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Bitshares & Bitcoin 2.0
The blockchain as a platform and ecosystem
byManuel Lains
Christian Lains
Open Source Developers' ConferenceNordic 2015
Bitcoin & Satoshi's Vision
● Satoshi Nakamoto (2008): Bitcoin: A Peer-to-Peer Electronic Cash System
● «A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution»
● «Commerce on the Internet has come to rely [...] on third parties to process electronic payments»
● «What is needed is an electronic payment system based on cryptographic proof instead of trust allowing any two willing parties to transact directly with each other»
Bitcoin Facts
● Open Source code first released in 2009● Based on cryptography and P2P communication● Solution to Decentralized Consensus Problem● Coins created by «mining transactions»● Proof-Of-Work● Satoshi: 1 CPU, 1 vote● Now million dollar ASIC industry● 2013: 1 exaFLOPS, 8 times faster than top 500
supercomputers. But single-purpose.
Community Creativity
● Decentralized innovation● Namecoin (DNS)● Litecoin (Silver)● Peercoin (POS)● Dogecoin● 1000’s of cryptocurrencies● Web-based Coin Generators
The Cryptocurrency Revolution
● PCs and Internet decentralized computing and information
● Cryptocurrencies will decentralize Economy● Free communication of value● Channel your own resources● Liquid Economy● Empowering the Individual● Transparency & Accountability
Bitcoin 2.0
● BitShares (DPOS)● Ripple / Stellar (Quasi-decentralized)● NXT / Horizon (POS)● Mastercoin (Bitcoin)● Counterparty (Blockchain Agnostic)● Ethereum (Turing Complete)
Daniel Larimer's Vision
● Daniel Larimer, Genesis Post:
«My mission in life is to find free market solutions to secure life, liberty, and property for all.»
«If I am successful then society as we know it will operate on an entirely voluntary and therefore non-violent basis.»
«Governments will not be overthrown; they will become irrelevant.»
Innovating with a Mission
● Life: Own your identity– Extended identity (passport, ID)
– Sensitive information (medical info, card numbers)– Passwords (Google, Facebook)
● Property: Own the keys to your property– Shares, Assets, Funds
● Liberty: Transfer value freely without middlemen● Empowering the individual to be free and independent
Economic Drive
● Economic freedom– Freedom to express value
● Economic efficiency– Value flowing freely– Price discovery– Channeling of resources
● Creation of value– Freedom to create value
Creation of Value
● Decentralized Autonomous Company (DAC)– Service
– Expenses & income
– Shareholders
● Slot Machine Analogy● Benefits that apply to all DACs
– Open, fair, secure
– Fast, easy, programmable
Delegated Proof of Stake
● 101 Delegates: Variable by shareholder approval.
● Delegates are selected by shareholder vote (stake) instead of proof of work (mining)
● At any point in time, only one delegate is producing the current block
● Transactions processed in 10s or less● Can scale to 10,000 tps and beyond
DPOS 2
● DPOS funds itself: – Delegates
– Workers
– Projects
● DPOS is a platform– Open source
– Promotes «clones»
– Soon: Turing complete
Examples of DPOS DACs
● BitShares– Decentralized Exchange
● KeyID (.p2p)– Decentralized identity, messaging and DNS
● FollowMyVote– Transparent, incorruptible voting
● Play– Provably honest gambling
● PeerTracks– A new way to incentivize musicians
Why do we need exchanges?
● Buying Cryptocurrency● Cashing out to FIAT (USD, NOK, etc)● Trading FIAT:Crypto or Crypto:Crypto● Crypto:Crypto – Shapeshift.io● FIAT represents challenges
Problems with Centralized Exchanges
● Exchange Failures● Mt. Gox, Mintpal, Bter, Cryptorush
● Problems● Trust – Fraud and theft of funds● Security – Single point of failure● Transparency - Accountability, Insider Trading● Control – User not in control of funds
Decentralized Exchange
● Order book/Trading mechanism● Gateways
– Deposits & Withdrawals
● User-Issued Assets– IOUs– Trusted
● BitAssets– Assets secured by the blockchain– Trustless
BitShares
GoxBTC
BTC
GoxUSD
USD
BitBTC
BitUSD
BitGold
BitEUR
BTC
TrustedGateway
USD
TrustedGateway
Decentralized Exchange
User-Issued Assets
● Used by gateways into/out of Exchange● Represents FIAT currency or physical asset● Subject to Regulation
– Know Your Customer (KYC)
– Centralized Control by the issuer
● Plethora of Potential Usecases
BitAssets
● Intrinsic assets of the BitShares platform● Represents the value of a traditional or physical asset● Trustless, secured by the blockchain and DPOS● Delegates provide price feeds to the network● Established by two parties entering into a contract,
locking BitShares (BTS) as collateral.● Margin calls executed based on aggregated Price Feeds
– Results in high tolerance to price flucuations typically seen in cryptocurrency markets
BitAsset Creation - Example
● Bob wants to borrow BTS, to increase his exposure to the volatility of BitShares, Alice wants to buy BitUSD to have a stable crypto-value.
● They enter into a contract where Bob locks away 200% of what he wants to borrow, Alice locks away 100% of what she wants to buy, leaving us with 300% BTS in security.
● BitShares autonomously now issues 100% worth of BitUSD and gives it to Alice.
Benefits of Decentralized Exchange
● Specific Solutions– Trust (fraud & coercion)
– Security (theft & failure)– Transparency (accountability, insider trading)– Identity (privacy)
– Control (autonomy)
● General Improvements– Open, fair, secure
– Fast, easy, programmable
● Creating value while– Securing life, liberty and property for all
– Increasing economic freedom and efficiency
UIAs: A Powerful Idea
● Initial Public Offerings (IPOs)– Traditional
– Crowd-fund with equity
● Gift Cards / Fan Tokens● Token-Controlled Access
– Simple Authentication
– Complex Authentication
● Ownership tracking– Property
– Assets
PeerTracks
● Front End– Streaming, Download, Merchandize, ArtistCoin
● Back End– ArtistCoin/Token
● BaseBall Card – Token● Token-Controlled Access – VIP pass● Crowd-Fund with Equity – Stock
– Portal/GateWay IOU● Transparent Transactions / Accounting● Programmable functions
Benefits
● New Artists– Promote Undiscovered Talent
– Not Screwing over loyal fans (Oculus)
● Established Artists– Creative Marketing
– Independence
● Users– Free Streaming
– Talent Discovery
– Transparent Accountability
FollowMyVote
● Voting on the Blockchain● Voter anonymity● Follow My Vote● Transparent● Provably honest● Incorruptible
Unlimited Potential
● KeyID (Identity, Messaging, DNS)● BitShares Play (Gaming)● Opportunities for entrepreneurs
– BitShares is open source● https://github.com/BitShares/bitshares
– Forks are actively encouraged
– Become a delegate today!
About us
● BitSpace– Group focused on Bitcoin and Crypto 2.0
– We are looking for active collaborators
– Visit us at http://www.bitspace.no
● BitGate– Norwegian gateway to BitShares
– Start trading bitGold, bitBTC, bitUSD, UiAs
– Sign up for updates: http://www.bitgate.no