Bitshares, the currently fifth ranked crypocurrency by market cap, has evolved to version 2.0 as of October 13. The move is more than just marketing or a big release. The blockchain and much of the protocol has been rewritten from scratch, building upon their experience as one of the most popular cryptocurrencies during recent years.
With the move to Bitshares 2.0 also known as Graphene comes as Bitshares founders and core developers have nearly exhausted their coffers and reserves to pay for their time developing the platform. Turns out that launching a cryptocurrency and keeping a relevant position of the initial coins is not necessarily a sustainable business model, even though it is basically the modus operandi of most cryptocurrencies.
A guide has been published by the Bitshares team for current users to migrate their holdings to the Graphene blockchain. The new blockchain comes with various important improvements to cryptocurrencies in general including two that are bound to make or break coins like Bitcoin, i.e. scalability and privacy.
Scalability is on top of everyone's mind when it comes to Bitcoin. This doesn’t only mean being able to support mainstream-level transaction volumes similar to Visa or Mastercard, but also maintaining low resource requirements for hosting a full node and those supporting the blockchain's decentralized nature.
According to Ken Code, Bitshares 2.0 Delegate and Business Developer of the Munich Bitshares community, the test networks “broke 10,682 [transactions per second]” recently. This is far more than what Bitcoin is currently capable of at 7 transactions per second.
He admits, however, that “a typical [virtual private server] can't handle much more than that” unless they are paid “the big bucks.”
Bitshares' answer to this is a bet on Moore's Law, a theory with an impressive track record that predicts the doubling of processing power every two years.
According to Bitshares’ documentation:
“Memory is becoming cheaper every day because it is extremely parallel in its design. The amount of information that is required to track the account balance and permissions of every person on the Internet is less than 1 Terabyte of RAM, which can be purchased for less than US$15,000 and installed on commodity (high-end) server motherboards. Long before 3 billion people adopt the system, this kind of hardware will be in the average desktop.”
Scalability is also related to transaction speed and confirmation times. At 1 hour confirmation times, Bitcoin will have a hard time scaling as a retail payment vehicle as it’s simply too easy to do a double spend with Bitcoin if a party does not wait for a certain number of confirmations, at least in some cases.
According to the Bitshares 2.0 documentation, their network “can confirm transactions in an average of just 1 second, limited only by the speed of light,” a claim backed by a full article on Industrial Performance and Scalability.
Among the leading technical implementations that they argue make this possible, are:
- Keep everything in memory (RAM);
- Keep the core business logic in a single thread;
- Keep cryptographic operations (hashes and signatures) out of the core business logic;
- Divide validation into state-dependent and state-independent checks;
- Use an object oriented data model.
What is not clear however is how these confirmation speeds will affect double spends and confidence in transactions. The Litecoin versus Bitcoin debate brought light to a particular argument, which simply states that faster block times do not equal faster security. It simply means you'll need more blocks to achieve a comparable level of security against double spends or roll backs; the mythical “consensus takes time” argument.
Christoph Hering, PR Manager at the Munich Bitshares community, disagreed with this argument during an interview with Disruptek.info. He believes that the security of transactions against double spends is achieved much faster with Bitshares 2.0's implementation of (currently) 3 second block times. However, a more detailed debate on this matter is certainly needed.
It is no secret that for a monetary system to function properly, all units have to have near perfect interchangeability. That means your bitcoin and my bitcoin are worth exactly the same, assuming the same exchange rate. This is called fungibility and this is where privacy comes in. As has been argued before, many times in the Bitcoin space privacy is essential to Bitcoin as a currency and Bitshares has taken this lesson to heart.
While the cryptocurrency community generally seems to agree with the need for privacy in Bitcoin, there is far less consensus in regard to how to go about achieving it. Bitshares 2.0 for example, has embraced Blockstream's confidential transactions and built it into their Graphene blockchain, renaming it as Stealth Transactions.
Based on Adam Back's proposal, these special transactions do two things in particular. They encrypt the amounts being transferred, and thus can not be identified on the blockchain by outsiders. Yet they allow cryptographic certainty that the amount users wished to transact was actually sent and received. If a user at some point wants to make this amount public, they can do so with a special key.
The second element is the creation of new deposit addresses per every transaction, bringing the added anonymity to users that is generally recommended to cryptocurrency users. See Blockstream's documentation for details.
One angle that Bitshares has generally lagged on has been wallet implementations and ease of use. Building a cryptocurrency that functions mostly on RAM results in fairly resource-intensive full nodes and during my attempts at trying out Bitshares 1.0, I gave up trying to install the client on Linux.
With Bitshares 2.0 comes a new emphasis on wallets, user experience as well as mobile and light clients. Open Ledger is expected to release one of the most popular Bitshares 2.0 wallets later this month, though whether it will have simple user interfaces for features like Stealth Transactions remains to be seen.
Other wallets include Moonstone, Limewallet and the core Graphene client. Some of these wallets are yet to be announced and have no active websites as of the time of writing.
[Disclosure: Juan S. Galt is the host and founder of Disruptek.info, the media organization that interviewed Christoph Hering]