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A blockchain facilitates secure online transactions. A blockchain is a decentralized and distributed digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. Essentially, what this means is that all computers on the network hold a record of all transactions along the network – which means any fraudulent records “uploaded” to the network would be immediately nullified by the decentralized network. With no central point of failure, blockchain technology ensures that value is recorded with the utmost accuracy, as well as maintaining accessibility even through failures from individual points in the network.
BitBay utilizes decentralized and distributed ledgers to record transactions within the BitBay market client. The BitBay (BAY) currency can be used for many purposes – bartering, employment, the purchase of digital and physical assets – through this client. The advantages of the BitBay decentralized market over traditional online retailers are numerous – for one, the decentralization ensures that no untrustworthy parties are able to interfere with transactions. Say for example Amazon.com goes down – how will you check on your purchases? Cancel purchases? Decentralization greatly reduces the probability of such a scenario from occurring within the BitBay market.
In addition, the BitBay market client enables consumers who are normally unable to access certain markets or economies to engage in business as usual – there is no requirement of a bank account, license, identification, or the hassle of converting foreign currencies. This will enable the mass participation of users, quite literally around the globe, in the current global economy with ease.
BitBay utilizes smart contracts. Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that make a contractual clause unnecessary. Smart contracts often emulate the logic of contractual clauses. What this means is that through smart contract software and simplified templates for common transactional scenarios, BitBay users are enabled to perform a wide variety of business functions without the need for outside arbitration.
The method BitBay uses to ensure these smart contracts are complied to is a clever system called Double Deposit Escrow. Double deposit escrow enables the trustless transactions between two parties. In the simplest terms, one could describe this arbitration system as the “Mexican Standoff” of security. Both parties place a deposit on the transaction as required by the smart contract. Each party has a vested interest in ensuring the transaction goes as detailed by said contract – were either party to disagree with how the deal panned out, both deposits are lost. This, along with the in-client BitBay reputation system, removes the financial incentive to violate the terms of the agreed-upon smart contract. Through double deposit escrow, we remove the need for a middleman (or middlemen) that typically would resolve disputes between parties.
The final step in making BitBay as consumer-friendly as possible is removing the volatility of the currency the market utilizes, a problem that has plagued cryptocurrencies since inception. The rolling peg is intended to act as a soft peg, maintaining the value of the BitBay currency at a certain price point as determined by user (or algorithmic) vote. Stability will be ensured through freezing and unfreezing a certain portion of user tokens on the market, preventing them from being traded. While this will not fully impede the value of BAY from increasing (or decreasing), as a hard peg would, this freezing and unfreezing of coins available for trade will prevent dramatic and trade-impeding swings in the value of the BAY currency.