Reading the BitShares Whitepaper
For a few weeks now, I've been learning about what BitShares is, how it works, and why it's important. It started with my altcoin investment story which began with Steemit, then PIVX (which has so far done amazingly well), and then BitShares. I did a post about the BitShares DEX and how you can short the USD by borrowing bitUSD into existence and then purchasing cryptocurrency with it. A few days ago I asked some newbie questions about BitShares and tonight I finally got around to reading the whole whitepaper.
View the BitShares White Paper Here
Sometimes learning new stuff can be a bit overwhelming. More than a couple times, I felt a bit like the young Joe Miller, drinking from the fire hose.
Hopefully you've seen the movie UHF. If not, it might be difficult for us to be friends. That said, my wife @corinnestokes hasn't even seen it and would probably hate it. Heheh.
I really did enjoy reading and listening to the white paper (I have my mac dictate to me with text-to-speech at full speed while I read). This was probably my favorite part:
The traditional banking system has long practiced what is called fractional reserve banking, but in many cases the more appropriate term is “fictional” reserve banking. In the BitShares ecosystem, however, we demand at least 100% reserves.
"fictional" indeed.
Most people don't realize how fiat currency works or how banks create money out of nothing with almost no collateral backing it. They don't realize how shaky the entire system is and how little it would take to cause major problems. 2008 was a serious warning, and we've mostly ignored it.
I like how the white paper ends with hope:
...We have described the foundations of the BitShares network, which we hope will soon begin to inspire a paradigm shift from classical banking towards peer-to-peer financing. We have laid out the many features and benefits of the BitShares Decentralized Exchange, which offers financial instruments for anyone to utilize with low barriers to entry.
What would the world look like if each individual controlled their own store of value? What if those with guns and a monopoly on the use of violent force within a geographic region couldn't take that value away? What if the banksters, fraudsters, and speculators who lie, cheat, and gamble with other peoples' money found the supply of value being entrusted to them dwindle away?
We as individuals and as business owners have tools available right now to take back control from governments and crony corporatists. The BitShares protocol is a great example of what's possible.
I'm sincerely thankful for Dan, Fabian (@xeroc), and others for building it, and I hope ongoing development and marketing will continue, even if the original creators are now focused on other things. I hope more people will benefit from decentralized exchanges as part of their own private wallets on a platform which is secure and maintained by trusted witnesses.
I don't know if BitShares will be passed by as other platform as a service protocols gain funding and attention, but I think there's something special here. I hope it grows and more people get involved who can really show off the power of this system and continue working with the developers to improve the user experience.
If I can be helpful, please let me know. Though I'm still a newbie, I'm learning what I can and will answer questions as best I can or seek out those who do have the answers.
The future is decentralized.
The future is freedom.
Helpful Links:
Every single conceivable financial or other system is bound to have shortcomings and problems at several levels. What would make a system easy to bootstrap and grow, would on the other hand make it prone to instability. Bitshares has not made that trade-off. So it is growing slowly. Cryptocurrencies could be made with different parameters, like minimun collateral, to overcome some of the shortcomings, but they would introduce other trade-offs in return. In the long run it would make little difference. People learn the rules of the system anyway, and game it. What is significant is that Bitshares is proven to work - it has been stable since genesis, and it can also adapt to changing conditions. It serves as a platform where people and companies can build value.
It has had other problems in the past too, like agreeing to fund anything, and will have them in the future too. But the system seems to work as designed, and problems have been overcome. Decentralized governance is working. There is no central authority, and people still come to consensus. The market mechanisms are working too. So I think there is no stopping Bitshares anymore. The problems of the future will be overcome like the ones before. It is not just empty promises, but a proven system. The future is here :-)
Bitshares doesn't appeal to a consumer in the way some more simple cryptocurrencies do. But if you think about which one to build a business on top of, Bitshares is probably the most appealing one. That, I think, will help one understand the price development of BTS over the last couple of years. Once the initial appeal wore off, the price stabilised against Fiat's. Meanwhile, businesses were building products on top of it, and once they start revealing the products, Bitshares will become appealing again.
Some people - probably the more intelligent ones - are able to see the real value in all the seeming complexity, and they will be handsomely payed off one day. They are the ones who read white papers. They don't bandwagon or panic. Luckily there is still lots of time to join the community before the rocket takes off. Things just don't develop so quickly.
Thank you, Idealist, for this great comment.
What are some examples? I get confused a bit when talking about the underlying technology (graphene) verses BitShares itself. Steemit, Peerplays, etc are separate from BitShares, though they may use the underlying technology, right?
That sounds nice to me. I also like the idea that I'll be included in the "more intelligent ones" category. That said, it's possible other systems which have the same functionality but less complexity, or, to be more precise, hide the complexity from the user experience of accomplishing a desired task, could surpass BitShares. Time will tell, I guess.
You have inspired me to make Bitshares the next cryptocurrency I investigate. Thanks for the inspiration
Very cool! Thanks for letting me know. :)