Decentralized Financial Platform

Bitshares, Everything On A Decentralized Financial Platform

Bitshares, Everything On A Decentralized Financial Platform

Decentralized Financial Platform

Bitshares is a blockchain-based, decentralized financial platform built with a plethora of services. It comes with a decentralized exchange and allows the establishment of Distributed Autonomous Companies. Dan Larimer and Charles Hoskinson founded Bitshares in 2014 with funding from the BitFund.PE venture capital firm. Hoskinson was later involved with the creation of Ethereum and Cardano. Larimer has also since then co-founded Graphene powered Steemit. Bitshares, just like Steemit, is Graphene powered.

Bitshares derives one of its strengths from implementing the Graphene blockchain protocol. Test results show that its platform is able to handle 100,000 transactions per second. This is a huge achievement considering the fact that other blockchains with adoption are grappling with processing the many transactions on their network at reasonable speeds.

Decentralized Autonomous Company (DAC)

At the center of the decentralized financial platform are decentralized autonomous companies (DACs). Bitshares, with DACs, aims to leverage blockchain technology to effect changes in how companies are run. This change is similar to how Bitcoin changed money by taking it out of the control of central authorities. DACs are a radical shift from the traditional way of running companies to a more decentralized, open and truly global process.

A Distributed Autonomous Company is one that is operated based on a set of business rules without the hand of humans in control. The set of rules are considered incorruptible, because they are coded into open-source software that is distributed globally, across various computers of members of the company. This way, a company and its rules are protected from any tyrannical control by any one entity.

The Bitshares Decentralized Exchange

Like all decentralized exchanges (DEX), the Bitshares DEX enables users to directly trade assets, without having to trust a centralized authority to hold funds. Trading on the Bitshares DEX is not limited to only crypto assets. According to the official Bitshares webpage, the DEX is “asset agnostic”. Tradable assets range form GOLD to USD to many cryptocurrencies.

The Bitshares DEX does not only offer advantages over centralized exchanges. Its development team claims their DEX is faster than other decentralized exchanges, because trades on the Bitshares DEX occur in real-time.

Another edge the Bitshares DEX has over others is its provable order matching algorithm. With this algorithm, users can be sure their orders match in the right way. This adds even more fairness to the decentralized system.

There are also Smartcoins on the DEX. Smartcoins are basically digital tokens on the DEX that are worth the value of their underlying asset. For instance, the Smartcoin bitUSD is worth the value of the USD. Each Smartcoin is backed by locked-up shares of Bitshares (BTS). Withdrawals come out of those locked up funds when done.

Delegated Proof-of-Stake for Consensus

There are many interesting ways through which many blockchain projects achieve consensus on their networks. Each project lays out reasons for choosing their preferred system and also state advantages derived from it. Bitshares skirts the more popular Proof-of-Work and Proof-of-Stake consensus mechanisms. Instead, the Delegated Proof of Stake (DPOS) is used on the Bitshares networks.

With DPoS, witnesses or delegates are responsible for signing blocks. Users on the network, in turn, vote on the witnesses every time they make transactions. This system drops some points with regards to decentralization, but scores high on being democratic.

Delegated proof-of-stake also compromises a little when it comes to doing away with trust but makes up for the compromise. First, there are measures in place to ensure the nodes or delegates entrusted with the task of signing blocks are being honest. Besides this, every signed block is verified to have followed a block signed by a trusted node.

An argument for delegated proof-of-stake is that it results in faster confirmation times and transactions. This is because transactions are confirmed once a number of trusted nodes give the nod. Other untrusted nodes do not have to be waited on to have transactions confirmed.

Price Suppression?

On CoinMarketCap.com, the price of Bitshares, at the time of writing, stands at $0.118364. Its $309,069,710 market cap makes it 38th on the list of cryptocurrency-platforms. There have been better days. Bitshares’ long-term performance, in terms of price, is not one that would impress a cryptocurrency investor. The roughly 11% increase in price over almost 4 years seems ordinary when comparing with other cryptocurrencies. Surely, there must be a reason for this. A decentralized financial platform with years of existence and proven useful technology making ordinary long-term gains in this market is surprising.

One possible reason for the relatively low price levels of Bitshares could be efforts to cripple it by other exchanges on which it is listed. Sentiments shared by community members suggest that the said centralized exchanges would naturally not want the token of a decentralized exchange to do well on their exchange. Bittrex surprised many in October 2017 by announcing they would delist Bitshares (BTS). According to some members of the Bitshares subreddit, the reasons that came out did not warrant delisting of a top volume currency. There have also been accusations leveled against Poloniex for suppressing BTS price. It was noticed that wallets on the exchange were often disabled when BTS was on a bull run.

Current and Upcoming Developments on the Decentralized Financial Platform

Based on a 27 February update on the state of the Bitshares platform, the network had seen growth in various ways. Notably, the number of wallets on the network had grown by 28,877 within a week. There had been a steady increase in the number of Smartcoins issued over the past year and the number of accounts holding Bitshares of exchanges was on a 17-week continuous rise.

Another new development is the upcoming Bitshares-based game known as BITFARM. It would be interesting to see the effect this would have on the platform.  We don’t expect the network to be clogged, since Bitshares has been proven to be capable of handling way more transactions than major blockchains can currently process per second. Btishares would, however, benefit from the CryptoKitties kind of hype.

As a decentralized financial platform, Bitshares is doing different things and doing them well. Due to this, we can expect adoption and patronage of the network to increase with time. Bitshares should be standing strong with other top cryptocurrency platforms in the years to come.

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