There has been a lot of talk about what Bitshares is in the Telegram chat room. I took on the task to see what I could come up with and I ran into an blog article that Dan Larimer posted on December 18th, 2014 with the title "What is Bitshares?". Impressed by the content of the article, I took the liberty to summarize more or less what he wrote and changed a few things around. Please help improve on it by posting your comments and let's see what we can all come up with. Without further ado, here is what I have so far:
1. Bitshares is a software that Runs a Multi-user Database Across the Internet.
2. Bitshares is a Network — A network of computers owned by individuals around the world. These computers run the Bitshares software and keep their databases synchronized according to the rules defined by the software. Each computer on the network maintains a full copy of the database which means no one can change or shutdown its public record.
3. Bitshares is a Ledger — A ledger is a database containing account balances and transfers among them. It is used by banks, companies, and organizations that deal in financial matters to track who owns what. The BitShares ledger is very robust because it is built on a highly distributed (decentralized) network, that is fully transparent, and secured by the latest cryptography. Bitshares’ ledger is without equal in the real world today. Ledgers based upon paper can be lost, stolen, modified, burned, or miscalculated. Digital ledgers managed by software such as Quick Books or Quicken are centrally managed, can be updated, changed, back dated, corrupted or otherwise misused. Advanced ledgers in use by our banking system are still subject to human error, lack transparency, are only backed up a hand full of places and often are internally inconsistent. The BitShares ledger changes the game by providing a badly needed advancement in accountability.
4. Bitshares is a Company — Companies are merely a ledger tracking joint ownership in a common venture. Companies issue stock which is nothing more than a ledger entry tracking what percent of the company everyone owns. Companies are managed by a board of directors which is elected by the shareholders, the votes of which are logged in the company’s ledger. Companies have a business model that hopes to earn profit for the shareholders and they maintain detailed records of all business transactions which, in theory, can be audited by the shareholders to ensure management isn’t embezzling money.
In the case of BitShares, the database tracks ownership of shares known as BTS. Each share can vote for witnesses, the top witnesses by vote become responsible for running the software and maintaining the network as well as performing other tasks for which the shareholders pay them. BitShares is a company in the business of processing transactions for a small fee and the profits from this business are shared with the shareholders via stock buybacks.
5. Bitshares is a Decentralized Exchange — The New York Stock exchange is a company that maintains a ledger to track ownership of stock and debt issued by other companies. It earns money from transaction fees and has its own stock as well. Like the New York Stock exchange, BitShares allows people to issue their stock or debt to be tracked and traded on its distributed ledger.
6. Bitshares is a Bank — Banks are companies that maintain a ledger to track debt collateralized by other assets such as housing. This debt is the money used around the world, denominated in dollars, euros, yuan, etc. Banks earn income by charging interest to the borrowers and attract capital by paying interest to depositors. BitShares creates dollar denominated debt collateralized by BTS. This dollar denominated debt is a BitAsset known as BitUSD. BitShares supports any number of BitAssets including BitGold, BitSilver, BitOil, etc. Whereas normal banks practice the unsustainable business of fractional reserve banking, BitShares uses at least 200% reserve and is often over 300% reserve. Whereas normal banks use illiquid assets to back (collateralize) debt payable on demand, BitShares uses highly liquid BTS as collateral. Whereas normal banks are bailed out by tax payers, BitShares depositors have direct claim on the collateral. Overall BitShares is better banking.
7. BitShares is a Currency — Anything can be used as money in the right circumstances. Gold, silver, giant stones, paper, debt, and cigarettes have all been used as money. The rich and powerful have often used bearer shares (paper stock certificates) as a form of money. In the case of BitShares there are many different assets that can be used as money including BTS, BitUSD, BitGold, and BitSilver. All of these assets have the property of being fungible, divisible, transportable, and impossible to counterfeit.
I have previously said that the best money is like a Flux Capacitor. It can move value through time and space as quickly as possible with minimal loss. Gold is great at moving value through time, as demonstrated by the fact that gold mined 1000 years ago is still worth something today. Fiat currencies produced by governments have a shelf life of less than 100 years, during which they slowly lose all of their value. Unfortunately, gold and paper money are not very efficient at moving value through space. Physically moving boxes of gold or hundred dollar bills long distances or across borders is very time consuming and expensive.
Bank deposits are very efficient at moving value through space via wire transfers, but they are still expensive and relatively slow (days). Bank deposits can also lose all of their value far more often than paper dollars because banks regularly go bankrupt.
With BitShares and BitGold, you get many properties of gold (such as price stability and freedom from counter-party risk), as well as the benefits of bank deposits (you can transfer millions of dollars worth of BitGold to the other side of the world in seconds).
Whether you use BitShares (BTS) as virtual bearer shares, BitGold as a 300% collateralized virtual gold deposit, or BitUSD as an alternative to fractional reserve bank deposits, BitShares provides the best money/currency in the world.
8. Bitshares is a Community —A piece of software powering a distributed network is worthless without people coming together to give value to the BTS on the ledger entries. Each and every person that joins the BitShares community adds value to the ledger and gains value from the fellow community members. All things start small with just a few people. Over the past year and a half, BitShares has grown from an idea to a global community with thousands of people.
Communities are brought together around common values and principles. They support each other through thick and thin. As the founder of BitShares, this community is largely brought together by the principles I espouse on this blog: Creating decentralized, market-based solutions to secure life, liberty, and property for all.
9. Bitshares is a Country — Countries are what communities become when they become large enough and powerful enough. Countries are sovereign and issue their own currency. Countries are run by elected governments, usually with some kind of senate or parliament like BitShares’ witnesses. While we have a long way to go, it is my vision to grow BitShares to the point where the ecosystem is able to make governments irrelevant to our daily lives. This means all dispute resolution and law enforcement will be managed by the BitShares community in an entirely non-violent manner by leveraging smart contracts, bonds, insurance, and other systems on the BitShares ledger. BitShares is a small town on global scale.
