Committee members are responsible for adjusting the fee schedule of transactions to ensure they remain at a low level as the price of BTS rises. To be elected, the protocol calculates the difference between up and down votes for each Committee Member. (Similar to Reddit post voting) Then, the median of top rated users will become Committee Members.
Code acts as a channel to submit proposals, contribute value and earn BitShares
You can set up a “worker”, a specific BTS account, to propose work for the BitShares network. You would include a scope of work, start/end dates and your pay rate which would be sent to the network of BTS token holders. They receive and vote on the proposal which can be accepted or rejected by the network. A counteroffer (like with requested pay rate) can also be issued back to the initial user proposing.
BitShares shares network fees among members
BitShares offers membership subscriptions which provide a “lifetime” membership of reduced fees for using the BitShares rails. In addition, there is a referral program for members that is one level deep which allows them to receive reduced fees and a percentage of the fees that are paid by those they refer.
Problems and Risks
Sounds great, but what about the downfalls? There’s always something…
The collateral risk of a “black swan event” (sudden crash in value)
Market pegged assets track the price of real assets through a crypto derivative that’s backed by collateral with established market value. Ultimately all bitAssets are denominated and collateralized by BitShares (BTS). This token is not immune from price action including drastic drops in value.
Although there’s a built-in construct to trigger margin calls (selling out positions to cover original principal), it’s isn’t foolproof. The biggest risk is the value drops too quickly and collateral can no longer purchase the asset. Sort of like if a home drops in value below the total loan due to a market downturn.
While the total market capitalization of Cryptocurrency has overwhelmingly increased exponentially to date, that has not been without a long bumpy ride. This Black Swan event would greatly erode confidence in the system and disrupt the ability to conduct a safe transaction (such as a loan), especially on a large scale.
People and businesses (banks even more so) are sensitive about their money so it must work flawlessly. This is still all very experimental technology, which is probably scary for “big money people”.
Bittrex de-listing caught the market and community off guard causing massive FUD
Ah FUD (Fear, Uncertainty and Doubt), the community’s favorite word. This is when people create a barrage of negative messaging about a coin (or anything really). Markets are very sensitive to FUD (especially smaller market caps) and can drop significantly as a result.
For unknown reasons not specified by Bittrex, BitShares was scheduled to be delisted from their exchange on October 13th, 2017. (But it still hasn’t) Some say it’s because the BitShares DEX competes as a decentralized exchange. Others calling it FUD to drive the price down. Then it was that their nodes were “too big” to run.
The above is unverified conjecture. All we know is, Bittrex said they were delisting Bitshares but did not with zero explanation to exchange users or the BitShares team.
Speculators are fickle and whether or not it is BitShares’ fault, most speculators scare like a pack of sheep who quickly dumped on the news causing the price of BitShares to tank.
One thing that is noteworthy is that despite this negative news, there has still been a fair bit of buying activity and “support”. (Many other delisted coins have crashed or died altogether)
No one can prevent the possibility of unforeseen breaches, software bugs or exploits
While this argument could be made about any project to date including Bitcoin, it is still valid for this projects. As seen with the $53 million DAO hack in Ethereum, they had to hard fork the network which caused a split into two different coins: Ethereum and Ethereum Classic.
Or how about the recent Ethereum wallet Parity debacle? (A vulnerability causing $300+ million of Ethereum to be frozen and rendered inaccessible)
User error is the documented cause of most problems with IT and cybersecurity. This is a perpetual threat not only with Cryptocurrencies but Technology in general. As with all Crypto, this is experimental tech so a healthy amount of skepticism and caution must be exercised, always.
Ultimately, BitShares leads the pack with exemplary thinking and architecture
Just to recap the main ideas covered:
BitShares is a decentralized network, protocol and industrial grade platform – Based on a Delegated Proof of Stake (DPoS) algorithm and Graphene (Steemit’s backend engine) with the potential to handle 100,000+ transactions per second.
BitShares offers a variety of decentralized financial services – Issuing smart coin bitAssets including Market Pegged Assets (MPA) and other crypto derived pairs from recognized commoditized assets (e.g. Gold, Oil, S&P 500)
The Delegated Proof of Stake (DPoS) algorithm adds a governance layer – Building on the traditional Proof of Stake model which increases and produces coins based on holding.
Despite all of these risks and challenges mentioned, the team perseveres, grows and continuously irons out kinks. Their services are just awesome (despite definite risks and pitfalls). I have personally used their DEX and find it fairly intuitive, smooth and quick.
As the platform matures and proves itself, it will attract interest from FinTech and financial services players.
I tend to show extra heavy interest in projects that promote decentralization and real-world use cases. This ICO craze is just nauseating at times (seriously, Paris Hilton?! LOL) and the space is in dire need of high-quality initiatives
Shaky market confidence, token dilution, hidden hackers, lurking regulations and other unforeseen pitfalls await us. (And frankly many “coins,” maybe even most, will not make it long term)
That’s why it’s super important that we put our attention toward helping build meaningful long-term focused communities and projects.
I believe BitShares is one of them.