true that the developers of Bitcoin Diamond have remained cloaked in secrecy, it would do good to remember that the developer of Bitcoin was also cloaked in mystery, privacy and anonymity, even to this day. Satoshi Nakamoto gave the world Bitcoin and disappeared, leaving the blockchain for developers to examine and improve upon.
Part of that improvement process includes hard forks, which are necessary when the community is in disagreement over aspects of Bitcoin, or any other cryptocurrency that hasn’t been created in a way that avoids the possibility of hard forks.
Bitcoin Diamond has made improvements to the core Bitcoin blockchain, and while it may not be perfect there’s no indication that it’s a scam either. Instead it just looks like a group of developers who value privacy in decentralized currencies. And its improvements have brought the world one step closer to the perfect cryptocurrency, if such a thing is possible.
I’ve gotten the feeling that Bitcoin Diamond may have been dreamed up and launched far too quickly, but its growth since doesn’t give the feeling that it is a scam. What do you think?
Featured Image Fotolia