Topic: Adam B. Levine interviews Daniel Larimer of BitShares (Read 694 times)

I generally prefer transcripts because it takes twice as long to listen as it does to speed-read.

I can skim looking for the parts I want to examine more carefully and copy-paste paragraphs I want to reference or comment on.

And text is searchable.

Thanks, Werneo!

Thank you to both of you. Really helpful for those like me who don't comprehend spoken English.

Transcript, Part 2...


LTB: The proxy idea is particularly interesting to me because I can very much see something like that being useful. Let’s change gears for second and talk about other projects that are being built on the graphene technology, because I know that there are a couple of those coming out. We’ve been talking about MUSE, formally known as bitshares music, for over a year now. When do you think we will actually start to see real projects using bitshares or the graphene toolkit.

DL: The next blockchain to use graphene technology is MUSE, which is created by peertracks for the purpose of creating artist tokens and tracking payments for digital downloads.
That blockchain you should expect to see in the next month and it’s using a snapshot
Notes is a token on MUSE platform. They used to trade on the bitshares blockchain as an asset
The same snapshot that we used switch from 1.0 to 2.0 is when we took a snapshot of NOTES.
different allocation, different target market.

LTB: Why do this as multiple blockchains rather than having different tokens on the same blockchain.

DL: It’s not really my choice. I would prefer having everything on one blockchain. But peertracks ...their whole business model depended on having their own blockchain. They started their business before we had the one bigger blockchain idea. So they are continuing with their same business plan.

LTB: I see. One of the things about graphene is that you are interested in licensing it to … people who need this technological solution and who don’t want to operate on the bitshares blockchain. So what types of projects are you seeing coming in that direction and what types of projects are you not seeing that you think are natural uses for the platform, whether on bitshares itself or whether on a (separate) blockchain.

DL: We’re getting a lot of interest from companies looking to have private internal blockchains. Or blockchains that are for other purposes that for whatever reason are not compatible with bitshares. Whether it’s controversial reasons like gambling... the large stakeholders in bitshares don’t want to mix gambling with the blockchain. So that’s an opportunity to use the graphene technology to build another blockchain because even if you implemented the features the stakeholders won’t approve it to get it voted in. So you have no choice but to start a new blockchain. Other people want to offer financial incentives that would require diluting the stakeholders more than the bitshares network allows through worker proposals. So if you are going to do some business model that needs to have a significant reallocation of the stake then
Or if you want to implement features that are very unique to what you are doing, that’s another reason for having a new blockchain. We’re working with several different companies I can’t talk about all of it. … I would like to point out that the source code is open source in the sense that if you are using graphene for anything for bitshares related, it’s… licensed.  As long as it’s for the bitshares network and on the bitshares network you can take modify, redistribute, do whatever you need to do for bitshares. The only restriction... is the creation of new blockchains.

LTB: In the last couple of years there’s been protoshares, there’s been angelshares, there’s been bitshares 1.0, and now everything is moving to bitshares 2.0.

DL: They’re all the same token. It’s just gone through different names as it’s been different versions. The original mined protoshares (PTS), you imported your private keys into bitshares 1 and you had bitshares. Now you take those same keys and you import them into your bitshares 2 wallet and you’ve bitshares still. It’s the same token, it’s just a different software….If you have your private keys any tokens you have from any previous blockchain you can access it still.

LTB: Okay, so you just import your old keys into the new client and you should be able to access your tokens.
36:44

LTB: My company Tokenly… it’s funny because bitshares offers so many things that I want to put Tokenly on to it. I want to put the types of services that we’ve built for bitcoin on to it. But I am… very apprehensive about it because I don’t know if now is the correct time to do that. I don’t know if you’re going to get traction this time. But the capabilities of what you’ve done… again that’s the point that keeps coming back to me… there’s so many things that we can’t do because we have not only do we have not only a 10 minute plus block time but we have an unstable block time. This morning I was troubleshooting issues caused by more 40 minute block times just one after the other. It was ridiculous. And then there’s other issues like transaction malleability that show up on a more popular blockchain…. How is it developing for bitshares technology compared to bitcoin? Because bitcoin has a lot of eccentricities in it.

DL: With bitshares, most development is actually easier. The transaction structures are easy to understand. The API for communicating with the blockchain is very object-oriented. It’s websocket-based, which means we can push notifications to you, and you don’t have to poll. We’ve got a concept of block irreversibility which is built right in. Where you’re guarantee that after 2/3rds of the witnesses have signed off on the block, it’s not going to be possible to reverse it. Every node on the network … is automatically check-pointing it. That happens as fast as every 30 seconds or less. For the most part you can accept a single confirmation, which is just 3 seconds, and know that your transaction is through and it’s there.

LBT: So a lot of things that are built into bitcoin is layers or utilities on top that we have to run now. These are things that are built-in and we could access by API.

DL: Yes

LBT: So are there any things that are more difficult?

DL: I’d be more than happy to talk with anyone who’s trying to develop and application and figure out how to support your particular application. We’ve experienced a lot of the same gotchas at various points in time. I believe the last gotcha that you experienced was
and inability to prove someone’s balance because bitshares 1 had everything with stealth addresses and the balances weren’t tied to the accounts and it just wasn’t easy for you to do that. Under bitshares 2 it’s now very easy to prove your balance.

LTB: Let’s talk about that for a second, because one of the reasons we couldn’t do that was because usernames didn’t actually have addresses associated with it. You would reference a user by their username rather than by a specific public key because the public keys, all that stuff was being abstracted and handled on the back end, and so all users ever dealt with was that. So how did you guys solve that? Did you solve that by simply making balances for users public? Or is it a more complicated thing? 40:12

DL: Effectively balances for users are public, it’s tied to their name. We recognized that under the old model, through analyzing the blockchain for patterns, it’s possible to link balances together the same way you can link balances together in bitcoin. And so people use bitcoin today believing that your transactions are private. But unless you really know what you’re doing everything is getting linked together or you’re jumping through a lot of hoops to prevent all your bitcoins being linkable through mathematical analysis of the blockchain. So we decided to do away with that illusion of privacy in bitshares, and so balances are tied to account names. When you are looking at the transaction history of the blockchain, you can see account name Dan sent Adam 100 bitshares. And everyone can see that. Unless you opt to use the stealth transfers. In which case, no one knows who sent money to whom or how much it was. But from an ease of use perspective, a lot of people will use public.

Another problem we had with bitshares was the voting mechanism. That’s sort of a signature. Every time you transferred funds, who you’re voting for had to go with it, or that stake couldn’t be used as part of the voting system, so that was compromising privacy. With the new system, it’s possible to count every single bitshare in your account, whether it’s in a market order, or in a smart contract, it’s controlled by you it can get factored into the voting. That also means it’s possible for you to do systems that need to look at well what is the balance. You can create your own token on the platform, and you can if you want to you can disable the stealth transfers for your token. The issuer of different tokens has permissions. They can control what features the users of their token can have. So if being public is a requirement for your token, which it often is if you’re an exchange and doing a token or if a platform like you’re describing,
you can make sure that your users can’t do anything other than that.

LTB:  A couple of questions on that. On the stealth address, you said that for ease of use reasons, people generally do simple sends. What is hard about it? Is it more complicated than checking a box?

DL: Think of it as, when you do a stealth transfer, the receiver is just as blind as everyone else in the world. He either has to inspect every transaction, which he can’t do, or he has to know where to look. And if you try to communicate to him where to look over the blockchain, you’ve just given up the privacy. I now know that Dan sent Adam something, because Dan sent Adam a message that says hey look at this. So we wanted to have maximum privacy for those who care about privacy, which means if I transfer money to you it doesn’t show up in your wallet because your wallet doesn’t even know that the transfer was to you. I have to take the receipt of that transfer and send it to you over some other channel whether it’s email, skype, or some other means of communication. 43:32

LTB: So it’s like a deposit claim system.

DL: Sort of, yes. And when you get that, now you know, hey I should go scan this particular transaction and now you’ve got your balance. So that’s a two step process. It’s active. The sender and receiver have to communicate outside of the blockchain for it to be secure.

LTB: Bitshares has a messaging layer built into it, too, and so that also goes onto the blockchain, which is why it can’t be used.

DL: Every transaction can have a memo. It’s not really a messaging layer. But yes, you can put arbitrary memos associated with any transaction.

LTB: So one of the things … is that tokens are cheap. That’s one of their real advantages. In counterparty it costs between 2 cents and 50 cents to create a new asset class and as many as you want. When I created LTB coin on bitshares as a kind of experiment, right after assets launched on the original chain, it was quite a bit more expensive and the pricing was scaling up as more people added more assets. I haven’t checked into it at all since then. That would be another point where we might not be able to work with the platform. Talk to me about the pricing of user issued assets or any differentiation between different types. 44: 53

DL: Pricing is directly proportional to symbol names. On the bitshares network you have to reserve your 3 or 4 character symbols for how it trades on the … exchanges. If you have a 3 or 4 character symbol name, the prices can be relatively expensive because there’s only so many 3 and 4 character names out there and we don’t want someone to come along and buy them all up.  So you are talking $1000 or more for a 3 or 4 symbol name. But if you’ve got a 5 or more symbol name, the pricing is just a couple of dollars.

LTB: So it’s more expense but it’s still less than $5. So why is the distinction between 3 and 4 vs. 5. That sounds like a really big jump. Is there a reason why you didn’t do something more gradual?

DL: At one point we had more levels in there, but pricing simplicity is also desired. The stock exchanges and commodities markets use 3 and 4 symbol names. And that handles all the big players, all the highly liquid markets, they want a 3 symbol name. By the time you get to 5 or more, we went with the simple approach of pricing them about the same. It needs to be high enough that no one is going to attempt to squat on everything, and to account for the overall cost each new asset adds to the system. But we wanted to make it cheap enough that if you’re trying to do something serious with it, you can. Price shouldn’t be prohibitive. But we didn’t people doing it frivolously….

LTB: Talk to me about any projects that are currently being built on the actual bitshares platform. What are you waiting for people to build so that it can add more functionality to it. Not talking about the other chains that are using the graphene technology.

DL: There are a lot of projects out there that are creating web wallets. The biggest change with bitshares 2.0 is the architecture of our wallet which is entirely done in javascript, which means that anyone can host a website and create custom interfaces and sign up new users, and that kicks into the referral system. There’s a lot of people out there that are creating exchanges and gateways onto the bitshares network in their own local regions. So they can get users, refer users to the network, and start earning income from transaction fees that those users generate on the network. There are several different exchanges... I can’t talk about all the different ones at this time… that are providing gateway access. It’s possible to change bitcoin, doge coin, litecoin, and soon ethereum and ripple tokens (XRP) on the bitshares exchange. The benefit of having all these different players involved is that you can trade quickly between exchanges. If you want to trade bitcoin for litecoin, or you want to list your own coin on the network, there’s nothing that stops you from adding your coin to the network and having it trade. So most of the partnerships are along these lines. There are people working on ATMs. There are so many projects I can’t even keep track of them all.

LTB: When you talk about the new architecture, you’re talking about web wallets. That sets off alarm bell in my head. Talk to me about, is this safe? Are these custodial wallets? Or are users generating keys client side? And do you have a desktop client in addition to this web approach? Because there are lots of people who are just uncomfortable with web in general.  52:49

DL: The entire system is designed to … keep all your keys in the browser. Nothing is ever sent to the server. It can be deployed on a static website. We do have a lite wallet that you can download. All that is is a packaged web application with its own built in browser that preloads all the pages. It’s not loading them from a remote server. You download the lite client and you’re guaranteed that your key is safe. It’s possible for anyone to run a full node either on the machine or in the cloud, and point their lite client to the full node

LTB: Talk to me about the referral program. Is this the sort of thing where if I have username on the bitshares system, I can refer people, or are you really talking about wallet providers themselves or people who are running applications that have this wallet applications built into it.

DL: We have a multi-tiered system that allows one person to be the registrar. This is the person who pays the transaction fee to create a new account. As a registrar you can specify another account that is the referrer, or basically the affiliate. This is the person who referred the user to the registrar. They can define the split between the two users. So if you’re a wallet provider, you’re the registrar. You can share a percentage of your referral income with users who just refer people to your wallet. Our biggest wallet provider is OpenLedger, bitshares.openledger.info. That is a website produced by CCEDK, which is a relatively well known bitcoin exchange. And soon anyone who refers users to openledger will be able to get a cut of the new users that sign up. So if you’re an application builder and you want to deploy your own wallet and attract users to your website, and compete on providing easier to use wallets: wallets with automated backup, wallets that keep your wallet on the server rather than in the browser where your computer can die and you lose your wallet. There’s a lot of competition for individuals to create better wallets. You mentioned earlier that one of our critiques of bitshares in the past has been that our user interface always lacked the other technology. We recognize that and we want to create a system with financial incentives to reward those who produce the most innovative, easiest to use wallets. If you produce a website, take our open source code, modify it, make it easier to use. A talented web developer could pick up our code, run circles around us by adding new features to make it easier to use. If they become the default wallet, they’re going to get a large percentage of the income from the network. We’re talking significant income because the fees on bitshares are slightly higher than other cryptocurrency networks while being significantly lower than the true competitors which are centralized exchanges and paypal and dwolla. For more information about bitshares, you can visit bitshares.org. If you’d like to learn more about graphene, or custom development, you can contact us as cryptonomics.com

LTB: I think we’re at the end of my questions. Is there anything you want to hit, Dan?

DL: The main thing I would like to say is that since we launched bitshares 2, the network has been profitable in the sense that we’ve earned more from transaction fees than we’ve paid out to operate the network. It’s hopefully going to continue as more users get involved. So the bitshares network is profitable with a decreasing supply for the first time.

https://soundclod.com/mindtomatter/ltb-e260-new-growth

Transcript by werneo (send bts, brownie.pts to: werneo)

TRANSCRIPT:
ADAM B. LEVINE OF LET’S TALK BITCOIN INTERVIEWS BITSHARES CREATOR
DAN LARIMER
October 31, 2015
https://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-260-new-growth

LTB: ...on the 13th (of October, 2015), there was a fairly large transition from the bitshares 1.0 project to the bitshares 2.0 project. Why don’t we… remind people what bitshares 1.0 was and how we got from protoshares all the way to here….

DL: Bitshares is a project that aims to use blockchain technology to organize people to solve problems like a decentralized exchange. The creation of a decentralized exchange was the original purpose behind bitshares. It’s had a long life through many transitions dating all the way back to 2013 when the idea was originally conceived. We’ve been through several different iterations: things like protoshares. ...Since then it’s really evolved through several iterations. As we adapt to the market and adapt to lessons learned. And we’ve made a lot of mistakes along the way, but we’ve discovered a lot of things and we’ve done a lot of innovations at the same time.

LTB: So the ... recent upgrade basically took bitshares off of the original codebase and put it on an entirely different one… called graphene. Why … abandon the earlier code base, and what advantages are you getting?

DL: Graphene is the library or the toolkit that we are using behind bitshares. In the process of developing the original version of bitshares, we (were) under a lot of time pressure to built it… quickly… to get it on the market, to try it out. But it just wasn’t a sustainable foundation upon which we could scale and add new features. In the desire to accelerate future development, and have the architecture that could expand in scale to the hopeful adoption, we had to re-architect things. So graphene is designed from the ground up with a whole lot of lessons learned, a whole new permissions system that makes multi-signature transactions and accounts and user interaction a lot easier. It’s designed with performance in mind. There’s … a host of things we’ve done to improve it, including the very consensus model behind delegated proof of stake. We’ve enhanced that to make more effective community consensus over complex issues.

LTB: I have always been interested in the features that you guys are putting in, and the ones you just described are perfect examples of that, but the problems I have always had with bitshares have surrounded basic kinds of usability. From what I can tell, there still seem to be usability problems. So can you talk about that ...and how do you decide what to focus on making sure that this is as easy to use as possible vs. how much is about making sure that you have these awesome features....

DL: Ease of use has many different aspects. You’ve got the actual user interface. But the interface often reflects the underlying technology. For example, with bitcoin, the bitcoin addresses and how you send those from person to person, it ends up showing up in almost all almost all user interactions from all bitcoin wallets. So we try to design fundamental features at the low level that allows ease of use at the high level. So our multisignature approach gathers all the signatures on the blockchain and that makes multisignature easier to use then … when you have to assign the transactions off line. So all the features we add the low level are actually done with the thought of how to make the higher level interface easier to use. And that’s one of the challenges, if you design a lower level protocol that is super generic and flexible, and completely scriptable, you still have to represent what that lower level protocol is doing to the user somehow. And we wanted to make the blockchain reflect the user’s actions as closely as possible: have the transactions be something you could almost understand just by looking at them, rather than complex scripts where you have to have a computer to evaluate and interpret.

LTB: So bitshares is a chain that uses the graphene library. There are other chains that will use the graphene library. Is this a change of … approach? I think I remember early on that the … bitshares chain would be the home to all these other things  and perhaps there might be sidechains in the future.

DL: Let’s talk about the scaling issue in particular…. there are different aspects to scaling. This is … very important for the entire industry to contemplate. There are several dimensions. One dimension is throughput. Another dimension is latency. Then there is a third dimension of political scalability. You can have a really fast internet connection, but if you are trying to connect to a website hosted on Mars, it’s going to feel really slow because the time between when you issue the command and the response gets back to you is so long. So bitcoin has a 10 minute latency on average before you get your first confirmation. Worse case is even longer than that… it sometimes could be 20 to 40 minutes between blocks. The throughput is how many transactions you can actually get in that time. So in 10 minutes, or 40 minutes, bitcoin can get an average of 7 transactions per second into a block. You can make your blocks bigger and that will increase your throughput, but it will do nothing to improve the latency of the system. And then there is political scalablity, and that has to do with how many people can be involved in the decision-making process. How many people have influence? How does that scale from small community projects to something as big as a nation or something that goes global. The political scalability of the system is the third dimension.

With bitshares and graphene, we’ve done a lot of focus on the latency aspect of this. Latency is very important for advanced smart contracts. It’s incredibly important for markets, where if you issue a market order, you want to know as soon as possible did that execute or not so you can go do your arbitrage at some other exchange or trade in some other asset. But if you are on a blockchain based upon proof of work where there is this uncertain period where you don’t know whether it’s confirmed or not,  it slows down the ability to sequence events and know that your previous actions are locked in and irreversible. And so you can think of it as the difference between how many cores you have on a processor and the frequency of the processor.

LTB: And so when you say the frequency of the processor, that means the speed, basically.

DL: Clock speed, yes.

LTB: One of the things about bitshares is blockchain usernames. You talked about multisig being more flexible in the new type of architecture that you have. I think that that comes from deeply integrated usernames within the system itself. Is that correct?

DL: That’s part of it, yes.

LTB: Most blockchains don’t have integrated usernames. You guys do. What are the other advantages of usernames in the system and are there any downsides to using usernames in the system?

DL: The primary advantages are that it’s possible to communicate your username over the phone or in conversations, or write it down on a business card. It’s easier for you to remember your account name. Those are the pros. The downside is typos could be more frequent. They could cause you to lose funds that way.

LTB: So just because it’s human readable basically that means that humans aren’t going to be copy and pasting them which means you can have errors creeping in that way.

DL: Yes, bitcoin addresses, I can’t tell you how many people I’ve talked to and how many times this has happened to myself where copy and pasting, it looks like a bunch of noise and you think you got it right. So there’s pros and cons with both. Our feeling is that from a usability perspective, copying random strings or having to use QR codes is a barrier to entry to the masses. The masses are used to bank account names that they know. There might be a routing number under the hood of their bank account, but they log in with a username and password. That’s how people interact with websites. Another benefit of names: it give them personality. You’re going to label your private and public keys anyway, just so you can keep track of who you are paying.... It provides some consistency to that, which allows your ledger to be readable and consistent readable across all your computers. There are a lot of benefits associated with it. One of the downsides to the named account approach: potential loss of privacy. Your name is no longer random, so if you pick a name that is somehow associated with who you are, then people might be able to link that activity to you. All that said, it’s still possible to generate a random account name and use that and have more or less the same privacy you have on bitcoin. I would like to add something on the privacy note that bitshares 2 has. It’s not available in the web interface but it is available on the protocol and on the command line wallet for advanced users, and that is Stealth Blinded Transfers. This is a level of privacy that exceeds what is available in the other coins. It’s based on the technology created by blockstream. Both the amount being transferred and who it’s being transferred to is completely obscured and there are no account names in this system. So it’s the maximum level of privacy but it comes at the penalty of ease of use. You’ve got to do more coordination between the sender and the receiver to make sure that payment is received properly.
11:24
LTB: Both bitcoin and ethereum support various kinds of smart contracts, and bitcoin is adding more smart contracting capabilities all the time, where you can program transactions to have rich levels of interaction. Where does bitshares or the graphene library fall between those two things. Are you more on the fully capable you-can-do-anything side or is it more on the limited language but powerful tools side like bitcoin?

DL: … we’re more on the curated side. We solve the adding features concept with changing the protocol by making hard forks to add new features easier to implement, easier to get consensus on, which means we don’t have to go for the unchangeable protocol, but an upgradeable protocol. Our belief is that any smart contract that is going to be widely used needs to have a native implementation. It’s possible to do all kinds of things with these smart contracts and ethereum or bitcoin, but it’s like tying one hand behind your back... yes we technically we achieved the transfer of control and the behavior we wanted but it wasn’t in a natural way for the particular application. It wasn’t necessarily done in the most efficient way that could be implemented. I use the comparison between the app store on apple … and the google play store. The bitshares stakeholders approve all the smart contracts that get added to the protocol. That said, one of the things that could be added to the protocol is smart contract type features. We haven’t added it to this point because we believe that it’s sort of a long tail of innovation. But the big applications … should be done natively. 13:30

LTB: You talked about political scalability earlier. Bitshares 1.0 used DPOS or Delegated Proof of Stake. I believe that the graphene system uses a more advanced variation of that and has a greater segmentation of roles, with the idea that if you split up the responsibility and the ability to perform these roles amongst many people, none of whom have the ability to perform all the roles, then no one individual or group of individuals are responsible for any one thing that happens.  And then you use the stake holders which is to say the people who actually possess the bitshares and then vote with those bitshares, they essentially give mandate to various representatives to act on their behalf. Is that a good description of the system that you designed and what did I miss? 14:15

DL: That’s a good high level overview. I’d say we take a constitutional style approach of separation of powers. We’ve got the witnesses which are responsible for witnessing transactions and time stamping them and putting them into blocks. We’ve got the committee members. They don’t produce blocks but they do get to change things like fees or network parameters such as block size. But everything that they do is peer reviewed by all individual users and goes through a waiting period where they can get voted out and (garbled) becomes void. So those are two roles. And then we have workers, and workers can get hired by the blockchain to do implementation of new features that the stakeholders want. So if they want a new smart contract or they want something that is going to make the blockchain more competitive, then the whole blockchain can fund it without having to worry about donations or some people having to sacrifice so that everyone else can benefit.  It really divides up all those rolls.
And then lastly anyone can be a full node and can be a validator, can basically check up on the network to make sure that all the rules are being followed. There is no limit to the number of validators. There’s actually no limit to the number of block producers, other than the economic limits of how much is the network willing to pay and how quickly do you want to reach irreversible consensus. 15:50

I’ve done some analysis of these various dimensions of decentralization, of control of power.
From where I sit I think bitshares is doing the best in every dimension. We’ve got the most unique individuals actually producing blocks within any given period of time. If you take within a 30 second window how many people have participated in signing off on blocks, bitshares has the most. There is one other role that we have in the bitshares system and that’s called the proxy, and it’s like proxy voting in a corporation. What we discovered in bitshares 1 was that there’s a lot of voter apathy. Not everyone has time to follow all of the politics or evaluate all the people that are trying to do things, evaluate all the ideas. Not everyone wants to think about it or even knows they are able to make the best decision. To solve that you can simply set your account to proxy to someone else who you trust to make those decisions. Which means that you can view proxy voters as sort of like a congress of people where it’s representation proportional to the weight. And that can allow the network to respond very quickly to changing conditions. That’s one of the main things that we wanted to make bitshares to be able to do, was respond to dynamic market conditions. If the governments decide they want to shut down all the mining pools, how does bitcoin respond? How long does it take them to respond? If there’s a major issue that comes up with blocksize, how long does it take you to respond? That is the kind of thing we want the bitshares network to respond to quickly. Proxy or representative voting is how bitshares achieves that.  17:52

LTB: It seems like you’ve replicated … almost a political situation… you said the word politics and that is basically what we’re talking about here. You said that there’s more participation on an individual level. I assume you are talking about relative to mining pools not individuals who run mining and participate in a pool. Why does that matter and why is your system better? 18:12

DL: In bitshares we try to make sure that every individual’s influence is directly proportional to their stake. If you have one single bitshare you can either vote directly on who you want or you can give it to someone who can decide for you. You’ve got say proportional to how much you own. Whereas in systems like bitcoin, if you own a bitcoin you have no say. If you’re a bitcoin miner you can pick between one of the pools out there, but economic forces mean that only if you can mine profitably do you have a say. In other proof of stake systems the bell curve of the distribution of funds mean that the only people that can profitably virtually mine are those that have a large enough stake. Anyone with a smaller stake they technically can run a node and produce blocks whenever their turn comes up, but they won’t be able to do so at a profit, which means they don’t get a say either.... because of economic reasons. 19:30

Lastly the ability of people to participate in the system without having to be technically proficient, without knowing how to run a server or maintain hardware or have good uptime. With workers and proxies and committee members you don’t need any technical expertise. All you need is to understand the concepts, to understand economics to do whatever job you’re going to do for the blockchain. 19:50

One thing big we haven’t discussed is another role in the network and that is spreading the word, bringing in new users, and that’s why bitshares 2 has a referral program built into the protocol, which means when a new account is created, the network knows who referred them, and it knows how to divide up the fees of that referred user back to the people who referred them. You bring someone into bitcoin and the network makes fees, the miners make fees, but there’s no income for you. With bitshares you bring someone to the network and you get a cut of whatever revenue they generate for the network. And this gets to one of the hearts of bitshares which is to make sure that the network is profitable. Profitable in the sense that the cost of paying all the witnesses to run the nodes and the workers to do everything should be less than fees earned. The cost of user acquisition is an expense that all businesses have. Bitshares makes sure that the cost of user acquisition is factored into the overall equation. 20:53

LTB: You and I first spoke about bitshares just a couple of months after I started Let’s Talk Bitcoin. It really feels like you guys have fallen down on expectation management. I have been watching the project casually for the last year and more intensely the year before that. One of the things that I felt pretty consistently about the project is that you guys have really amazing technology … there is zero question in my mind that when I use bitshares it is much faster, and because it’s much faster and it confirms really quickly it works really well when it works, that it should have a larger user base than it does. But it doesn’t because I feel like you guys over promise and under deliver, and your technology is still better than other stuff out there but it doesn’t meet the goals that you have set for yourselves. And because of that it feels like it’s always in a perpetual state of well this is just a temporary thing, this is the new system that’s coming out because you tried to hit the goals and weren’t able to hit the goals. 24:05

I specifically bring this up in the context of a number I have heard tossed around a couple of times and I think it came officially from you guys but I am not sure, in that the system can support 100,000 transactions per second theoretically. Theoretically is one thing, but in practice I read an article that you wrote maybe a couple of months ago….that said that in practice you guys can only do about 100 TPS right now because of realities of peer to peer technology, which are things that I don’t think you’re working to change. I think it’s like you’re waiting for progress to push along and that that will make it so that your system can work at that full throughput. Do you see what I mean here? 100,000 transactions per second is fantastic compared to any system out there that maintains meaningful decentralization. Compared to 100,000 transactions per second it looks like a big failure. So you get the issue I’m bring up here? 25:00

DL: Sure, this is a question that comes up a lot. ...when we say 100,000 transactions per second we’re referring to the speed of the CPU. Even the fastest CPU is still limited by how fast the network is. So when Intel says they can do so many million floating point operations per second on their latest CPU, that’s only for applications that are highly optimized and under the assumption that you’re not getting all the data that you’re trying to feed the CPU from a network that’s really slow.

We identified that as a bottleneck. There are some tasks in blockchain technology that are inherently sequential. So we’re talking about the core frequency, and just like CPUs, that’s the one area of technology…. we can add more cores, the individual cores, single threaded performance isn’t growing as fast as multithreaded. So we optimized for what we identified as the bottleneck in the space. Everything else can be done in parallel: Signature verification, faster networks, faster memory, more memory. Those are all things that are out there.
So when we did our testing on a public test network with 30+ participants distributed around the world, we were actually able to achieve over 1000 transaction per second using low end VPS systems. These are DigitalOcean machines with just a couple gigs of RAM. So we’re doing 1000 transaction per second without even doing any of the optimizations that could be made at scale, such as direct fiber optic links between the nodes that have been elected, more efficient networking protocol to improve latency, GPS time synchronization to improve timing. There are a lot of optimizations that we know are possible that we’re not waiting for … technology to advance. As soon as the network is saturating 100 or even a 1000 transactions per second, there will be so much revenue generated that we could easily pay for both the development and deployment of the infrastructure to achieve 100,000 transactions per second without having to redesign the protocol in a fundamental way.

LTB: Okay so the protocol itself is capable of that, although the current technology is not. You used processors as an example. How good of an example is that? … There are lots of things that you could do that don’t require any sort of network connection or latency whatsoever because they’re happening locally on your device. There are lots of use cases where you wouldn’t have to have that element at all. But with bitshares, again, because it’s this common ledger, that use case doesn’t exist. There’s no reason why you want to run an offline copy unless you’re doing for cold storage… 27:54

DL: At scale, in the computer industry...the fastest single threaded performance CPU you can get, that is the limit on how many sequential order dependent operations you can pump through the system at a time. You can’t run a market where every bid or asks that’s filled affects the orders that are available to the next bid or ask. In a single market that’s all going to have to take place on a single thread on a single CPU somewhere. Even if you have many different computers all over the world running that same calculation, they all have to process the transactions. So one question is how do you aggregate all the transactions, group them, sequence them, and then execute them. The process of peer to peer networks, block production, all those things, that’s all the grouping, but at the end of the day all blockchains are limited by this. So we can scale up the network infrastructure, we can do parallel signature verification,  have high bandwidth connections capable, but at a 100 bytes per transaction you’re looking a massive bandwidth requirements, not to mention the latency requirements in order to move that much data from one spot in the world to the other side of the world in a timely manner. From a practical perspective, we know we can do 1000 transactions per second without requiring excessive hardware because we’ve demonstrated it on our test networks in public. And we’ve scaled it back to 100 transactions per second just because we know we don’t have the demand for it. It’s more of a safety feature to prevent flooding attacks on the network. 29:35

LTB: You talked about the test net with the DigitalOcean instances. DigitalOcean is a cloud computing service, so were these actually distributed around… is there latency in this system? Or you got a bunch of instances...in co-located locations … on DigitalOcean. Is this a realistic comparison?

DL: I used DigitalOcean to describe the specs of the machine not necessarily the location.

LTB: Ahh.

DL: We’re talking about low end VPS systems but this testnet had systems from around the world involved in it. Some people had … home internet connections. Some people in China. We had a few on DigitalOcean. A wide variety of internet connections and hardware specs. 30:19

LTB: You talked about direct fiber optic connections between nodes that have been elected. One of the things that we’ve noticed over time with bitcoin is that as the infrastructure requirements get greater we actually see centralization because the barrier to becoming a part of the system that enables it in a way that a miner or one of your delegates might… the barrier simply becomes higher, it costs more money. And with something like a direct fiber optic connection, then again that’s a meaningful infrastructure investment that somebody would have to chose to make, so do you have any concerns about the system becoming less decentralized or less robust over time because of these optimizations? 31:00

DL: What we realized early on is that economic necessity forces centralization. At scale you have centralization. What we do is manage it so that you can get elected and have a secure source of income for producing blocks before you necessarily have to make the investment in the hardware. It means that it’s not just whoever is willing to make the investment and compete. They get it. Basically you buy your way into controlling bitcoin. You can’t buy your way into control of this network. You need both money and political support. That adds a lot of checks and balances. And it also means that once someone is an established player they’re not guaranteed to maintain that spot just because they have money. If they start misbehaving they could lose their position and be out their entire investment. Whereas a bitcoin miner can’t be fired.  31:55

thanks for the link, i'll listen to it on my break

I am doing it now xD Well i am not driving.

Thx. I can listen this in my car.

Nice, thanks for the link, i'll listen to it right now

Listen Right Here