A Beginner´s Guide to Buying, Selling, Using, and Mining BitShares:
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It’s been a wild few years for BitShares (BTS). Back in 2017, the cryptocurrency enjoyed an astounding 16,000% price increase, with its value surging towards the end of the fourth quarter last year.
The BitShares project, which was launched in 2013, has been largely overshadowed by its more mainstream peers like Bitcoin and Ethereum. This cryptocurrency, however, shouldn’t be overlooked, as it has several unique features that warrant attention.
BitShares at its most fundamental level is a blockchain. A blockchain is a distributed ledger that keeps a record of all transactions that take place on the network. By nature, blockchains are decentralized, meaning that no central entity, whether a bank, corporation, or government can dictate its operations. The public ledger is accessible to all parties and can audited by anyone. Blockchains have fostered in a new era of transactional transparency and accountability.
As one of the older cryptocurrencies, there is a large amount of research available on BitShares. Interested parties can go to BitShares’ reddit page, which contains extended discussions, how-to’s, and specific definitions for BitShares and blockchain technology in general. Some users also post news updates to the reddit page, making it a great way to find the most current information.
BitShares must be bought on a cryptocurrency exchange. Users must first register an account with a compatible exchange, then fund their newly created account with cash, with a bank transfer, or with a credit card. The funds in the account can be used to purchase cryptocurrencies like BitShares.
Currently, users cannot purchase BTS coins directly with any fiat currencies. Instead, they must first purchase another cryptocurrency like Bitcoin or Ethereum, then exchange Bitcoin or Ethereum for BTS.
Alternatively, users can buy BitUSD, a BitShares' blockchain-issued asset pegged to the U.S. dollar, directly with USD without needing to buy BTC or ETH first. In this case BTS serves as collateral to obtain BitUSD, which can be exchanged directly for USD.
To sell BTS coins, users must first convert their coins into another cryptocurrency like Bitcoin or Ethereum. Then, the other cryptocurrency can be exchanged for the fiat currency that was originally used to fund the account, such as USD, Euros, or pounds.
Once the respective cryptocurrency has been turned into a fiat currency, the money can be moved to a traditional bank account where the cash out can be completed by withdrawing funds from an ATM
BitUSD holders can exchange their coins for USD directly, with BTS coins functioning as collateral.
BitShares performance as an investment speaks for itself. And though past performance cannot guarantee future results, investors should consider adding BitShares to their cryptocurrency wallets. Investors have been rewarded handsomely for their BitShares investments, as the coin has had several periods in its history where its value has taken off.
When trading and investing in BitShares, there are two major strategies. The first is to buy and hold. Users purchase BitShares coins and simply hold them in their crypto wallet, and then sell when their time horizon has been realized. The second strategy consists of more active trading, and often involves a form of market timing. Traders buy and sell BitShares more rapidly, hoping to capitalize on short term price movements.
One major benefit of investing in cryptocurrencies like BitShares is that because of decentralization, no central bank controls its price or supply. This means that BitShares is exposed to different risks than fiat currencies, including the exchange rate risk that comes with central bank manipulations.
One unique way that investors can use BitShares coins is as the token for the BitShares platform. It offers a wide range of financial services like asset exchanges and banking services. The platform supports a decentralized asset exchange, dynamic account permissions to help management corporate environments, and allows users to make recurring and scheduled payments. The BitShares coin is the native token for the platform, giving users access to its many features.
The BitShares platform also allows users to trade in many different asset types, in addition to the native BitShares coin. There are smartcoins, which track the value of their counterparts — for example, bitUSD tracks the USD — as well as user-issued assets, which are coins created by platform users.
Mining a cryptocurrency is the process of validating and adding transactions to the larger blockchain. BitShares follows the Delegated Proof-of-Stake (DPoS) consensus protocol. It leverages the cumulative power of stakeholder approval voting in order to meet consensus, rather than relying on raw computing power. With DPoS mining, the network has a deterministic way of selecting block producers.
The blockchain uses witnesses that validate signatures and timestamp transactions by including them in blocks. Those who have initiated BitShares stakes are able to choose any number of witnesses to create blocks. Each node is given one vote per share per witness. The top ''x'' witnesses by aggregate approval are elected. The unique protocol allows stakeholders to select witness when they believe there is enough decentralization.
As a result of the DPoS protocol, miners don’t have to rely on mining calculators to determine the profitability of a given block like Proof-of-Work miners do. Because mining can be done with a large swath of devices, raw processing power is not required. Another result of the DPoS protocol is that miners don’t have to join mining pools, because far less work is required.
Because of the DPoS protocol, BitShares are technically minted rather than mined. All a user has to do is stake, or hold, BTS coins in their wallet and leave it running. The consensus of BitShares holders will elect witnesses to confirm blocks, with each witness given a three second window to confirm a given block. The network guarantees that minting is evenly, randomly, and fairly distributed to all witnesses. The average confirmation time is around 1.5 seconds per block.
Because the platform and coin are designed for use in the financial services industry, they must be able to scale. The development teams is confident that they can reach transactions speeds of 100,000 TPS when we pay for the network to go with it. They also note that the blockchain’s performance is highly dependent upon having a compatible transaction protocol, which happens to be the Delegated Proof-of-Stake consensus. Though the platform hasn’t reached 100,000 transactions per second (yet), the combination of emerging blockchain technology and the Delegated Proof-of-Stake protocol is a step in the right direction.