Checking Out Decentralized Exchanges… Bitshares (BTS)

I’ve finally gotten to the decentralized exchange that I imagine has to be the favorite Steemians, Bitshares. After all, the Steem and Bitshares blockchains are built on the same technology developed by Dan Larimer, Graphene.

My other posts on decentralized exchange plays include Komodo, Blocknet, Binance, decentralized exchange protocol Loopring, KyberNetwork, Project 0x and Waves.

Bitshares is an industrial-grade financial smart asset platform. It originally launched as ProtoShares (PTS) back in 2014 and was later renamed to Bitshares (BTS).

It’s build on Graphene which enables industrial performance and scalability. And what’s cool is the Graphene network can do up to 100,000 transactions per second. That’s more than Visa’s network which handles around 2,000 transactions per second and maxes out around 56,000. You can check out this link for the nuts and bolts of Graphene.

It uses delegated proof of stake (DPOS) for consensus. It’s a variation of Proof of Stake (PoS). Instead of coin holders processing transactions, the coin holders vote for delegates who are responsible for validating transactions and who can earn transaction fees.

Bitshares released Bitshares 2.0 in October 2015, making it a truly Decentralized Autonomous Corporation (DAC). In fact, Bitshares does not claim to be a cryptocurrency. Rather, when you purchase BTS you are purchasing equity in the Bitshares DAC. This is likely why Bittrex recently delisted BTS.

The DAC is operated by witnesses, committees, and workers.

The Bitshares Witnesses collect the tranactions, bundle them into a block, sign the block, and broadcast it to the blockchain.

The Bitshares Committee is a tool for on-chain consensus. Committee members can define their preferred parameters for the Bitshares blockchain. And those are subject to shareholder approval.

Bitshare Workers can make proposals for the development and improvement of the Bitshares DAC and blockchain and get paid from the reserve pool. To get funded a worker proposal needs to have a high shareholder approval ranking.

As a shareholder proxy voting is available. That’s where you delegate your votes to someone else.

Let’s take a look at the features of Bitshares.

Every operation in the Bitshares ecosystem has an individual fee that needs to be paid in BTS. The fees are variable and flexible and are defined by the committee members. Since Bitshares is a DAC and all of its operations have a fee, you can think of its features a products for the DAC.

The core product of Bitshares are market-pegged assets, also called BitAssets or SmartCoins. It’s a crypto-token that represents the value of the underlying asset. For example, BitUSD tracks the value of US doillar.

The peg is maintained through a contract for difference with BTS for collateral. That means a SmartCoin always has 100% of its value backed.

In addition to market-pegged assets Bitshares also allows for customizable assets, also known as user-issued assets (UIA).

Bitshares also features named accounts. These accounts can be registered to the blockchain. This means users no longer have to worry about long alphanumeric addresses associated with most other cryptocurrencies.

Then of course there’s the Bitshares decentralized exchange. When Bitshares 2.0 released OpenLedger became the default wallet and exchange for the Bitshares platform. (Just click on ‘Exchange’ on the OpenLedger home page to get to the exchange)

As you can see from the chart below the transaction volume in the Bitshares DEX has grown significantly over 2017.

You can look up the US dollar volume on the Bitshares exchange on coinmarketcap, last I looked it was roughly $600,000 for the day. That’s more than Waves, but a pittance compared to Binance, which does close to $100 million daily.

I think for Bitshares to ultimately be successful as a decentralized exchange it needs to have a user experience on the level of Bittrex or Binance. Make it look centralized, but keep it decentralized.

There’s a lot to like about Bitshares and at a market cap of $162 million it’s an undervalued coin. (Full disclosure I own some BTS)

What do you think of Bitshares?

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