Is DigiByte (DGB) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations
Is DigiByte (DGB) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 26 Nov 2019


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DigiByte is one of the first-gen blockchains that has been continuously developed and remains popular even in the current days where the crypto space is flooded by many different newer projects.

DigiByte has active developers and is one of the most adaptable blockchain platforms. It has adopted SegWit, DigiShield, DigiAssets, OdoCrypt, and MultiAlgo mining according to its own official website.

So, how is DigiByte's future compared to its competitors? And is it worth it to invest your money in DigiByte coin in the long term? Let’s find out together!

DigiByte - Summary

The majority of altcoins that were issued 5-6 years ago had similar goals. They all wanted to become the “better” version of Bitcoin. Faster, more secure, and cheaper tx fees than Bitcoin itself. You can name different kinds of altcoins during those years, but they all shared similar ideas.

DigiByte was one of them. DigiByte wants to be used as a tool to send money across the countries. In other words, its main purpose is for peer-to-peer electronic cash. DigiByte itself still uses the same consensus algorithm like Bitcoin, which is Proof of Work (PoW).

However, the biggest difference is that DigiByte has its own mining algorithm, which combines five different algorithms at the same time. These mining algorithms are Odocrypt, Skein, Scrypt, SHA256, and Qubit. 

The process of mixing these five mining algorithms is called MultiShield. The concept is that all five algorithms can adjust their own algorithms and are weighted against each other in the network. 

The core team of DigiByte believes that having a unique PoW-based mining system like this allows the whole ecosystem to be more decentralized than both the classic PoW and PoS systems. 

In a classic Proof of Work system with one mining algorithm, typically, some large entities or mining pools can dominate the entire blockchain ecosystem. In a Proof of Stake system, few groups of people can just dominate the token supply and stake them on the network to “control” it.

Apart from the differences in the mining algorithm, DigiByte's another unique selling point is that the blockchain has more than 280,000 nodes since two years ago (2017). The number of operating nodes in the DigiByte ecosystem is significantly higher than other public blockchain systems, even the much more popular ones.

How about the speed? Despite still using Proof of Work, but DigiByte can still compete with newer blockchain ecosystems (which typically uses Delegated Proof of Stake or other variations). DigiByte is able to achieve 1066 TPS (transactions per second) with SegWit activated. 

The current block time is only 15 seconds, and it’s reduced by 1% every month. For comparison, the block time for the Bitcoin blockchain is 10 minutes. It’s much slower than DigiByte. Of course, DigiByte doesn’t just stop at being “faster” or “more decentralized” than other blockchain platforms.

It also wants to be used for decentralized applications, just like Ethereum or EOS. DigiByte claims that developers of smart contracts should use DigiByte because the blockchain is more secure and more decentralized than other dApp platforms.

In the dApps world, DigiByte has a goal to put all kinds of data into the blockchain. They want to be able to host money, videos, music, documents, and even photos into the Digibyte blockchain through a digital form that they call DigiAsset.

Analyzing DigiByte Team

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image source

Before we can answer the question of whether investing in DigiByte is worth your money or not, we must be able to analyze the capabilities of the team. Investing in a cryptocurrency often means believing and having faith in the project leaders. 

We put our money in cryptocurrencies because we believe they can be used for bigger purposes and use cases in the future. And talking about the future of a specific cryptocurrency, it means we trust the core team’s efforts to make it better.

So how about the team that has been developing DigiByte? Well, just like most projects that were started in 2013 or 2014, DigiByte did not have the privilege to get funded through ICO (initial coin offering) or IEO (initial exchange offering). It all began with just one guy, Jared Tate

Started in 2013, Jared Tate finally launched DigiByte’s genesis block in January 2014. He got some help from other developers, but none was publicly named. Many rumors believed that the majority of the token supply is still owned by the early developers, including Jared Tate himself.

Even on the official About Us page, there doesn’t seem to be any information about the developers besides the founder Jared Tate. So, the lack of information here means we can only “analyze” Jared Tate and his cryptographic background.

Fortunately, he’s not a new name in the industry. If you look at the improvements he and his team have made for the DigiByte coin from 2014 to today, it looks like they have always been actively improving the coin’s technology.

Many newer blockchain projects with high profile teams actually have much slower progress compared to DigiByte. So, according to my analysis of the DigiByte team, they seem pretty capable of improving the coin’s technology despite the lack of information.

If there’s one criticism about the team, it’s probably more about their marketing efforts. In 2019 (and we are already close to 2020), it’s not easy to market and spread awareness of an altcoin. And judging by their past action, it doesn’t look like DigiByte team is that “interested” to adopt aggressive marketing strategies that are often displayed by other altcoin teams. 

DigiByte Future And Potential Roadblocks

While DigiByte looks quite decent from its technology and team’s background perspectives, but to be honest, there are also some significant doubts about its future.

First of all, based on the data from CoinMarketCap, DigiByte’s daily trading volume is very low. There are lower market cap coins with significantly higher trading volume. At the time this post was written (November 26th, 2019), the daily trading volume was just slightly above $1.7 million. Last month, typically, it was ranging around $3-4 million.

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Digibyte trading volume on top exchanges - source: CoinMarketCap

This trading volume is considered low, especially when you are in a top 70 crypto rankings by market cap. The liquidity that keeps getting lower from time to time makes it even harder to be massively adopted.

And talking about DigiByte dApps vision, it’s not easy to gain some market share from the likes of Ethereum, EOS, or Tron. Most dApp developers are already “comfortable” with more established platforms.

While nobody can predict the future, but criticism for the core team’s about the coin’s lack of visibility is valid. It’s pretty hard to stay visible in the sea of other blockchain platforms that try to target the same use cases.

The potential roadblocks for DigiByte are other cryptocurrencies that are more popular and have better public visibility. For example, in terms of “fast and cheap” coins, we have XRP, XLM, DASH, TRX, and others. 

And in terms of visibility among dApp platforms, we have Ethereum, EOS, TRX, VeChain, ONT, and IOST. All of these blockchains have more visible public images compared to DigiByte.

Binance Controversy And DigiByte

Generally, there aren’t big controversies regarding the DigiByte project. However, there’s one controversy that’s worth to be discussed. The coin founder, Jared Tate, chose to publicly attacked Binance through Twitter on September 20th, 2019. 

Jared claimed that Binance asked them for $300K as well as 3% of DigiByte's total coin supply. He wanted the public to know that everything is about money if you want to get listed on Binance exchange. 

Binance CEO Changpeng Zhao chose to respond to the tweet by saying that he didn’t want to waste his time on “these types of guys”. There are some crypto supporters who defended Jared Tate because they believe a decentralized cryptocurrency should not be forced to pay just to get listed on a crypto exchange.

But, there are also critics who believed Jared Tate was just trying to get his 15 minutes of fame. They claimed that it’s already well-known in the crypto space that people have to pay if they want their coins or tokens to get listed on Binance.

 And without Binance listing, it looks like DigiByte doesn’t have much trading volume. At the moment this post was written, DigiByte’s biggest trading activities come from CoinEx for DGB/BCH and DGB/USDT trading pairs. The volume for both pairs is not that impressive.

DigiByte Adoptions

The adoption rate of DigiByte is not bad, but it’s also not that good compared to its competitors. According to coinpayments.net, there are more than 400 firms that can accept your DigiByte coins to pay for their services. Some of them include Gamerall, Snel, or Anna Freya Voice. 

There are other altcoins that have been accepted by thousands of merchants. DigiByte needs to catch up with these other coins. Although to be fair, there are also other altcoins that have significantly lower adoption rates.

External Factor And DigiByte Price

Unfortunately, talking about the future of one specific cryptocurrency is not as easy as talking about its fundamentals. Cryptocurrencies often move in one trend. When Bitcoin goes up, altcoins go up. When Bitcoin goes down, altcoins go down.

DigiByte won’t be an exception when Bitcoin price keeps going up (or down). Everybody knows that most altcoins are still very dependent on Bitcoin price. Just like what I’ve written on my other articles, if you decide to invest in an altcoin, you must look at Bitcoin price into one of the factors to consider.

There are some analysts that predict 2020’s Bitcoin mining reward halving event will be bullish for Bitcoin price. But, on the other hand, some other analysts predict everything has been “priced in”, which means the rise of Bitcoin price this year was the result of everybody expecting the same thing from 2020’s halving event.

So, whichever way Bitcoin will follow in 2020, nobody truly knows. One thing for sure, though. Bitcoin price in the next few years, most likely, would affect DigiByte coin price as well.

Conclusion

DigiByte coin is a cryptocurrency with great technology and unique Proof-of-Work mining algorithm. It is fast, decentralized, and “arguably fairer” compared to other PoW-based ecosystems. That being said, there are some legit criticisms about the coin, especially when it comes to visibility, lack of trading volume, and adoption.

Whether DigiByte can eventually surpass its competitors, unfortunately, only time knows the answer. Investing in this coin is still a decent idea, but (judging by the current situation), there are better alternatives out there.


CryptoBoomer
CryptoBoomer

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