What is BitShares for Dummies | BitShares Review

What is Bitshares?

Many cryptocurrencies are targeted at improving aspects of the current financial system—payments, contracts, speed, privacy—but Bitshares (BTS) aims to have it all: a universal asset exchange equivalent to something like the NASDAQ, a price-stable cryptocurrency, a lightning-fast transaction network, a corporate finance platform, and more. Bitshares has a lot of complex layers, but at its most basic, it is two things: tokens that represent other assets, and a decentralized exchange that those tokens can be traded on.

How does Bitshares work?

The most impressive part of this blockchain is the speed: new blocks are created and transactions confirmed every 3 seconds, which soundly beats Bitcoin’s block time of ten minutes, Litecoin’s of 2.5 minutes, and even Ethereum’s of 15 seconds. Its network is theoretically able to handle up to 100,000 transactions per second—more than Visa and MasterCard put together. This blockchain is run on “Delegated Proof of Stake” or DPoS, which means 101 powerful computers run the whole network, and anyone who joins the network can vote for trustworthy people to run it.

In some areas, though, it veers off into some different territory. First, it has two classes of coin: BTS and SmartCoins. The first is what you can trade on the market just like any other cryptocurrency, and it is what gives value to SmartCoins. SmartCoins are coins that represent, at approximately a 1:1 ratio, other assets—the most notable examples currently being U.S dollars (bitUSD), euros (bitEUR), yuan (bitCNY), gold (bitGOLD), and even Bitcoin (bitBTC). You can create SmartCoins by buying BTS and putting up 200% of the asset’s value as collateral (the minimum is 175%). To create one bitUSD, you would need to have $2.00 worth of BTS.

SmartCoins, then, are essentially just IOUs that represent various assets—but they are valuable because they can be traded in for BTS, which has real value in other currencies. Anyone looking to trade assets on the Bitshares exchange needs it, and just like a regular currency, there are people willing to sell it in exchange for other currencies that they want more.

The other major piece of the puzzle is where all this takes place—a decentralized exchange. A conventional, centralized exchange takes your currency and gives you buying power. You can use that buying power to buy Item A, but you don’t actually receive Item A—just a token that says you have it. The exchange is responsible for having enough money to pay you when you sell Item A back for currency.

On the decentralized exchange, those tokens are SmartCoins—but they aren’t issued by any central authority, and the record of transactions is maintained by the whole network. If you choose to sell your SmartCoin, you can then either use the BTS you are paid in to buy another SmartCoin, or you can sell them to someone else. It works the same way as a traditional exchange, but without any centralized point of trust.

Recent developments

In October 2017, one of the biggest cryptocurrency exchanges, Bittrex, delisted the coin. Poloniex, another major exchange, followed suit by freezing deposits and withdrawals—though these were reinstated in February 2018. This was seen by many as centralized exchanges attacking their potential competition.

BITFARM, a farming simulation game run entirely on the decentralized network, is set to launch by March 2018.

How to buy BitShares

BitShares’s coin is mostly bought and sold on Binance. Here is a quick guide on how to buy BitShares starting with fiat to avoid hefty fees:

1. Buy Bitcoin or Ethereum at an exchange that uses your fiat currency on Coinbase.
2. Transfer your BTC or ETH to an exchange that supports BitShares. Currently, Binance is the best choice. (Tip: if you bought BTC/ETH on Coinbase, look into using GDAX to avoid transfer fees)
3. Buy BitShares by trading your BTC/ETH for their coin, and you’re done!

Fun fact

The creator of Bitshares, Dan Larimer, is also the main developer behind STEEM and EOS.


More Articles for You

How to Handle Money in a Frugal Lifestyle

Let’s be honest: handling money can be hard and requires a lot of self discipline, especially if you know living …

What is the Highest Credit Score You Can Get

When people think about credit cards, curiosity gets the best of them and the question of “what is the highest …

5 Ways to Boost Your Credit and Buy a House

Buying a house is an exciting experience and one of the best things that could happen to you. However, the …

Tips for Saving Money on Groceries

Who does not want to save a couple of bucks? There are no avoiding expenses for groceries so may as …

Poshmark vs eBay: 10 Secrets to Selling on Poshmark

It is no secret that Poshmark is making buying and selling fashion pieces “in” again. Poshmark is an interactive, social …

Simple Ways to Plug the Hole in Your Wallet

Nobody likes to waste their hard-earned cash, but every year people throw money away because of a lack of planning, …