Bitshares & Bitcoin 2.0

The blockchain as a platform and ecosystem

byManuel Lains

Christian Lains

Open Source Developers' ConferenceNordic 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 BeyondSatoshi Nakamoto 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– Decentralized Exchange

● KeyID (.p2p)– Decentralized identity, messaging and DNS

● FollowMyVote– Transparent, incorruptible voting

● Play– Provably honest gambling

● PeerTracks– A new way to incentivize musicians

Decentralized Exchange

USDbit

CNYbitEURbit

GOLDbitSILVERbit

BTCbit

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

Mt.Gox

Order Book

BTC GoxUSD USD

Centralized Exchange

GoxBTC

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 Alice

Contract

$2 $1

1 BitUSD

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!