Blackbytes is a cash-like private currency. It is one of the two main currencies of the Obyte platform, the main currency is Bytes.
As Blackbytes are sent peer-to-peer, transactions are not visible on the public database. This makes Blackbytes similar to bank notes, albeit a digital version.
The main privacy feature of Blackbytes design is to hide the entire transaction inputs and outputs. Only the hash of inputs and outputs is published on the public database.
You can send Blackbytes to anyone as textcoins, even if you do not know the recipient's wallet address. Blackbyte textcoins are transferred via a medium which permits the sending of digital files. For example you can send them via email, Whatsapp, Signal, Telegram, WeChat etc.
For example, if you wanted to send money privately to someone else on the other side of the world but didn't have the recipient's wallet address, you could do this by sending them a Blackbyte textcoin over Telegram.
Users can choose to send Blackbytes over the Tor network to further shield the transaction from outsiders. This option can be enabled within the Obyte wallet.
One of the major benefits of Blackbytes is that they are a private asset accessed from your Obyte wallet. This means that when privacy is not required, users can use Bytes (the main Obyte currency) to make transactions.
In the real world, privacy is not in high demand for most transactions. Credit card and cash payments are easy to trace back to the sender through credit card records, closed circuit cameras etc.
The Obyte offering of Blackbytes (private) and Bytes (public) from the same wallet combines convenience with giving users control.
If users send them over the Tor network and do not let anyone else have access to their Obyte wallet, the transactions are extremely private. As they are sent peer-to-peer, the history of coins is stored by the current owner. This shows parts of transactions, since a typical payment will likely consist of several transactions. However, the value of this information for potential adversaries decreases with time.
Note too, that only the recipient of the file can view parts of some transactions, not everyone in the world. As different signatures are used for each transaction, there is no network analysis that an adversary can deploy.
If you plan to buy nuclear arms from North Korea, making the payment in Blackbytes would not be the most private method. Potential adversaries for a transaction like this are likely to be very well funded and resourced. If, however, you simply want to make ‘normal’ private payments that are extremely difficult to trace back to you, sending Blackbytes over Tor would be a good option.
If Blackbytes were traded on a centralized exchange, the exchange would have enough information to reveal the origin and destination of Blackbytes, and amounts traded, which defeats their purpose.
Blackbytes can only be traded on decentralized exchanges, with conditional payments in the Obyte wallet. Peer discovery has to happen outside the Obyte wallet. Such an exchange is yet (November 2018) to appear.
Currently the most popular way to trade Blackbytes is the Freebe exchange. Freebe uses Obyte smart contracts, and your funds stay in your wallet until your offer is filled. Trade makers pay 0.5% transaction fees, but trade makers pay no fees at all.