BitShares is an open-source, public, blockchain-based, real-time financial platform. It provides a decentralized asset exchange – similar to NYSE but for cryptocurrencies and without the need to trust a central authority to handle all the funds – that facilitates trading using an international network of computers, in which anyone can take part. BitShares also provides a cryptocurrency token called "BTS", which can be transferred between accounts and is used to collect fees for network operations and as a collateral for loans. The platform was designed by Daniel Larimer, an American programmer and entrepreneur, and launched in July 2014. Since March 2016 the project has been a part of Microsoft Azure Blockchain as a Service package.
|Original author(s)||Daniel Larimer and Charles Hoskinson (Invictus Innovations Inc.)|
|Initial release||1.0 / 19 July 2014|
|Latest release||2.0.180202 / 2 February 2018|
|Code repository||BitShares on GitHub|
|Development status||Currently under development|
|Operating System||Full node available for Linux, Mac OSX & Microsoft Windows. Wallet available online.|
|Developer(s)||BitShares community within a decentralized autonomous corporation model|
|License||MIT License (open source)|
|Timestamping scheme||Delegated Proof-of-stake|
|Block time||3 sec|
|Circulating supply||2,608,450,000 (February 10, 2018)|
|Market cap||$671 million (February 10, 2018)|
On June 2, 2013, an entrepreneur named Dan Larimer discovered that a fiat/Bitcoin exchange that does not require fiat deposits could be created by using a token that is backed by another token on the same blockchain.
While discussing this concept with other crypto-enthusiasts on various Internet forums, he introduced his ideas to Charles Hoskinson, the later co-founder of Ethereum and Cardano, who helped to vet the idea and develop a business plan. Together they presented the plan to Li Xiaolai, a Chinese Bitcoin tycoon, who agreed to fund the development. On July 4, 2013, they founded a company named Invictus Innovations. A few months later, in October 2013, Hoskinson and Larimer presented the concept of BitShares at the Atlanta Bitcoin Conference.
Larimer aimed to create Bitshares X, a blockchain platform that derives its value from a built-in business – specifically a decentralized bank and exchange – instead of an Internet meme (e.g. Dogecoin) or some technical innovation (e.g Bitcoin, Ethereum). As he realized that the development would take time, he created BitShares PTS (also known as ProtoShares), a bitcoin clone whose tokens were planned to later be upgraded to Bitshares, so that the early backers could be involved with the project by way of mining and trading. The first PTS block was mined on November 5, 2013.
Invention of DPOS (Delegated Proof of Stake)Edit
A few weeks later, Daniel came to the conclusion that the concept of mining was flawed. He argued that it led to the network centralization in countries with cheap electricity and unfairly high entry requirements for participation, as mining on an average computer quickly became unprofitable.
A month after the release of ProtoShares, around December 1, 2013, he announced that his following projects instead of Proof of Work mining would utilize a Proof of Stake derivative, which, in his opinion, was a simple algorithm that could be used by anyone on their home computer.
On December 8, 2013 Larimer introduced a new consensus algorithm - Delegated Proof Of Stake (see below), upon which the BitShares platform was built and launched on July 19 of the same year.
On October 13, 2015 Bitshares had evolved to version 2.0 also known as Graphene.
Performance and scalabilityEdit
According to the developers, the platform is capable of processing 100,000 transactions per second (tps) and even more with minimal optimization. For comparison, VISA, one of the largest financial providers in the world, handles, on average, 2,000 tps with a maximum capacity of 24,000 tps.
Decentralized asset exchangeEdit
BitShares allows its users to trade on the built-in fully decentralized exchange (DEX). While traditional cryptocurrency exchanges rely on their own private servers to store, handle and control all the funds, they also have a history of theft (e.g. Mt. Gox), being hacked (e.g. Bitfinex), or closed down (e.g. BTC-e). The idea of a DEX is to have no access to its users' private keys, which are the cryptographic equivalent of a strong password to a regular Internet account, and to operate on a distributed computer network. This way traders remain in full control of their money and the trading platform itself is more resistant to attacks.
Dynamic account permissionsEdit
All accounts on the platform can be set up to be controlled by multiple different accounts, reflecting the hierarchy of permissions in real life organizations, where the funds could be controlled by several people. Such a hierarchical control over funds creates an environment that is less prone to theft or hacking.
Referral Rewards ProgramEdit
The blockchain has a built-in referral program which provides incentives to users who bring new people to the platform, as increasing the number of users strengthens the security of the whole network and raises its market value.
Users on BitShares are able to create their own custom tokens in order to, for example, promote their business or facilitate crowdfunding for a startup. These tokens can be traded or held by other users as a regular cryptocurrency. The issuer can decide on the token name, description, initial distribution, trading fees and more.
According to the developers, a "Smartcoin" is a token that has its value algorithmically adjusted to that of some asset, such as the US dollar, a precious metal or a share of a company. The value of Smartcoins on the BitShares platform is programmed to always be fully backed by its core currency, BTS. These tokens also provide the option to be automatically converted to BTS – "settled" – at any moment without the need to use an exchange.
Stakeholder-approved project fundingEdit
BitShares has its own reserve pool into which it collects the transaction fees. The funds from this pool can be spent on the improvement of the network and its maintenance. Any user can propose a project and ask for funding. The other users then vote to decide if the proposal gets approved. This model allows the platform to be self-sustaining and to rely less on external funding.
Delegated Proof of StakeEdit
Delegated Proof of Stake (DPOS) is a blockchain's consensus model. It utilizes a voting system to control the network parameters such as transaction fees, block intervals, the number of block-producing nodes and to decide which nodes it will be. This predetermined list of nodes allows for transaction confirmation times of, on average, one second.
The block-producing nodes are called "witnesses"; their job is to group the transactions that have been broadcast to the network into "blocks" and add them to the blockchain. The block production is performed in a round robin pattern so that every node gets to produce one block per round. Each witness is paid for every valid block it produces while failure to do so results in no payment and a possibility of being voted out as a malicious node. Every day the network updates the witness list in accordance with the user votes.
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