Topics Blockchain
Bybit Learn
Bybit Learn
Beginner
Sep 15, 2022

DigiByte (DGB): A Decentralized, Fast & Secure Layer 3 Blockchain

Since its launch in 2014, DigiByte has strived to improve upon Bitcoin’s scalability and cybersecurity. The decentralized blockchain network is known for being significantly faster than those of Bitcoin and Litecoin, making it a popular option for users wanting to exchange smart contracts, decentralized applications (DApps) and other digital assets. Transactions on the blockchain are completed using the network’s currency, DGB, which has a maximum supply of 21 billion tokens and a circulating supply of 15.65 billion tokens.

Because DigiByte is an open-source network with a strong community of developers, it’s always improving. Use this guide to learn more about this blockchain network and its unique features.

What Is DigiByte?

DigiByte is a scalable blockchain platform, founded in 2013, that utilizes a peer-to-peer (P2P) cryptocurrency, DGB, for decentralized application (DApp) exchanges.

History of DigiByte

The DigiByte network was founded in 2013 by Jared Tate, a programmer who has been involved with Bitcoin since 2012. The goal was to expand Bitcoin’s blockchain technology and create a secure, decentralized network that could quickly reach a larger community. While the open-source blockchain network does have some similarities to Bitcoin, there are several key differences.

The network was released to the public on January 10, 2014. A small portion of the blockchain network’s native cryptocurrency, DGB, was pre-mined and given upon release to those who supported its development.

Since its initial release, DigiByte has incorporated several improvements. In 2014, features such as DigiShield and MultiAlgo were introduced. MultiShield was introduced in December 2015. In April 2017, DigiByte became the second major blockchain to utilize SegWit to improve scalability. Then, in July 2019, the network introduced a unique hashing algorithm, Odocrypt, to further improve security.

DigiByte’s speed has also greatly increased since the blockchain’s launch in 2014. At that time, the blockchain used a single algorithm, with a difficulty retargeting frequency of two hours. After several upgrades and the introduction of multiple algorithms, speed and security both improved. For example, block mining speed in 2014 was about one minute, whereas in 2022 it’s around 15 seconds.

How Does DigiByte Work?

Because DigiByte is a scalable blockchain known for its fast speed, users worldwide can complete irreversible, permissionless transactions using DGB coins faster than they would be able to with Bitcoin or Litecoin.

DigiByte’s decentralized blockchain uses a proof of work (PoW) consensus mechanism to secure and validate transactions. While DigiByte block rewards can still be issued to miners, DGB has a finite supply of 21 billion. The PoW consensus mechanism is very similar to Bitcoin’s; however, there are no halving events that reduce miner rewards. Instead, block rewards will be reduced monthly by 1% until all 21 billion DGB coins are minted.

The DigiByte blockchain consists of three layers: An application layer, a consensus layer and a network layer. While other blockchains may have multiple layers, the layers on this decentralized network function a little differently.

The application layer is the user-facing portion of the blockchain network, used to exchange DGB coins and access DApps. Smart contracts and other DigiAssets are also exchanged on this layer.

The consensus layer records and manages DigiByte transactions. It’s also the layer that releases new cryptocurrency to DigiByte miners. It serves as an efficient, electronic public ledger.

The network layer manages all operating procedures for devices running the blockchain's software. Its global network of nodes also validates transactions.

Applications/DigiAssets

DigiAssets are customizable crypto assets that exist on the DigiByte blockchain. They can represent anything, from notarized documents and smart contracts to NFTs and even traditional financial assets. DigiAssets can be created using a wide range of digital tools, making the underlying technology accessible to the general public.

Digital Assets/Public Ledger

Digital assets on the middle layer of the blockchain are distinct from DigiAssets, which are on the top layer. The middle layer focuses on recording transactions and providing security to the blockchain. Its goal is to ensure that the tokens on the blockchain hold value, and the data being exchanged is genuine. A public ledger records each transaction on the network.

Because security is incredibly important to the DigiByte ecosystem, it uses the same key encryption methods used to secure nuclear launch codes. To reduce counterfeiting, hacking, duplication and other security issues, five different proof-of-work mining algorithms are used by the network: SHA-256, Scrypt, Odocrypt, Skein and Qubit.

SHA-256, which is also used by the Bitcoin blockchain, generates a unique 32-byte hash that can serve as a digital signature and validation.

Scrypt, which is also used by several altcoins (including Dogecoin and Litecoin), is a mining algorithm that actively mitigates mining centralization.

Odocrypt was designed with the DigiByte blockchain in mind. It automatically modifies itself every ten days to prevent ASIC dominance.

Skein helps to make mining more efficient, regardless of the type of hardware the miner is using. It’s known for being significantly faster than the SHA-256 mining algorithm.

Finally, Qubit is a hashing algorithm that’s quick, efficient and secure. While it was initially only compatible with CPU hardware, the algorithm is now compatible with GPU and ASIC mining hardware.

Core Protocol/Global Network

Operating procedures are completed on the bottom layer of the blockchain. According to DigiByte’s website, thousands of people around the world are using DigiByte software at any given time. This bottom layer enables communication between nodes on the network.

Features of the DigiByte Blockchain

There are several features that set DigiByte apart from the Bitcoin network and other blockchain networks. In addition to allowing users to exchange DApps and tokens, the blockchain has implemented some features over the years aimed at boosting speed and preventing centralized control. Here are some examples of the blockchain’s notable features.

Pure Consensus

DigiByte uses the PoW consensus algorithm to make decisions on the network. The blockchain’s developers chose this algorithm to achieve a decentralized consensus quickly. The goal is to keep the decision-making process on the network to reduce manipulation and tampering. Pure consensus is a group decision-making process that enables users to complete transactions and obtain block rewards for mining. All five of the blockchain mining algorithms work together to verify each transaction.

On-Chain Scaling

Proper scaling is the key to future growth. To support additional transaction volume, the blockchain needs to be able to complete transactions quickly and easily incorporate them into the blockchain. The blockchain’s current goal is to double the block size every two years. On-chain scalability also facilitates increased block speed to correspond with network capacity. In addition, the introduction of the Segregated Witness, or SegWit, protocol in April 2017 has optimized on-chain scalability.

DigiAssets

DigiAssets can be issued, sent and received on the DigiByte blockchain. Each DigiAsset represents a real-world asset, such as a contract, DApp, in-game currency, digital art or music, or event ticket. DigiAssets can also be smart contracts, which are programs stored on a blockchain that automatically run once all the required conditions of the contract are met.

Almost anything can be made into a DigiAsset. You don’t have to be a developer to create, issue or trade these assets on the top layer of the blockchain’s network. There are various tools available to help you create smart contracts, NFTs and other unique assets.

Digi-ID

Authentication and security are both critical to DigiByte. To this end, Digi-ID is a simple application designed to securely replace usernames and passwords. As a decentralized network, DigiByte doesn’t store personal information. Digi-ID allows users to maintain a strong level of security while remaining completely anonymous.

Mining

All transactions are verified on the network using a complex PoW system. As mentioned previously, to greatly improve the overall security of the blockchain, five cryptographic algorithms are used during the mining process: SHA-256, Scrypt, Odocrypt, Skein and Qubit.

Multi-algorithm mining, also referred to as MultiAlgo, strengthens security by combating against mining centralization. Centralized mining can significantly reduce the overall value of a token as pools grow and take control of a network’s hashing power. Multi-algorithm mining helps to redistribute some of the power used to mine new block rewards, which in turn keeps rewards consistent.

Another benefit to multi-algorithm mining is that it can be completed using a wide range of hardware. This makes the process simple for both new and experienced miners, regardless of their setup size.

DigiShield

DigiShield adjusts the mining difficulty to help protect against overinflation. In early 2014, mining pools tended to switch between cryptocurrencies rapidly to increase profitability as block rewards changed. The problem is that this created fluctuations in mining hash power, and rapidly sped up block production, followed by major stalling and increased mining difficulty. DigiShield is a mechanism that permits real-time adjustments of block difficulty, helping to guard against extreme fluctuations.

Since its successful implementation on DigiByte, DigiShield has been incorporated into several other blockchains, including Ethereum, Dogecoin, Bitcoin Cash and others.

MultiShield

Introduced in December 2015, the MultiShield network upgrade activated DigiShield across all five algorithms. MultiShield essentially increases the mining difficulty every time a new block is found using an algorithm. The mining difficulty on the other four algorithms is then decreased, allowing for more consistency. MultiShield also helps to protect against any malicious hash rate indirection that would affect the production of blocks.

Staking

DigiByte doesn’t currently use a staking algorithm, but developers are working on a way to incorporate both the current PoW consensus and a proof of stake (PoS) model. This would replace one of the five current mining algorithms, and reward token holders for owning DGB. The PoS model being investigated would also reduce potential for double-spend attacks on the PoW algorithms.

Dandelion++

In 2019, DigiByte introduced a new upgrade aimed at further enhancing privacy. Dandelion++ helps to obscure IP addresses, preventing people from identifying the physical location of users sending transactions. DigiByte was the first major UTXO blockchain to implement this privacy-enhancing protocol.

Mobile Applications

Prior to 2018, DigiByte could only be accessed on computers. After developing and launching Android and iOS applications, DigiByte was able to grow the blockchain’s global user base and the overall versatility of the network. Its applications are available in over 50 languages, enabling users to trade DGB all over the world.

DigiByte vs. Bitcoin

DigiByte may have been built to be like Bitcoin at first, but there are several differences that set it apart. It was designed to be more scalable and secure than the Bitcoin blockchain, significantly improving the basic technology. Over the years, DigiByte has incorporated several useful features that the Bitcoin blockchain lacks. This doesn’t just set it apart from the Bitcoin blockchain; it sets it apart from other decentralized blockchain networks and altcoins.

Similarities

There are several similarities between DigiByte and Bitcoin. Both blockchains utilize a PoW consensus mechanism. DigiByte takes PoW a few steps further, adding multiple algorithms to improve decentralization, security, efficiency and scalability.

Both Bitcoin and DigiByte have a maximum supply, although DGB has a maximum supply of 21 billion tokens, while Bitcoin has 21 million. To produce new tokens, both networks rely on miners using a proof of work consensus. Both blockchain networks also have definitive plans to gradually reduce the number of rewards for miners. Bitcoin blockchain rewards are halved approximately every four years, while DGB rewards are decreased by 1% each month.

In addition to similarities in processing transactions and mining tokens, DigiByte and Bitcoin are also both open-source blockchains. This means that anyone can access and help develop the code. Because of this ability to participate in the development process, both blockchains have a strong sense of community and are constantly encouraging innovation.

Differences

DigiByte was built to improve Bitcoin’s blockchain technology, so there are several notable differences between the two. One of the biggest differences is the transaction speed. DigiByte processes transactions about 40 times faster than Bitcoin, and can create a new block every 15 seconds.

Transaction fees are also significantly lower than Bitcoin’s. Bitcoin’s fees in 2022 are about $1 per transaction, while DigiByte’s are around $0.01. This makes DigiByte a more cost-efficient choice for daily use, although fees may differ if you’re buying and selling tokens on an exchange.

DigiByte also possesses features to combat mining centralization that Bitcoin’s blockchain doesn’t. Five complex mining algorithms redistribute the mining difficulty in real time, protecting the blockchain from sudden changes. While both blockchains utilize SHA-256 as a PoW mechanism, as mentioned, DigiByte also incorporates Scrypt, Odocrypt, Skein and Qubit to promote secure mining.

Is DigiByte Better Than Bitcoin?

DigiByte’s developers have always strived to create a more secure and decentralized network than Bitcoin’s. Because the network uses five PoW algorithms, can be mined significantly faster and offers several unique features, some users may prefer it to Bitcoin.

DigiByte Road Map

DigiByte’s open-source blockchain is supported by a dedicated community. All current developers work on a volunteer basis; therefore, it’s difficult to establish hard deadlines for projects and upgrades.

The DigiByte Pipeline details the blockchain’s current projects and goals. It contains a list of smaller and larger action items, developer experience items and third-party project integration items. The current document can be accessed on GitHub. Developers who would like to contribute to the blockchain can also open pull requests, ask questions and learn more about current projects.

DGB Tokenomics

Although DGB was first mined in 2014, a new token is created on the network during each mining process. Completing a mining transaction takes about 15 seconds, making it among the fastest altcoins on the crypto market. It’s estimated that the blockchain will reach its cap of 21 billion coins by 2035.

While DGB has several strengths over Bitcoin, it has a much lower value per token. In September 2022, a Bitcoin token is worth between $22,000 and $22,500. On the other hand, DGB tokens are valued at around $0.01.

DGB Price Prediction

DGB reached a historical high of $0.18 in May 2021. While its price has significantly decreased from its high, there are several predictions that it will rise as block rewards begin to decrease. Because there’s a maximum supply of 21 billion DGB coins, the price could continue to rise as fewer tokens become available.

There are several different price predictions. Changelly suggests that DGB could eventually reach $1. While the cryptocurrency market is volatile and tokens have made large jumps in price in the past, the odds of the token reaching $1 in the next few years seem slim. TechNewsLeader and PricePrediction both suggest that the price of DGB may reach $0.016 in 2023, and go as high as $0.34 by 2031. 

Where to Buy DGB

There are several platforms where you can buy DGB. Bybit is a user-friendly platform that enables users to easily buy and sell DGB and other altcoins.

After you’ve registered and verified your Bybit account, all you need to do is open the app or website, head to the DGB/USDT Spot Trading page and enter the exact amount of DGB you would like to purchase. Remember, once you submit a transaction, you cannot reverse it, so be sure to double-check your input before clicking on Buy

Do also take advantage of Bybit's exclusive zero fees campaign on all spot pairs. This will only be available for a limited period of time.

If you’re hoping to invest in DGB long-term, transfer your tokens to a secure crypto wallet. Wallets store cryptocurrency off of the blockchain, helping to protect your assets. 

Is DigiByte a Good Investment?

DigiByte is constantly growing and evolving. Because its blockchain network is open-source and has a strong community, it will likely keep advancing and incorporating new technology. While the token has a large cap of 21 billion, the value of DGB coins could increase as mining rewards continue to decrease.

The Bottom Line

DigiByte consistently strives to improve blockchain technology. Its unique decentralized network is well-known for its speed, security and versatility. As a three-layered blockchain, it’s incredibly efficient. While the price per DGB token is significantly smaller than a token such as Bitcoin, it’s much faster to mine. Because DigiByte has an active team of volunteer developers, the network is always improving and incorporating new features. It will be exciting to see how much this innovative blockchain will grow in the future.