BitShares (BTS) - Your share in the Decentralized Exchange | Discussion Thread
What is BitShares
BitShares is a technology supported by next generation entrepreneurs, investors, and developers with a common interest in finding free market solutions by leveraging the power of globally decentralized consensus and decision making. Consensus technology has the power to do for economics what the internet has done for information. It can harness the combined power of all humanity to coordinate the discovery and aggregation of real-time knowledge, previously unobtainable. This knowledge can be used to more effectively coordinate the allocation of resources toward their most productive and valuable use.
Bitcoin is the first fully autonomous system to utilize distributed consensus technology to create a more efficient and reliable global payment network. The core innovation of Bitcoin is the Blockchain, a cryptographically secured public ledger of all accounts on the Bitcoin network that facilitates the transfer of value from one individual directly to another. For the first time in history, financial transactions over the internet no longer require a middle man to act as a trustworthy, confidential fiduciary.
BitShares looks to extend the innovation of the blockchain to all industries that rely upon the internet to provide their services. Whether its banking, stock exchanges, lotteries, voting, music, auctions or many others, a digital public ledger allows for the creation of distributed autonomous companies (or DACs) that provide better quality services at a fraction of the cost incurred by their more traditional, centralized counterparts. The advent of DACs ushers in a new paradigm in organizational structure in which companies can run without any human management and under the control of an incorruptible set of business rules. These rules are encoded in publicly auditable open source software distributed across the computers of the company’s shareholders, that effortlessly secure the company from arbitrary control.
BitShares does for business what bitcoin did for money by utilizing distributed consensus technology to create companies that are inherently global, transparent, trustworthy, efficient and most importantly profitable.
BitShares has undergone many changes and has done its best to stay on top of blockchain technology. Towards the end of 2014 some of the DACs were merged and the X was dropped from “BitShares X” to become simply BitShares (BTS).
BitShares X was first introduced in a White Paper titled “A Peer-to-Peer Polymorphic Digital Asset Exchange” by Daniel Larimer, Charles Hoskinson, and Stan Larimer. Shortly after authoring the White Paper, the project was founded by Daniel Larimer of Invictus Innovations after receiving funding from Chinese venture capital firm BitFund.PE. Charles Hoskinson, founder of the Bitcoin Education Project, was a co-founder of the original project but has since left the team. The BitShares X project received a lot of attention in August 2013 when it was covered by CoinDesk and subsequently announced to the the BitcoinTalk forums on August 22nd 2013 as a project announcement. The project generated a good amount of buzz around the proposal, though the original scope and timelines have since undergone modification.
Consensus is the mechanism by which organizations of people decide upon unitary rational action. While not considered technology in the traditional since, consensus “technology” is the basis of democratic governance and the coordination of free market activity first coined by Adam Smith as the “Invisible Hand.” The process of consensus decision-making allows for all participants to consent upon a resolution of action even if not the favored course of action for each individual participant. Bitcoin was the first system to integrate a fully decentralized consensus method with the modern technology of the internet and peer-to-peer networks in order to more efficiently facilitate the transfer of value through electronic communication. The proof-of-work structure that secures and maintains the Bitcoin network is one manner of organizing individuals who do not necessarily trust one another to act in the best interest of all participants of the network. The BitShares ecosystem employs Delegated Proof of Stake in order to find efficient solutions to distributed consensus decision making.
Distributed Autonomous Companies
Distributed Autonomous Companies (DAC) run without any human involvement under the control of an incorruptible set of business rules. (That’s why they must be distributed and autonomous.) These rules are implemented as publicly auditable open source software distributed across the computers of their stakeholders. You become a stakeholder by buying “stock” in the company or being paid in that stock to provide services for the company. This stock may entitle you to a share of its “profits”, participation in its growth, and/or a say in how it is run.
The BitShares platform itself is run and maintained by the BitShares community–an open consortium of individuals and organizations committed to providing universal access to the power of smart contracts.
Working together, this community has designed and developed the BitShares platform to include numerous innovative features which are not found elsewhere within the smart contract industry:
Price-Stable Cryptocurrencies - SmartCoins provide the freedom of cryptocurrency with the stability of the dollar
A SmartCoin is a cryptocurrency whose value is pegged to that of another
asset, such as the US Dollar or gold. SmartCoins always have 100% or
more of their value backed by the BitShares core currency, BTS, to which
they can be converted at any time at an exchange rate set by a
trustworthy price feed. In all but the most extreme market conditions,
SmartCoins are guaranteed to be worth at least their face value
(and perhaps more, in some circumstances). Like any other
cryptocurrency, SmartCoins are fungible, divisible, and free from any
Decentralized Asset Exchange - A fast and fluid trading platform
BitShares provides a high-performance decentralized exchange, with all
the features you would expect in a trading platform. It can handle the
trading volume of the NASDAQ, while settling orders the second you
submit them. With this kind of performance on a decentralized exchange,
who needs risky centralized exchanges?
Industrial Performance and Scalability - Graphene is capable of 100,000 TPS when we pay for the network to go with it
High performance blockchain technology is necessary for cryptocurrencies
and smart contract platforms to provide a viable alternative to
existing financial platforms. BitShares is designed from the ground up
to process more transactions every second than VISA and MasterCard
combined. With Delegated Proof of Stake, the BitShares network can
confirm transactions in an average of just 1 second, limited only by the
speed of light.
Dynamic Account Permissions - Management for the corporate environment
BitShares designs permissions around people, rather than around
cryptography, making it easy to use. Every account can be controlled by
any weighted combination of other accounts and private keys. This
creates a hierarchical structure that reflects how permissions are
organized in real life, and makes multi-user control over funds easier
than ever. Multi-user control is the single biggest contributor to
security, and, when used properly, it can virtually eliminate the risk
of theft due to hacking.
Recurring & Scheduled Payments - Flexible withdrawal permissions
BitShares is the first smart contract platform with built-in support for
recurring payments and subscription payments. This feature allows users
to authorize third parties to make withdrawals from their accounts
within certain limits. This is a convenient way to “set it and forget
it” for monthly bills and subscriptions.
Referral Rewards Program - Network growth through adoption rewards
BitShares has an advanced referral program built directly into its
software. Financial networks derive their value primarily from their
network effect: more people on the same network increases the value of
that network for everyone. BitShares capitalizes on this by rewarding
those who sign up new users, and does so in a fully transparent and
User-Issued Assets - Regulation-compatible cryptoasset issuance
The BitShares platform provides a feature known as "user-issued assets"
to help facilitate profitable business models for certain types of
services. The term refers to a type of custom token registered on the
platform, which users can hold and trade within certain restrictions.
The creator of such an asset publically names, describes, and
distributes its tokens, and can specify customized requirements, such as
an approved whitelist of accounts permitted to hold the tokens, or the
associated trading and transfer fees.
Stakeholder-Approved Project Funding - A self-sustaining funding model
BitShares is designed to be self funding and self-sustaining by giving
the stakeholders the power to direct where blockchain reserves are
spent. BitShares has a reserve pool of 1.2 billion BTS (about $8 million
dollars) that automatically grows as transaction fees are collected and
the share price rises. Each day, the blockchain is authorized to spend
up to 432,000 BTS (about $77,000 per month), which is enough to hire a
small team to maintain the network for years, even with no price
Transferable Named Accounts - Easy and secure transactions
Named accounts enable users to easily remember and communicate their
account information. We don't use IP addresses to browse the internet or
numbers to identify our email, so why shouldn't we have human-friendly
account names for our financial transactions?
Delegated Proof-of-Stake Consensus - A robust and flexible consensus protocol
Delegated Proof of Stake (DPOS) is the fastest, most efficient, most
decentralized, and most flexible consensus model available. DPOS
leverages the power of stakeholder approval voting to resolve consensus
issues in a fair and democratic way. All network parameters, from fee
schedules to block intervals and transaction sizes, can be tuned via
elected delegates. Deterministic selection of block producers allows
transactions to be confirmed in an average of just 1 second. Perhaps
most importantly, the consensus protocol is designed to protect all
participants against unwanted regulatory interference.
Delegated Proof of Stake
Delegated Proof of Stake (DPOS) is a new method of securing a crypto-currency’s network. DPOS attempts to solve the problems of both Bitcoin’s traditional Proof of Work system, and the Proof of Stake system of Peercoin and NXT. DPOS implements a layer of technological democracy to offset the negative effects of centralization.
Delegated proof of stake mitigates the potential negative impacts of centralization through the use of witnesses (formaly called delegates). A total of N witnesses sign the blocks and are voted on by those using the network with every transaction that gets made. By using a decentralized voting process, DPOS is by design more democratic than comparable systems. Rather than eliminating the need for trust all together, DPOS has safeguards in place the ensure that those trusted with signing blocks on behalf of the network are doing so correctly and without bias. Additionally, each block signed must have a verification that the block before it was signed by a trusted node. DPOS eliminates the need to wait until a certain number of untrusted nodes have verified a transaction before it can be confirmed.
This reduced need for confirmation produces an increase in speed of transaction times. By intentionally placing trust with the most trustworthy of potential block signers, as decided by the network, no artificial encumbrance need be imposed to slow down the block signing process. DPOS allows for many more transactions to be included in a block than either proof of work or proof of stake systems. DPOS technology allows cryptocurrency technology to transact at a level where it can compete with the centralized clearinghouses like Visa and Mastercard. Such clearinghouses administer the most popular forms of electronic payment systems in the world.
In a delegated proof of stake system centralization still occurs, but it is controlled. Unlike other methods of securing cryptocurrency networks, every client in a DPOS system has the ability to decide who is trusted rather than trust concentrating in the hands of those with the most resources. DPOS allows the network to reap some of the major advantages of centralization, while still maintaining some calculated measure of decentralization. This system is enforced by a fair election process where anyone could potentially become a delegated representative of the majority of users.
Rationale Behind DPOS
- Give shareholders a way to delegate their vote to a key (one that doesn’t control coins ‘so they can mine’)
- Maximize the dividends shareholders earn
- Minimize the amount paid to secure the network
- Maximize the performance of the network
- Minimize the cost of running the network (bandwidth, CPU, etc)
Shareholders are in Control
The fundamental feature of DPOS is that shareholders remain in control. If they remain in control then it is decentralized. As flawed as voting can be, when it comes to shared ownership of a company it is the only viable way. Fortunately if you do not like who is running the company you can sell and this market feedback causes shareholders to vote more rationally than citizens.
Every shareholder gets to vote for someone to sign blocks in their stead (a representative if you will). Anyone who can gain 1% or more of the votes can join the board. The representatives become a “board of directors” which take turns in a round-robin manner, signing blocks. If one of the directors misses their turn, clients will automatically switch their vote away from them. Eventually these directors will be voted off the board and someone else will join. Board members are paid a small token to make it worth their time ensuring uptime and an incentive to campaign. They also post a small bond equal to 100x the average pay they receive for producing a single block. To make a profit a director must have greater than 99% uptime.
Pooled Mining as Delegated Proof of Work
So how is this different than Bitcoin? With Bitcoin, users must pick a mining pool and each pool generally has 10% or more of the hash power. The operator of these pools is like a representative of the clients pointed at the pool. Bitcoin expects the users to switch pools to keep power from becoming too centralized, but collectively five major pools control the network and manual user intervention is expected if one of the pools is compromised. If a pool goes down then the block production rate slows proportionally until it comes back up. Which pool one mines with becomes a matter of politics.
Reasons to not randomly select representatives from all users
- High probability they are not online.
- Attackers would gain control proportional to their stake, without any peer review.
- Without any mining at all, the generation of a random number in a decentralized manner is impossible and thus an attacker could control the random number generation.
Assuming a fixed validation cost per transaction and a fixed fee per transaction, there is a limit to the amount of decentralization that can take place. Assuming the validation cost exactly equals the fee, a network is completely centralized and can only afford one validator. Assuming the fee is 100x the cost of validation, the network can support 100 validators.
Role of Delegates
- A witness is an authority that is allowed to produce and broadcast blocks.
- Producing a block consists of collecting transactions of the P2P network and signing it with the witness’ signing private key.
- A witness’ spot in the round is assigned randomly at the end of the previous block
How to become a delegate
Howto Become an Active Witness
How do I get “votes?”
- Persuade others to give upvotes to your witness
- When another user gives an upvote to your (and possibly other) delegates
- A user can give an upvote for more than one witness. As a result all upvoted witnesse get a vote
- Convince proxies (that vote on behalf of their followers) to vote for you
Why use only upvotes?
- Giving only upvotes, and allowing multiple votes per share, is called Approval Voting, and comes with several advantages over the old delegation voting.
- No downvotes are needed, which not only simplifies usability but also reduces code and complexity.
How are ‘votes’ counted?
Once every maintenance interval, all votes are recounted and the corresponding result takes effect.
Is there an anti-vote?
Not any more. After discovering emski’s attack the developers decided to use Approval Voting.
Disincentives for Attacks
- By choosing not to produce a block, a witness risks getting fired and they lose guaranteed profits in the future.
- A dishonest delegate would only fail to produce a block if they were sure to win something from it
- If a lottery only payed out 50% to a jackpot (giving the other 50% to charity) then the most this dishonest delegate could do is break even.
- Witnesses can’t sign invalid blocks as the block needs confirmation by the other witnesses as well
How many witnesses are securing the network
This is totally in the hands of the shareholders. If the majority votes for 50 witnesses, then 50 witnesses will be used. If the shareholders only vote for 20, so be it. The minimum possible witness count is 11.
Please see the registration tutorial if you are a new user.
BitShares (Core August 23rd, 2018 / GUI August 14th, 2018)
The latest official core client release can always be found on GitHub at this URL: https://github.com/bitshares/b...
The latest official GUI release can always be found on GitHub at this URL: https://github.com/bitshares/b...
Recommended System Requirements
- Windows 7+ or Mac OSX 10.8+
- Modern Internet Browser
Documentation is available at docs.bitshares.org.
Technical support is available in the community Technical Support subforum.
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