Ethereum first grabbed the attention of the Bitcoin 2.0 movement with news of their plan to create a platform for distributed contracts and DACs. BitShares and BitSharesX introduced the concept of “BitAssets" as one of the numerous technologies claiming to be “bitcoin 2.0” or “finance 2.0.” In essence, this “Bitcoin 2.0” movement represents a movement to leverage the power of globally decentralized consensus and decision making networks as birthed by bitcoin.
We interviewed Beyond Bitcoin founder, and BitShares researcher, Ben Keyhotee, to discuss BitShares, its importance, its past and future, and how it humanizes crypto-currency.
What got you interested in Bitcoin?
It is really an entire list of things, but I’ll try to shorten it up and keep concise:
I have a background in community management as a Gamer and organizer of Guilds in Massively Multiplayer Online Role Playing Games (MMORPGs). It was here that I learned the value of digital commodities.
My Guild Leading days led me to find ways to become more efficient with my time, which led me to automation software, often called “bots”, that would gather in-game materials for use by guild-members. This is where I learned the value of using software for task automation.
I then joined the U.S. Air Force, where I studied psychology and worked in mental health, deploying to Afghanistan in 2009. This is where I gained an appreciation for the Constitution and what it is like for people to live under the thumb of a corrupt regime.
After joining the Air Force, I watched the banking failures in 2008 and began spending a great deal of my off time learning about the “elite” and their control over the currency supply. This is where I learned the true definition of money and the value of freedom of association, which directly relates to our most intimate interactions on a daily basis: the transfer of currency between two people in exchange goods and services.
My quest began as I learned about the Enron scandal, Carbon Credits, the Federal Reserve System, Agenda 21, and later things like CISPA and the NDAA. As I learned how much freedom and self-determination was taken from us by the “money masters” controlling the currency supply, and learning about their intentions for the future I realized that we needed to find a way to issue our own currency again--and that this was the only way we could nonviolently free eachother from the shackles of tyranny. It was apparent to me the very moment I learned about bitcoin that we could use these currencies to decouple ourselves from the control of those who despite their best intentions, are severely incapable of helping humanity on a granular level necessary to reach symbiosis with our world and eachother. Bitcoin is why I love cryptocurrency, but as always, we should be willing to acknowledge flaws in any system and strive to improve upon the status quo...which is what led me to BitShares.
What is your role with BitShares?
I, along with the bitshares community, am the founder of Beyond Bitcoin. Beyond Bitcoin is a media movement that is meant to help replace the current blind altcoin [ANN] thread paradigm which has enabled such a high level of corruption and scams that hurt newbies to the crypto space. I personally run Beyond Bitcoin Dev Hangouts for all developers who create Delegated Proof of Stake (DPOS)-based chains and sharedrop a portion of the total supply onto current BitShares, PTS and AGS holders, but the Mumble Server I run for this is available for use by any bitcoin/altcoin community.
These are town-hall styled events where developers and investors can connect in a way that encourages open engagement and honesty between both parties because there is always someone able to fact check statements made.
The dynamic is intentionally set in such a way that the moderator does not have to be the one asking the difficult questions because in more centralized formats the interviewer is not incentivized to ask difficult questions for fear of losing future guests, which equates to a loss of viewers, advertisers and as a consequence profits. In Beyond Bitcoin Hangouts, the audience is most often going to be full of large stake holders in a project, individuals interested in investing a large amount, or competitors. It is for this reason they are incentivized to ask the questions that will best protect users from potential scams or financially unsound investments.
The crypto-space is dangerous to the unwary; we aim to reward trustworthiness and participation by correctly aligning incentives. Luckily Beyond Bitcoin Hangouts will enable us to grow and scale because we will not be forced to sell advertisement space for funding. This is because we can have a delegate (fuzzy.beyondbitcoin) voted into power by the shareholders of the BitShares DAC, which allows us to be hired and funded directly by the blockchain. This means we can focus on the best interests of the community at large, and only the community, providing this as a public service.
What got you interested in BitShares?
Listening to Dan Larimer’s (aka Bytemaster’s) speeches, learning his philosophy on economics and human rights. It was clear that his intent was to use blockchain tech to these ends and the knowledge that he was one of the few who were regularly in direct contact with Satoshi Nakamoto was simply a bonus.
Dan Larimer coined the term DAC and recognized that cryptocurrencies in fact operated more like shares in a decentralized autonomous company (DAC). He was on the forefront with respect to using blockchain technology for industry and I believe his vision will change the world to help move us in a direction more toward freedom, liberty and abundance.
Why is BitShares important?
BitShares is Unique in that is opens up a whole new paradigm of possibilities for the issuance of cryptocurrencies, while finding the proper balance of efficiency, security, scalability and decentralization of control over the networks built using its underlying DPOS protocol.
And unlike many of its competitors, it is designed in such a way as it is meant to be a toolkit that provides thousands of chains that compete to offer services worldwide.
BitShares recognizes the value of a community of DAC-Savvy investors and has set a precedent for the emergence of new DPoS-based chains to compete for BitShares’ userbase by distributing a portion of their total currency supply to holders of BTS, PTS, AGS or any other chain that best represents the demographic with which they would like to bootstrap their network.
Unlike most projects that want to be the platform upon which all other technologies are built, it looks to be the Linux of the crypto industry with many DACs being built and flourishing side by side in a purely decentralized “Universe” of DACs. I call this the “BitShares Universe”.
So why is this important?
Imagine if simply holding Bitcoin gave altcoin developers an incentive to sharedrop a % of their total altcoin supply on you. If this were to be the Bitcoin consensus, people would not be forced to take the high risks of trading their BTC in hopes of finding the next big thing. This means there is a better risk profile for the entire ecosystem which still gives those interested in higher levels of risk taking the ability to trade their tokens in for technology they feel is better.
In short, because of sharedropping, DPOS-based chains are chains I could comfortably advise my mother invest in long term, knowing that in 10-20 years at least some of them would prove highly profitable. This opens the doors for wider adoption and also creates a more socially palatable range of options for investing in crypto projects and Devs who are willing to do it automatically gain access to the community in the form of hangouts, so their projects are more likely to receive the valuable input necessary to make them more likely to succeed. With BitShares, incentives align for the development of a more robust and equitable investment opportunity... and I am proud to be a part of that.
What is a Decentralized Autonomous Company and how will it change the way the world works?
When altcoins first began arriving on the scene, it became apparent that many were trying to fill specific niches in the market--to bring cryptocurrency to specific industries and fulfill specific market needs. From coins with specific features (like Darkcoin and Monero’s attempts to achieve anonymous transactions), to coins with little innovation that were simply banking on using specific brand positioning as coins of choice for certain industries (Sexcoin and Gamecoin come to mind), it was clear that blockchain protocols wanted to be used in multiple areas of society.
Though the creators of these coins were visionaries with respect to how blockchain tech could be used, it was clear that the open beta technology that was Proof of Work (PoW) was not up to the task of scaling to enterprise transaction speeds and volumes. Equally as important, the power grew more centralized away from holders due to economies of scale and the use of Algorithm Specific Integrated Circuits (ASICs). PoW also unnecessarily taxed the holders of system tokens, essentially paying power companies inordinate sums in order to secure the network.
Proof of Stake (PoS) intended to be the solution to PoW but fell short with respect to enterprise scalability. It became clear that we had to rethink blockchain tech in terms of something broader and more expansive than a use as a “Gold-equivalency” of digital currency. It became evident we needed blockchains built specifically for business.
When members of the crypto-community began thinking in these terms, it was not long after that technologies like Transparent Forging and Delegated Proof of Stake (DPoS) came onto the scene. These technologies were engineered with business in mind and it was apparent. They began touching upon the ability of blockchain technology to create decentralized companies that provide specific services owned and controlled by stakeholders--not by force (hashpower).
NXT and its clones like Horizon (HZ) and New Economy Movement (NEM) intuitively understood this, and engineered their infrastructure to become exchange platforms with far higher scalability potential. They did this while while making it possible to maintain a level of decentralization of control that was the primary draw for cryptocurrency users from the very beginning.
Although NXT, HZ, and NEM intuitively understood this, it was the vision of Dan Larimer (aka Bytemaster) of the BitShares Project who actually outlined the dynamics of such systems, recognizing decentralized exchanges as only one of many potential Decentralized Autonomous Companies (DACs) that could exist to use blockchains. In fact it was Dan himself who coined the term “DAC”.
Perhaps we can attribute some of Dan’s insights to multiple in-depth interactions with Satoshi himself, or perhaps Satoshi was drawn to Dan’s understanding and expansive vision of how blockchain protocols could be used, and as such BitShares’ innovation is solely that of Dan’s creation. Whichever is the truth of this matter, BitShares is important because it’s founder and chief engineer recognized the necessity to “reinvent the wheel” to build blockchain technology that can be truly be considered as the likely gold standard for blockchain protocols made for decentralized control and ownership of businesses.
How does Bitshares differ from other so-called “alt-coins?”
Bitshares differs from “altcoins” in that it is not an altcoin. It is, in fact is a DAC with “shares”. This is a key distinguishing feature because of the underlying philosophy of how and why BitShares was engineered. Because Dan Larimer understood that all blockchains were, in fact, acting like DACs.
For this reason he understood that it was important to engineer the source code to make alt-chains operate as companies. This means he constructed them in such a way as to maximize profitability and value creation while minimizing the cost of securing and maintaining the network.
Bitshares is a toolkit that powers the creation of unknown multitudes of potential DACs. The code is open-source and freely available for use by all to develop their own DACs.
One of the least known, understood, and yet most valuable aspects of the BitShares Ecosystem is that Developers who use the toolkit will most often use a method of initial distribution of their DAC’s shares called ShareDropping. Though we have spoken to a degree about ShareDropping earlier in this interview, I would like to explain it in a bit more detail here:
ShareDropping is powerful for a few reasons:
- It utilizes a “snapshot” of blockchains at any given date in order to establish a targeted demographic of investors who are most likely to understand and bring value to a Developer’s new DAC. This is valuable for bootstrapping one’s DAC with a community most likely capable of increasing the value of the DAC’s shares.
- It gives Shares to the owners of chosen blockchain investors, thus enriching them and diversifying their portfolios of crypto-investments by giving them a stake in one’s project without ever asking them to risk shares with proven value to purchase shares in projects yet unproven. This is a distinctly different incentive structure than the current status quo and opens up a lower risk category of crypto-investments for those more averse to risk (which in turn opens up more opportunity for investment in the cryptospace).
- As ecosystems become more politicized in the BitShares Universe, people will begin to look for alternatives that share similar values to themselves while still having the same benefits DPoS offers. ShareDropping is a way to advertise one’s project to users who may be more inclined to help build a new ecosystem than remain in one they may feel has altered its path from its core views.
What do you think BitSharesX will look like in ten years?
BitShares, giving the power of ownership and growth back to the people who own stake in the project, has no choice but to become the flagship chain in an entire political network of DAC chains. All these chains will be created by Developers of varying philosophies, owned by networks of individuals who believe in the viability of these philosophies and run by professionals who bring the most value to each chain while maintaining the vision for which each chain was originally established and vested. But these networks will dynamically change to adapt to the various challenges faced when realities meet philosophies and force them to evolve. In essence, BitShares will not be just one chain. It will be a crypto-standard for networks to form communities that provide services like companies do. Where this dynamic will take us is hard to tell, but it is sure to be a wondrous and wild ride!
Why are delegates so important to the system?
Delegates are the nodes that sign the blocks onto the blockchain. Anyone can try to become a delegate but must be voted into place by the stakeholders in the community. In BitShares, a developer can choose from any number of delegates his/her chain will have, but Daniel chose 101 for security purposes and for maximum scalability/efficiency. It is this choice that made it possible for BitShares to have 5 second block times and under 10 second transaction times.
How are delegates kept honest?
BitShares Delegates must be kept honest in similar ways to how our politicians must be kept honest--good old fashioned community sleuth work. Of course there are some aspects of delegates operations, such as the missing of blocks or running on forks, that are monitored from https://bitsharesblocks.com and could end up causing a delegate a slot to be moved out of the top 101 (which is, in BitShares, the number of delegates allowed to produce blocks).
With that said, Beyond Bitcoin Community Services tries to offer Delegate Hangouts in addition to the weekly scheduled Dev Hangouts so the community can ask questions of the delegates voted into power. All these hangouts are made available on our Beyond Bitcoin SoundCloud (https://soundcloud.com/beyond-bitcoin-hangouts). We aim to become like the CSPAN of cryptocurrencies that give their stakeholder’s power over how the ecosystem is constructed. For this reason we make our hangouts open for anyone who wants to enter and ask questions/learn from each other.