The network’s ultimate goal is to collect more from transaction fees than it spends through paying witnesses and workers. Delegates can adjust the transaction fees and referral commission rates to ensure that the network remains sustainable. By charging appropriate fees and distributing the income in an effective manner, BitShares-powered networks can grow, even while others struggle. Members pay fees similar to Bitcoin ($0.04 per transaction), while users pay fees similar to Dwolla ($0.20 per transaction) or centralized exchanges (0.2% of trade volume).
The flexible ultimate financial ecosystem
As a core payment and clearing system with an integrated digital asset exchange at heart, the platform allows for numberless financial services all of which are connected by one shared ledger.
Features like exchange, transfer, settlement, payment requests and digital asset creation are available through our application programming interface (API).
Plug & Play – The BitShares Blockchain for all kind of financial services
The BitShares Blockchain combines multiple financial service features on a distributed ledger, which can be used by everyone. Right from the beginning, the BitShares Blockchain has been tailored to the needs of the financial industry. On this level, it provides a peer-to-peer network where users can create tokens for various digital assets, transfer them and trade on the shared decentralized asset exchange.
Other than with traditional stock exchanges like NYSE however, there is no need to trust a central authority. Creation, transfer, trade and settlement are individual smart contracts automatically enforced by the blockchain.
BitShares’ core token BTS (bitshares) is traded as a native crypto currency. BTS are required to pay network fees and can be used as collateral for market pegged assets. The blockchain is charging BTS for all operations and executed smart contracts.
The BitShares Blockchain is the first Decentralized Autonomous Company (DAC). Pioneering the industry with the consensus algorithm “delegated proof of stake” (DPoS), BitShares Blockchain is governed directly by elected representatives. Everybody who holds BTS tokens can call their vote in the real-time BitShares Governance.
The Problem
With the digital revolution on its way, the global payment infrastructure appears to be outdated, slow, inefficient and expensive. As a centralized system, it does not scale to the new development in the field at all.
Traditional financial institutions run private and closed ledgers on disconnected servers in isolated data silos making data exchange, clearing and settlement of assets hard and time-consuming. In the meantime, further pressure is coming from the rapidly growing digital payment industry with a transaction volume of more than $3 trillion USD already.
The old payment infrastructure which was never designed for those dimensions is at the edge of collapse with customers waiting days for bank transfers and paying overpriced fees.
The Solution
This is where the BitShares Blockchain comes in. The blockchain is able to handle more than 3,300 transactions per second. It instantly connects banks, payment providers, digital asset exchanges and corporates over a shared peer-to-peer ledger, with instant transactions and superior fund traceability along the full payment life-cycle. All of this runs without friction and high fees.
Based on the Graphene technology and governed by the consensus algorithm delegated proof of stake (DPoS), the BitShares Blockchain stands for the next generation payment infrastructure.
Everyone can join this global payment network and offer a brand new frictionless experience to their clients. Like the email protocol, with the BitShares Blockchain you can develop unlimited financial services, all connected by a shared ledger – the BitShares Blockchain
Leveraging the latest blockchain technologies, the BitShares Blockchain has been particularly developed for the financial industry to serve as a new financial backbone for the digital economy.
The driving force behind the BitShares Blockchain
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.
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Blockchain Governance
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Blockchain Technology for Financial Services
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Financial Instruments
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The Platform
The driving force behind the BitShares Blockchain
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.
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Everyone is able to create and submit a worker proposal to the BitShares community to fund new development, marketing, promotions or other ideas. Once submitted to the BitShares Blockchain every BTS token holder can vote for the proposal. Enforced by smart contracts a worker smart contract specifies a start date, an end date, a daily pay rate of BTS, worker description, worker owner and a vesting period for the pay received. Each day, a budget of 399, 864 BTS is allocated to the approved workers. All active workers are automatically sorted by net vote approval and paid in turn until the daily budget runs out. In the case an active worker is losing the voting support of the BTS token holders, the worker will not receive any funding anymore. This will protect the working budget from bad actors and keep the working budget funds save. Each worker can specify a vesting period for funds received. This optional vesting period reassures stakeholders that a proposed worker has a long-term commitment, because it prevents the received funds from being sold immediately.
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Refund workers are a special worker type that return their pay to the working budget. These workers can be elected to prevent spending on other workers, which saves more funds in the reserve pool for future projects.
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 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
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The questions that must be answered by any consensus process include, but are not limited to:
1. Who should produce the next block of updates to apply to the database?
2. When should the next block be produced?
3. What transactions should be included in the block?
4. How are changes to the protocol applied?
5. How should competing transaction histories be resolved?
The goal is to find answers to these questions that ensure the consensus process is robust against an attacker who wishes to gain control over the network. In practice, gaining control means acquiring the ability to unilaterally censor transactions. The process should also be robust against an attacker wishing to take advantage of a temporary inconsistency in the database state on different computers. -
The term witness was chosen because it is a legally neutral word that is free from regulation. Traditional contracts often have a place for witnesses to sign. For extremely important contracts, a public notary is sometimes used. Neither witnesses nor notaries are party to the contract, but they serve a very important role of certifying that the contract was signed by the specified individuals at the specified time. In the BitShares Blockchain, witnesses serve a similar role of validating signatures and timestamping transactions by including them in blocks. They are also called Block producers and can be compared to Bitcoin miners, although no mining takes place at the BitShares Blockchain.
Under DPOS, the stakeholders can elect any number of witnesses to generate blocks. A block is a group of transactions which update the state of the database. Each BitShares account is allowed one vote per share per witness, a process known as approval voting. The top N witnesses by total approval are selected. The number (N) of witnesses is defined such that at least 50% of voting stakeholders believe there is sufficient decentralization. When stakeholders expresses their desired number of witnesses, they must also vote for at least that many witnesses. A stakeholder cannot vote for more decentralization than witnesses for which they actually cast votes.
Each time witnesses produce a block, they are paid for their services. Their pay rate is set by the stakeholders via their elected committee (to be discussed later). If a witness fails to produce a block, then they are not paid, and may be voted out in the future.
The slate of active witnesses is updated once every maintenance interval (1 day) when the votes are tallied. The witnesses are then shuffled, and each witness is given a turn to produce a block at a fixed schedule of one block every 3 seconds. After all witnesses have had a turn, they are shuffled again. If a witness does not produce a block in their time slot, then that time slot is skipped, and the next witness produces the next block.
Anyone can monitor network health by observing the witness participation rate. Historically, BitShares Blockchain has maintained 99% witness participation. Any time witness participation falls below a certain level, users of the network can allow more time for transactions to confirm, and be extra vigilant about their network connectivity. This property gives the BitShares Blockchain the unique advantage of being able to alert users of potential problems less than 1 minute after the trouble arises.
A fast and fluid trading platform- The BitShares Blockchain provides a build in high-performance decentralized exchange, with all the features you would expect in a trading platform.
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.
High performance blockchain technology is necessary for cryptocurrencies and smart contract platforms to provide a viable alternative to existing financial platforms.
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.
SmartCoins provide the freedom of cryptocurrency with the stability of the dollar
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.
Regulation-compatible digital assets issuance
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.
Exchange Backed Assets represent deposit receipts that are issued by a centralized entity, such as exchanges, banks or other institutes. These can either be interpreted as I owe you (IOUs) or certificates for a deposit at that institute.
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.
Price-stable cryptocurrencies (aka SmartCoins) were the inspiration for BitShares Blockchain.
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.
Feed backed assets allow to propose and fund market based innovation by sharing a cut of future profits generated by this particular innovation with the people that helped fund it.
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 is a specialization of MPA where there is no need for margin calls or forced settlement because all positions are fully collateralized at any price.
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.
Network growth through adoption rewards
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.
Management for the corporate environment
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.
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?
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.
Flexible withdrawal permissions
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.
BitShares Blockchain: thoroughly democratic and autonomous
With the BitShares Blockchain, the users lead the way. As a decentralized system using the delegated proof of stake (DPoS) consensus model, the blockchain allows every shareholder to participate or delegate with his votes in real-time governance events. This way, the network users ultimately decide on the future.
The approach of this stake rated direct democracy is based on the idea that every user should be able to propose and vote on the key parameters of the system and adjust the platform according to the latest needs – every day and around the clock.
Apart from workers, primarily witnesses and the committee, the board of directors, are to be elected. In order to make the process easier a proxy can be chosen who will vote on behalf of a user. Proxy voting enables instant reactions to immediate business concerns.
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Everyone holding BTS (bitshares) is entitled to vote, either directly or through a proxy, which is a community representative votes can be delegated to.
1 BTS = 1 vote. All votes are collected via smart contracts, they are fraud proof and recorded in real-time. The BitShares Blockchain presents one of the first full transparent blockchain ecosystems with a people driven governance.
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The BitShares governance allows users to elect the following parties, either directly or through a proxy:
Committee: Unpaid members of the community who maintain the key parameters of the BitShares Blockchain
Witnesses: Paid block producers who create new blocks and validate the Blockchain
Workers: They propose work for the network which can vote whether the proposal will be accepted or not. Once approved, they get paid from the BitShares Blockchain working budget.
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All charged network fees are collected and pooled into the working budget smart contract. The working budget holds approx. 1/3 of all available BTS tokens. Its funds are used to pay witnesses for their services and to fund approved worker proposals. In case one or the other looses voting support from the BitShares shareholders, the working budget will stop payments. As a result, every voter has the power to manage spendings at all time.
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The BitShares Blockchain offers predictable governance allowing the ecosystem to adjust to world events and market demands.
Users can vote on all kinds of aspects, be it new products, lower platform fees or a higher community consensus over a project, just to name a few.
All shareholders receive real power over corporates interest by allocating their savings to those who support their beliefs and political agenda.
Each and every user can directly influence expenses as well as fund projects that help grow the platform, instead of wasting money on unnecessary activities.
Direct blockchain governance with outstanding benefits
Lightning Fast
With a minimum of 3,300 transactions per second settled in less than 3 seconds around the world, trade and settlement merge into one instant action.
Scalable
The BitShares Blockchain can consistently handle 3,300 transactions per second, which is far more power than VISA™ and Mastercard™ combined will ever need.
Distributed
Based on open-source technology and built on the best principles of blockchain, BitShares is a strong growing community.
Stable
BitShares’ three-year track record of stable technology and solid governance makes it ready for institutional and enterprise use.
Innovative
With the BitShares Blockchain anything can be created, transferred or traded. Besides blockchain enforced derivatives, bonds, shares, exchange traded funds and others.
Tokens
The BitShares Blockchain has 6 unique digital assets classes (tokens). 1. Market pegged assets (MPA - Smartcoins) 2. User issued assets (UIA) 3. Exchange backed assets (EBA - Bitcoin on Poloniex) 4. Feedbacked assets (FBA) 5. Privatized Bitassets 6. Prediction market assets