Bitshares & Bitcoin 2.0 The blockchain as a platform and ecosystem by Manuel Lains Christian Lains Open Source Developers' Conference Nordic 2015 Bitcoin and Beyond 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 and Satoshi Nakamoto Beyond Creator of Bitcoin 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. Bitcoin Network Hash Rate 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 Constraints on building DACs ● Shareholder influence ● Economies of scale ● Cost of decentralization 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 – ● KeyID (.p2p) – ● Transparent, incorruptible voting Play – ● Decentralized identity, messaging and DNS FollowMyVote – ● Decentralized Exchange Provably honest gambling PeerTracks – A new way to incentivize musicians Decentralized Exchange bitUSD bitEUR bitCNY bitBTC bitGOLD bitSILVER 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 Centralized Exchange Mt.Gox Order Book BTC GoxBTC GoxUSD USD 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 Decentralized Exchange BitShares BTC BitEUR Trusted Gateway USD BitUSD GoxBTC GoxUSD Trusted Gateway BitBTC BitGold BTC USD 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 Contract BOB $2 $1 1 BitUSD Alice 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 User Issued Assets 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 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 Questions!