BitShares

<p>BitShares Blockchain is going beyond Delegated Proof of Stake (DPOS) concept while introducing the latest BTS LOCK function among voting power system aiming to held investors accountable for their investment directions within the decentralized organization; thus investors looking for investing in the decentralized organization will have to lock their BTS for gaining voting power which is required to define any development direction that will be utilizing the BitShares Blockchain built-in development worker system (a decentralized human resources (HR) built-in system for paying salaries to BitShares Blockchain developers).</p><p>Delegated proof of stake  mitigates the potential negative impacts of centralization through the  use of witnesses (formally called <em>delegates</em>). A total of N  witnesses sign the blocks and are voted on by those using the network  with every transaction that gets made. By using a decentralized voting  process, DPOS is by design more democratic than comparable systems.  Rather than eliminating the need for trust all together, DPOS has  safeguards in place the ensure that those trusted with signing blocks on  behalf of the network are doing so correctly and without bias.  Additionally, each block signed must have a verification that the block  before it was signed by a trusted node. DPOS eliminates the need to wait  until a certain number of untrusted nodes have verified a transaction  before it can be confirmed.</p><p>This reduced need for confirmation produces an increase in speed of  transaction times. By intentionally placing trust with the most  trustworthy of potential block signers, as decided by the network, no  artificial encumbrance need be imposed to slow down the block signing  process. DPOS allows for many more transactions to be included in a  block than either proof of work or proof of stake systems. DPOS  technology allows cryptocurrency technology to transact at a level where  it can compete with the centralized clearinghouses like Visa and  Mastercard. Such clearinghouses administer the most popular forms of  electronic payment systems in the world.</p><p>In a delegated proof of stake system centralization still occurs, but  it is controlled. Unlike other methods of securing cryptocurrency  networks, every client in a DPOS system has the ability to decide who is  trusted rather than trust concentrating in the hands of those with the  most resources. DPOS allows the network to reap some of the major  advantages of centralization, while still maintaining some calculated  measure of decentralization. This system is enforced by a fair election  process where anyone could potentially become a delegated representative  of the majority of users.</p><h2 id="header-0"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id2" rel="noopener noreferrer nofollow">Rationale Behind DPOS</a></h2><ul><li>Give shareholders a way to delegate their vote to a key (one that doesn’t control coins ‘so they can mine’)</li><li>Maximize the dividends shareholders earn</li><li>Minimize the amount paid to secure the network</li><li>Maximize the performance of the network</li><li>Minimize the cost of running the network (bandwidth, CPU, etc)</li></ul><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id3-rel-noopener-noreferrer-nofollow-shareholders-are-in-control-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id3" rel="noopener noreferrer nofollow">Shareholders are in Control</a></h3><p>The fundamental feature of DPOS is that shareholders remain in  control. If they remain in control then it is decentralized. As flawed  as voting can be, when it comes to shared ownership of a company it is  the only viable way. Fortunately if you do not like who is running the  company you can sell and this market feedback causes shareholders to  vote more rationally than citizens.</p><p>Every shareholder who locks their BTS gets to vote for someone to sign blocks in their  stead (a representative if you will). Anyone who can gain 1% or more of  the votes can join the board. The representatives become a “board of  directors” which take turns in a round-robin manner, signing blocks. If  one of the directors misses their turn, clients will automatically  switch their vote away from them. Eventually these directors will be  voted off the board and someone else will join. Board members are paid a  small token to make it worth their time ensuring uptime and an  incentive to campaign. They also post a small bond equal to 100x the  average pay they receive for producing a single block. To make a profit a  director must have greater than 99% uptime.</p><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id4-rel-noopener-noreferrer-nofollow-pooled-mining-as-delegated-proof-of-work-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id4" rel="noopener noreferrer nofollow">Pooled Mining as Delegated Proof of Work</a></h3><p>So how is this different than Bitcoin? With Bitcoin, users must pick a  mining pool and each pool generally has 10% or more of the hash power.  The operator of these pools is like a representative of the clients  pointed at the pool. Bitcoin expects the users to switch pools to keep  power from becoming too centralized, but collectively five major pools  control the network and manual user intervention is expected if one of  the pools is compromised. If a pool goes down then the block production  rate slows proportionally until it comes back up. Which pool one mines  with becomes a matter of politics.</p><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id5-rel-noopener-noreferrer-nofollow-reasons-to-not-randomly-select-representatives-from-all-users-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id5" rel="noopener noreferrer nofollow">Reasons to not randomly select representatives from all users</a></h3><ul><li>High probability they are not online.</li><li>Attackers would gain control proportional to their stake, without any peer review.</li><li>Without any mining at all, the generation of a random number in a  decentralized manner is impossible and thus an attacker could control  the random number generation.</li></ul><h2 id="header-1"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id6" rel="noopener noreferrer nofollow">Scalability</a></h2><p>Assuming a fixed validation cost per transaction and a fixed fee per  transaction, there is a limit to the amount of decentralization that can  take place. Assuming the validation cost exactly equals the fee, a  network is completely centralized and can only afford one validator.  Assuming the fee is 100x the cost of validation, the network can support  100 validators.</p><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/9a71308b29db4fedbf2d1e83c4853d38.png" /></p><p>Systems like Nxt and Peercoin will have excessive fees if they intend  to allow everyone to be a validator and earn fees at scale. What this  means for Nxt and Peercoin is that anyone with less than 1% stake cannot  validate profitably unless their fees are higher than our DPOS chain.  If these chains assume 100 delegates is too centralized and start  promoting they have 1000 validators, then their fees must be 10x those  of DPOS. If such a chain grew to be the size of Bitcoin ($10 B) then  only those with $1M worth of coin could validate profitably and most  would consider that an elite club. If they reduce the minimum stake to  be a validator to $1000, then their fees would be 10,000 times higher  than DPOS.</p><p>Developers of DPOS assume that everyone with less than the amount  required to validate won’t participate. Also assumed is a “reasonable”  distribution of wealth. It’s clear that unless alternate chains have  unusually high fees, there will only be a handful of people with enough  stake to validate profitably.</p><p>In conclusion, the only way for POS to work efficiently is to  delegate. In the case of Nxt, they can pool their stake by some means  and ultimately this will end up like DPOS prior to approval voting with a  variable number of delegates. Delegates wouldn’t actually receive any  income as with mining pools because the validation expenses will consume  the vast majority of the transaction fees.</p><p>The end result is that decentralization has a cost proportional to  the number of validators and that costs do not disappear. At scale,  these costs will centralize any system that does not support delegation.  This kind of centralization should be designed as part of the system  from the beginning so that it can be properly managed and controlled by  the users, instead of evolving in some ad hoc manner as an unintended  consequence.</p><h2 id="header-2"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id7" rel="noopener noreferrer nofollow">Role of Delegates</a></h2><ul><li>A witness is an authority that is allowed to produce and broadcast blocks.</li><li>Producing a block consists of collecting transactions of the P2P network and signing it with the witness’ signing private key.</li><li>A witness’ spot in the round is assigned randomly at the end of the previous block</li></ul><h2 id="header-3"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id8" rel="noopener noreferrer nofollow">Voting Algorithm</a></h2><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id9-rel-noopener-noreferrer-nofollow-how-do-i-get-votes-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id9" rel="noopener noreferrer nofollow">How do I get “votes?”</a></h3><ul><li>Persuade others to give upvotes to your witness</li><li>When another user gives an upvote to your (and possibly other) delegates</li><li>A user can give an upvote for more than one witness. As a result all upvoted witnesses get a vote</li><li>Convince proxies (that vote on behalf of their followers) to vote for you</li></ul><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id10-rel-noopener-noreferrer-nofollow-why-use-only-upvotes-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id10" rel="noopener noreferrer nofollow">Why use only upvotes?</a></h3><ul><li>Giving only upvotes, and allowing multiple votes per share, is called <strong>Approval Voting</strong>, and comes with several advantages over the old <em>delegation</em> voting.</li><li>No downvotes are needed, which not only simplifies usability but also reduces code and complexity.</li></ul><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id11-rel-noopener-noreferrer-nofollow-how-are-votes-counted-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id11" rel="noopener noreferrer nofollow">How are ‘votes’ counted?</a></h3><p>Once every <em>maintenance interval</em>, all votes are recounted and the corresponding result takes effect.</p><h3 id="a-href-https-how-bitshares-works-en-master-technology-dpos-html-id12-rel-noopener-noreferrer-nofollow-is-there-an-anti-vote-a"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id12" rel="noopener noreferrer nofollow">Is there an anti-vote?</a></h3><p>Not any more. After discovering <a href="https://bitsharestalk.org/index.php?topic&#61;5164.msg67657#msg67657" rel="noopener noreferrer nofollow">emski’s attack</a> the developers decided to use <strong>Approval Voting</strong>.</p><h2 id="header-4"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id13" rel="noopener noreferrer nofollow">Disincentives for Attacks</a></h2><ul><li>By choosing not to produce a block, a witness risks getting fired and they lose guaranteed profits in the future.</li><li>A dishonest delegate would only fail to produce a block if they were sure to win something from it</li><li>If a lottery only payed out 50% to a jackpot (giving the other 50%  to charity) then the most this dishonest delegate could do is break  even.</li><li>Witnesses can’t sign invalid blocks as the block needs confirmation by the other witnesses as well</li></ul><h2 id="header-5"><a href="https://how.bitshares.works/en/master/technology/dpos.html#id14" rel="noopener noreferrer nofollow">How many witnesses are securing the network</a></h2><p>This is totally in the hands of the shareholders. If the majority  votes for 50 witnesses, then 50 witnesses will be used. If the  shareholders only vote for 20, so be it. The minimum possible witness  count is 11.</p><p></p><h2 id="header-6">For More Information</h2><p>Official GitHub Website: <a href="https://bitshares.github.io/" rel="noopener noreferrer nofollow">https://bitshares.github.io</a></p><p>Official GitHub Repositories: <a href="https://github.com/bitshares" rel="noopener noreferrer nofollow">https://github.com/bitshares</a></p><p>Official Telegram Group: <a href="https://t.me/BitSharesGroup" rel="noopener noreferrer nofollow">https://t.me/BitSharesGroup</a></p><p>Official Development Telegram Group: <a href="https://t.me/BitSharesDEV" rel="noopener noreferrer nofollow">https://t.me/BitSharesDEV</a></p><p>BitShares Reference Wallet: <a href="https://bts.exchange/" rel="noopener noreferrer nofollow">https://bts.exchange</a></p>

BitShares Blockchain is going Beyond Delegated Proof of Stake (DPOS) with Blockchain As Organization (BOA) concept

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BitShares

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