The flexible ultimate financial ecosystem

The BitShares Blockchain is powered by the Graphene framework, an open source blockchain implementation which also powers the Steem and EOS blockchains. The Blockchain is using the delegated proof of stake (DPoS) consensus model.

Since the BitShares Blockchain is a decentralized Autonomous Company (DAC), there is no single entity running this Blockchain. The platform is operated and maintained by the BitShares community – an open consortium of individuals and organizations committed to grow the platform and develop new features and services.

Working together, this community has designed and developed the BitShares Blockchain to include numerous innovative features which are not found elsewhere within the blockchain and financial industry.

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 committee members. 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. The BitShares Blockchain is first and foremost a globally distributed database that is used as a ledger to track ownership of digital assets. All updates to the ledger must be validated and applied in the proper order to allow the database to remain consistent and universally agreed upon. Reaching a consensus about the order in which updates should be applied is the purpose of Delegated Proof of Stake (DPOS).

DPOS consist of the following parties:

• Witnesses – Block producers
• Committee – Board of directors
• BTS Token holders
• Proxy – representatives of Token holders

It can handle the trading volume of the NYSE, while settling orders the second you submit them. Throughout history, centralized exchanges have repeatedly proven unreliable and untrustworthy. Whether it is MF Global, Mt. Gox, or BitStamp, many people have been cheated because they allowed a 3rd party to hold their funds. It doesn’t matter how big they are, or how many auditors, regulators or insurers are involved, every kind of fraud, abuse, and theft can occur. In the modern financial system, these transgressions happen all too frequently within centralized banks and exchanges operating across the world. It is time for a change.

The BitShares Blockchain is designed from the ground up to process more transactions every second than VISA and MasterCard combined. With Delegated Proof of Stake, the BitShares Blockchain can confirm transactions in an average of just 1 second, limited only by the speed of light.

Overview

To achieve this industry-leading performance, the BitShares Blockchain has borrowed lessons learned from the LMAX Exchange, which is able to process 6 million transactions per second. Among these lessons are the following key points:

Keep everything in memory.
Keep the core business logic in a single thread.
Keep cryptographic operations (hashes and signatures) out of the core business logic.
Divide validation into state-dependent and state-independent checks.
Use an object oriented data model.

By following these simple rules, the BitShares Blockchain is able to process up to 100,000 transactions per second without any significant effort devoted to optimization. Future optimizations are expected to bring the performance of the BitShares Blockchain to levels similar to LMAX.

It should be noted that the performance achieved by the BitShares Blockchain is highly dependent upon having a compatible transaction protocol. It would not be possible to achieve the same level of performance in a protocol where the Core Business Logic is run in a virtual machine that performs cryptographic operations and references all objects with hash identifiers. Blockchains are inherently single-threaded, and the performance of a single core of a CPU is the most limited and least scalable resource of all. The BitShares Blockchain is designed to get the most out of this single thread of execution.

A market pegged asset (MPA) aka 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 restrictions.

The BitShares Blockchain provides a feature known as “user-issued assets“ (UIA) 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.

The BitShares Blockchain allows individuals and companies to issue their own tokens for anything they can imagine. Common use cases include:
Deposit Receipts
1. Know Your Customer
2. Asset Seizing
3. Market Restriction
4. Transfer Restrictions
Company Shares
Event Tickets
Rewards Points
Individual or Corporate Debt
Crowd Funding
Digital Property
Privatized SmartCoins (Stable Cryptocurrencies)
Information/Prediction Markets
How to Profit by Issuing an Asset
Fee Pools

The potential use cases for user-issued assets are innumerable, and the regulations that apply to each kind of token vary widely, and are often different in every jurisdiction. The BitShares Blockchain provides the tools to allow issuers to remain compliant with all applicable regulations when issuing assets.

From the Blockchain perspective, EBA are equivalent to a User Issued Assets (UIA) that is created and issued by an exchange, bank or financial institute. You usually receive those kind of assets when you deposit USD or BTC at a exchange. The exchange will issue you a GatewayUSD, GatewayBTC on their ledger. Then you will be able to trade with these EBA on their exchange. Hence, it is their responsibility to credit you with the corresponding blockchain token (the EBA) on deposits.

Now, users can create their own price-stable assets with custom parameters
designed to track the value of any asset they can imagine. The benefit of price-stable cryptocurrencies is that they are fully collateralized, and the issuer only needs to be trusted to appoint an honest set of independent (non-collusive) feed producers. Unlike deposit receipts, the value of a Privatized MPA is secured even if the issuer disappears.

The BitShares Blockchain provides many parameters that an issuer may tune. In addition to account whitelists, market restrictions, and transfer restrictions, the issuer of a private MPA has control over:

• Collateral Type
• Initial Collateral Rate
• Maintenance Collateral Rate
• Forced Settlement Fee, Delay, and Daily Volume
• Price Feed Update Rate
• Global Forced Settlement

With these tools it is possible to implement a true collateralized loan.
Arbitrary financial indexes can be used for the price feed to mimic all manner of exotic assets.

Think of it as a Kickstarter for features. Hence, if people can profit from successful features in the form of fees then it can help the BitShares ecosystem to become more adaptable over time as it promotes innovation and can pay for its development.

A prediction market has a price between 0 and 1 and the issuer settles all positions after the event occurs and the final price is known. These prediction markets can be very secure if the issuer is a multi-sig account with many independent and trustworthy parties involved.

The BitShares Blockchain 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. The BitShares Blockchain capitalizes on this by rewarding those who sign up new users, and does so in a fully transparent and automated way.

The BitShares Blockchain 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.

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?

Every BitShares account is assigned a globally unique name that can be selected by its creator. There are many potential uses for account names beyond simply being an alias to a set of dynamic account permissions. They can be used as user logins or mapped to domain names. These names are transferable, which means that they are valuable in their own right.

The BitShares blockchain defines a simple algorithm to determine the fee it charges to reserve a new account name. Names that contain a number, are longer than 8 characters, or contain no vowels are essentially free. Otherwise the name is priced according to its length.Delegates can propose a different fee for each length which gives the BitShares Blockchain the power to adapt to market demands.

Transferring Names

Accounts can be transferred by updating the permissions used to control the account. However, the semantics of transferring an account are slightly different in the context of a web-of-trust. Users need a means to update their keys for security purposes while maintaining their standing in the web-of-trust. In other words, users must be given a way to explicitly transfer an account name to a new user while breaking any liability for how the account is used in the future.
When users transfer an account name to another user, they use a special transaction that clears all of the links in the web-of-trust. Both the buyer and the seller are protected by this fact, because simply updating the key that controls a named account does not signify a legal change in ownership.

The BitShares Blockchain 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.