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Limiting or eliminating fees in decentralized networks is possible if you look at it from another angle. Fees are the result of anti-spam measures to a great extent. Holding minimum balances can offer a solution. Since there are parallels to this in the banking world, it could be a viable solution. It’s particularly problematic in the micro-payment world where is doesn’t make sense to pay a $.01 fee on a $.05 transaction.
On this weeks BitShares Developer Hangout, Dan Larimer of Cryptonomex talks about the successful update, margin calls, fees, the referral program and answers Community questions.
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Transcript
bytemaster: The biggest news this week is BitShares has been upgraded successfully to BitShares 2.0. It was a great effort by everyone in the community. We currently have 35 active Witnesses with 100% participation on the network. It’s been more or less smooth with the exception of one minor incident earlier this week that resolved itself in less than one hour.
I’d like to thank all you Witnesses out there who have participated in the test networks and who are helping run reliable nodes on the main network. The users have been generating income for BitShares for transaction fees that have actually reduced the supply of BitShares between 500,000 – 1,000,000 BitShares, I haven’t checked the latest number. That income is in the form of transaction fees and account registrations and the like.
There are two light wallet clients released, one for Mac one for Windows. Those wallets connect to OpenLedger as the data source and then we also have bitshares.openledger.info which is a hosted wallet. It’s the exact same experience on all three interfaces, the primary difference is in the security of your private keys. The light clients keep your keys locally and the javascript and all the application that is able to touch your keys is kept locally and cannot change, unless you download a new light client.
Whereas if you use bitshares.openledger.info then you will have auto upgrades, but you are relying on the server, to some extent, to not get compromised. And if it’s compromised and uploads code that will reveal your private keys, then you could be compromised in that way. The bottom line is you can’t be compromised as long as you never login to a compromised server. If you would like to run a full node it’s possible to build and run a full node on your own computer and then configure any of the light wallets or even the OpenLedger website itself to point to your local full node client as it’s source of data. So my official recommendation is to use the light wallets, from a security perspective.
Another nuance that many people may not be aware of, when you use BitShares on OpenLedger.info your wallet file is still kept on your local computer and is tied to that particular browser. If you open it up in a different browser or you go to a different computer it will be a completely different wallet and you won’t have access to your funds unless you export your wallet and then import it into the new computer. Just because it’s a website, the server is not saving your wallets files in any form so it cannot give you access anywhere. In fact the server doesn’t do any authentication. It’s entirely possible to host the wallet from a GitHub repository and that will be a static non-changing website. It just needs a websocket connection.
I just want to point that out, that the hosted wallet is there for your convenience of automatic updates. It is not yet at the level of blockchain.info where you can login from any computer and gain access to your keys. So that’s a brief summary there.
[00:05:33] bytemaster: As far as exchanges go I’m happy to report that several of them have already completed the migration to BitShares 2.0. Poloniex, CCEDK and a few others, there’s a thread on the forum where you can go to see the latest updates as exchanges come online with support there.
[00:05:50] bytemaster: Blocktrades.us and CCEDK will have on-chain assets for doing trading with Bitcoin, Litecoin and other cryptocurrencies sometime next week. And we’ll have direct support for getting deposit and withdrawal keys right there in the wallet. We are willing to integrate with anyone including metaexchange.info and Shapeshift if they provide us a ReactJS component that we can add to the page. We’ll add, support and integrate with your exchange to the base wallet as a gateway.
[00:06:29] fuzzy: Along these lines there’s a thread called, “Shout out to the exchanges”, which you posted. Monsterer was in there saying something about quicker adoption by exchanges, please consider adding authenticated HTTP access to your API. Have you guys considered this or has that been done?
[00:06:53] bytemaster: We already have authenticated access, it’s possible to define a config file that controls who can login to the websocket API and what they can access.
[00:07:06] fuzzy: So does that mean for all intents and purposes this is taken care of?
[00:07:12] bytemaster: It’s more or less taken care of except for perhaps testing and documentation.
[00:07:26] bytemaster: We’ve spent a little bit of time making sure that we could divide up our API’s into groups by function and computational load and security risk. So there’s that.
[00:07:40] fuzzy: So it’s multiple layers?
[00:07:43] bytemaster: Yes, there’s definitely different layers. We support SSL and non-encrypted versions. We recommend … one of the things we’re looking for is additional API servers. API servers expose the API connection so light clients can connect and get information about the blockchain. OpenLedger is just one API server. We’d like to diversify that. It would be great if Witnesses would run a second node, probably not the same node as your Witness because these nodes will gets lots of load and could be suffered from denial of service attacks and the like.
[00:08:24] bytemaster: That would allow users to get information about the blockchain. The reason I think this is a good job for Witnesses is because it’s just another Witness activity. A Witness is observing the blockchain and testifying about it. They testify by signing the transactions and they testify by serving up chain state.
[00:08:45] bytemaster: Anyone who runs one of these will need a domain name with HTTPS certificate so that we can add it to the list of available websocket connections in the client. We’d like to let users know where the data is coming from in the UI, so eventually we’ll show the server in the bottom bar so you know that you’re looking at the state of the blockchain according to a particular website that you are trusting to feed you with chain state.
[00:09:17] bytemaster: It’s important to understand our trust model here. We are trusting the server to look up accounts, look up authorities and so if someone says send me money and they give you an account name, the server is the one telling you the information there. It’s possible to construct transactions that will only go to a particular account name, so you don’t actually have to trust them completely for that. But you do need to trust the server for things like encrypting the memo and other information that you’re gaining from the blockchain. So I guess that’s where we are with those options.
[00:10:02] bytemaster: I’d say the topic I wanted to discuss today after the status update is the margin call mechanics, because there has been a lot of confusion about that. A lot of people are worried that it’s not working. It is working exactly how it was designed. But I think it’s something that would be good for everyone here to understand and hopefully be able to explain to others more accurately. As well as to understand the reasons behind the design that we have.
[00:10:37] bytemaster: So I’ve posted the link earlier on this chat log. I’ll post it again for everyone who’s here now. It’s a whiteboard drawing that I drew. I’d like to talk about that.
[00:10:52] fuzzy: This thread is called, “Margin Call Explanation & Beware of Illiquid Markets with Low Margin“.
[00:11:08] bytemaster: I’m looking at this diagram now and if you’d imagine you’ve got your order book, you’ve got your bids and your ask and you’ve got your “V” shaped depth chart. Right in the middle is the settlement or the feed. For the purposes of this discussion we’re just going to assume the settlement or feed price is also right in the middle of the spread in the market.
[00:11:32] bytemaster: That’s the basic simple market, bids and asks, the markets setting a price. Now with each account being able to borrow the asset provided the post sufficient collateral, and they can add and remove to their debt or collateral at any time. The debt to collateral ratio … so if you have $100 backed by 1,000,000 BitShares, that defines the Swan price or the point at which the collateral exactly equals the value of the debt. Any time the market moves beyond that we would have a Black Swan event and all orders would be forced to be settled.
[00:12:16] fuzzy: Because there’s not enough collateral backing it?
[00:12:18] bytemaster: Correct. So the swan price is sort of the threshold price and every single account has a unique margin position and a unique swan price for that account. The swan price for the entire network is the account with the least collateral backing their debt. And when a margin call happens and we consume all the orders up to the swan price, that’s the black swan, that’s the point at which price is locked and all orders are settled at that price.
[00:12:59] bytemaster: So you can kind of view the swan price as the minimum value of a bitUSD in terms of BitShares. So it’s worth at least that many BitShares at that time. So that’s the base. Now we have the call price. The call price is a multiple of the swan price. So we want to say that we want to have extra collateral. How much extra collateral do we need to have before we get a margin call?
[00:13:27] bytemaster: So you can take your swan price and multiply it by 1.75, that’s 75% extra collateral is required. Any time you have less than 75% extra collateral, you will be margin called. That’s called the “call price”. Every individual user has a different call price. Your margin will be called … basically the network will take your collateral, sell it on the market and pay off your debt any time the highest bid … the person who is willing to pay the most for your collateral, is less than the call price of your position.
[00:14:21] bytemaster: And when that’s true, the market is just going to take every order on the book until your position is covered. And if there are no orders on the book near the settlement feed … or the feed or the settlement price … you could end up paying “above market”. It’s really not above market, but above the feed in order to cover.
[00:14:52] bytemaster: This is called a “short squeeze”. This happens when the order book is thin particularly it can really push the price up on the internal market as it’s trying to cover your position. Now it’s possible that a short squeeze could run all the way up to the swan price and trigger a black swan in illiquid market and we don’t want that to happen.
[00:15:14] bytemaster: So we have another feature and this is a short squeeze protection price. This says that we will not call your order, we will not sell your collateral for any price less than this. So it’s sort of like a minimum value. And this short squeeze protection price is actually based on the feed. So you can look at it as the highest possible premium that you’ll have to pay above the feed in order to cover a margin call.
[00:15:44] bytemaster: Now some people have been advocating that we don’t force anyone to pay any higher than the feed in the event of a margin call. I am very much against that. I think there needs to be some room for the market to establish a premium in order to incentivize people to keep orders on the books and incentivize people to provide extra collateral. If you provide a lot of extra collateral, your call price is going to be very far away from where the market is trading and you don’t even have to worry about this.
[00:16:21] bytemaster: And if people know that they’re protected by the feed, they won’t worry about getting margin called, because it will just turn into an order at the feed. And if the market is illiquid or where it’s trading with free exchange is different from where the feed is for whatever reason, the feed would have too much control over setting the price. We want the feed to be sort of a guideline and it’s sort of like the safety rails on the market.
[00:16:46] bytemaster: We want the actual price to be established by the actual bids and asks in the market with some protection for the users. And the protection is mainly there to give the market a chance to recover in the event of a margin call or short squeeze or whatnot. When the internal markets are less liquid than the external markets.
[00:17:09] fuzzy: Do you think this premium kind of gives an extra buffer?
[00:17:15] bytemaster: Yes, this premium is sort of a dynamic fee that you end up paying as a result of getting margin called. If you got margin called and the network says we’re not actually going to margin call you if there’s no bids at the feed price. Then you could end up walking all the way down to a swan and no one got margin called because all the bids were not high enough so they were never filled.
[00:17:44] bytemaster: If you don’t have sufficient collateral we need to take whatever offers are on the books to exit your position in order to protect the wider market. And even if that means we have to pay a premium to get the USD or the CNY or bitBTC, that premium you have to pay is just the price of getting margin called. Where we are right now, if the BitShares price was half a cent, 0.005 USD, your collateral could be sold all the way down at 0.0033 USD in order to fill a margin call.
[00:18:30] bytemaster: So some people have created margin positions that were very low on the collateral and as a result a little bit of movement in price resulted in them getting margin called. And because the network is new and there aren’t a lot of orders on the books right now the orders that were there ended up being very far away from the feed and they paid a very high price for getting margin called. So that’s what the thread was warning about.
[00:18:56] bytemaster: If you’re going to take out a margin position, you need more collateral during periods of low liquidity and low depth in the books than you will need during periods of high liquidity and with deep books. Just because the network will allow you to go to just 75% extra collateral … if you take 76% collateral and the price moves against your bid you’re going to be margin called and you’re going to lose money because you’re forced to buy back in an illiquid market.
[00:19:33] bytemaster: Everyone who was migrated from BitShares 1.0 to BitShares 2.0 should have had ample collateral because we had a 300% requirement in BitShares 1.0. So you’re only at risk of being margin called in this market if you take some of that collateral off of your position.
[00:19:56] fuzzy: It sounds like people can kind of choose, to a degree, how much collateral is going to be backing it.
[00:20:07] bytemaster: Each individual can choose their debt to collateral ratio, which will directly impact the price at which they will be called. Which means if you want a guarantee that you’ll never be called or that you have the least likelihood of being called, you should put all of your BitShares as collateral for all of your USD.
[00:20:28] bytemaster: That will make sure that you have the least likelihood of getting called. If you have $100 and you’ve got 20 million BitShares backing it, your call price is going to be so far away from any feed and all the market orders that you’re never going to get called, unless of course BitShares dies and it’s worthless.
[00:20:53] bytemaster: This is just a warning out there to everyone that while the markets are illiquid, have ample collateral or you will lose money by being called.
[00:21:33] bytemaster: In normal markets they call you and say you’ve got 24 hours to increase your collateral or we’re going to close your position. In BitShares you get no notice your position just gets closed. So it’s up to each individual user to make sure that their collateral {audio cuts} and that they monitor the market and setup automated scripts to warn them if their margin is getting low.
[00:22:03] bytemaster: So you can view a margin call in BitShares as, “times up we’re selling your collateral”.
[00:22:09] CryptoPrometheus: Do you think it would be useful to have some sort of email reminder built in as an extra feature in the future?
[00:22:22] bytemaster: That would require tying the email address to particular accounts and a server setup. I think that’s something that some wallet providers could certainly do to differentiate themselves and win customers.
[00:22:29] Thom: If you brought over some USD from BitShares 1.0 how much collateral do you have by default?
[00:22:35] bytemaster: If you have USD then you’re not in a margin position, you just have USD. Your USD is not at risk. It’s only the people who have leverage who basically went short in BitShares 1.0.
[00:22:52] Thom: This is why I’m a bit confused because first of all the symbol changed, because in 1.0 it was called bitUSD and now I guess it’s just called USD. Is that correct?
[00:23:03] bytemaster: That is correct. Technically in BitShares 1.0 it was also just called USD and in the user interface we put a “bit” in front of it to let the user know what was going on. Right now we’re just showing the symbol as it exist on the blockchain and has always existed on the blockchain.
[00:23:24] Thom: I was under the impression that in order to buy the bitUSD that you had to have a … it’s basically a margin, a call type option anyway because you have to back it with BTS in order to get it. So when it’s transferred over is there no backing for it anymore? I guess I’m just a little bit fuzzy on it.
[00:23:45] bytemaster: The backing is still there. Everyone who had an open margin position in BitShares 1.0 has a special account, you can see them on the blockchain as “USD collateral holder 1-n”. Those are the accounts for all the people that have open positions that have a debt in collateral backing it. So all USD is still backed by ample collateral.
[00:24:09] Thom: Right, my question is how much collateral is that now that it’s transferred over? And you mentioned there’s no risk for it being called or anything, but I guess I don’t understand why that would be the case if there’s a collateral backing for those accounts. For those positions you would think that there would be a way to understand that and it would fluctuate as the value changes or the liquidity changes in the market.
[00:24:36] bytemaster: I didn’t say that there was no risk, I said that there was low risk. Only because it’s 3X collateral is what it was created at. You’d have to look at the individual accounts to see what they risk of them being called is. We’re working on adding additional tables in the market page to show all these positions sorted by the one with the highest swan price or the highest call price and then moving down.
[00:25:07] bytemaster: It’s backed just as strongly under BitShares 2.0 as it was under BitShares 1.0 up until someone who has leverage in BitShares 1.0 imports their account and adjust their margin position to remove some of their collateral. At that point, they’re under the new rules and they could have as low as 175% collateral. But of course as I advised earlier, I do not recommend people that migrated their account to reduce their collateral backing their position until the market has more bids and asks in it.
[00:25:46] bytemaster: Because if you do get margin called, and you’re more likely to if you reduce your collateral, you will pay a price. If you hold USD you’re fine. There’s someone out there that has to buy it back from you at some point in the future in order to get their collateral and so it continues to have it’s value.
[00:26:07] bytemaster: We don’t expose the ability to do a forced settle at the price feed in the GUI right now, but you can certainly do it from the command line wallet. We will be adding the button to initiate a forced settlement in the GUI. The primary reason why we didn’t do that right now is because bids in the market should give you a better price than forced settlement. But technically speaking, the least collateralized short position out there can be called at the settlement price.
[00:26:42] fuzzy: Roadscape mentioned, “at the moment that it’s transferred over it’s probably still backed by 200%-300%”, is that correct?
[00:26:49] bytemaster: That is correct.
[00:26:50] CryptoPrometheus: You mentioned about forced settling at the price feed. Is that an option for someone that happens to be holding USD, that wants to get BTS in exchange for it and for whatever reason there’s no bids that happen to be as high as the price feed?
[00:27:13] bytemaster: That is correct. The savvy bitUSD holder right now would place their bitUSD on the books to buy BitShares at 10%-15% the current market price, just to be there to catch people that get margin called. At some price above the short squeeze protection price. If you keep your USD there on the books then you will get a really good deal on some BitShares anytime someone’s margin called.
[00:27:44] fuzzy: So those who have less collateral are the ones who are going to have a higher chance of being margin called and being forced to basically liquidate a portion of their position at a loss. And whoever’s out there waiting is going to basically win out in that transaction.
[00:28:05] bytemaster: Correct. And you’ll see how this incentive helps secure the market and protect the market, because people with bitUSD no longer have any incentive to just keep it in your account because you’re no longer getting yield. The best thing you can do with your bitUSD, if you’re just holding it in your wallet, is to keep it on the books to buy BitShares at something between the short squeeze price and the settlement or feed price.
[00:28:35] bytemaster: So that what you’re doing is you’re protecting the market, you’re allowing the shorts to exit their position at a loss and you get a profit. You can turn around and then wait for the market to fill up and then sell back closer to a fair price or sell it on the exchange somewhere at closer to the feed price.
[00:28:57] bytemaster: This is why I believe there should be a relatively large spread between the settlement of the feed and the short squeeze protection price. So that there’s a large range of profit opportunity for people to keep the books thick.
[00:29:13] fuzzy: During this initial rollout, when it’s a relatively illiquid market because of all of the complexity of a rollout, obviously. You foresee this being one of those times when the markets can swing pretty wildly and that somebody can be called pretty quickly. Is that correct?
[00:29:34] bytemaster: That is correct.
[00:29:37] fuzzy: So right now basically the walk away point is, for those of us who don’t want to day trade or anything, but we want to support the network and also potentially get a lot of BTS at a very good price … it’s a good idea to support the network by high collateral bitUSD holdings?
[00:29:58] bytemaster: Correct. So if you want to take advantage of people getting margin called or being stupid with their collateral, then you can yourself take out a margin position, borrow money from the network with a lot of collateral, take the USD that you get and sell it very close … you know, 15%-20% below the feed price. So that if someone does get margin called who was not as wise as you and held less collateral backing it, then you get a windfall.
[00:30:27] fuzzy: So first off just want to plug this, bytemaster just called all of you guys very wise, so keep that in mind. All joking aside this brings in what Thom and roadscape were talking about. Let’s say I had bitUSD over on the first chain, that’s going to start out at what it was before, until there might be a margin called or something to that effect. Is that correct?
[00:30:55] bytemaster: Yeah. USD is still pegged, it’s still backed by things and it’s still redeemable. It’s actually more redeemable now than at any other time, at the price feed. So, your USD is fully redeemable at the price feed at all times. The only difference now compared to last week is that your bitUSD is not earning your interest.
[00:31:20] bytemaster: I’d also like to remind everyone that you can leave orders on the books without compromising your ability to vote. All BTS in orders votes according to your account, so that’s good.
[00:31:34] bytemaster: I’d also highly recommend anyone who’s migrated their funds to either vote for a lot of Witnesses, we’ve got 35 of them out there. Or nominate a proxy that will vote for them. It’s real easy in the user interface to just name the account you want to be the proxy and be done with it.
[00:31:56] bytemaster: Those of you on this Mumble session are probably good candidates for being proxy too. You come here every week, you get status updates, you can be informed about who’s a good Witnesses or things that need to happen. You’re informed about how to make policy decisions and you’re actively engaged. So we’ve got a lot of candidates in this room that should be actively voting and they should be requesting other users to nominate them to vote by proxy.
[00:32:33] bytemaster: Right now the network is relatively centralized because one of the accounts I control is getting a lot of proxy votes right now. I would like to, as soon as possible, get 30+ people, each with less than 3% in there so we can have diversification and decentralization of proxy control. That’s up to us as a Community to be proactive in securing that decentralization. And please do not rely on me to be the dictator of policy just by everyone proxying to me.
[00:33:15] fuzzy: And this is just a quick plug, I have seen user “fav” on the forums looking to be a proxy. That’s the first one I’ve seen, for anybody who’s interested in automatically diversifying it a little bit.
[00:33:32] fuzzy: Pheonike ask, “Can you color code the margins in GUI to visually know if it’s a profit loss with red and green”?
[00:33:41] bytemaster: It’s hard to know the profit or loss, because when you have to take your margin position it’s neutral. You end up with USD in your account, you notice you have $100 credit, $100 debt and your monies in your collateral. There is no profit or loss there. You might sell the USD you received for BitShares, you might sell it for CNY, you might sell it for USD, out there real USD.
[00:34:10] bytemaster: So there’s no way to know a profit or a loss just because you borrowed money. It’s like going to the bank and asking for a loan. You get the dollars from the loan, did you have a profit or a loss? The bank doesn’t know. So there’s no way to indicate that right now.
[00:34:30] fuzzy: CCDEK says, “Good news in terms of how many new accounts have been created via faucet on OpenLedger in the last 72 hours. Almost 700. I understand it took 2 months to get 600 plus accounts in BitShares too. So already almost 700 OpenLedger tokens are reserved. So that’s just a quick update on that front”.
[00:34:55] CryptoPrometheus: Is there a maximum amount that can be redeemed of USD or whatever the pegged asset is? And also, is there still a 24 hour waiting period before that is filled?
[00:35:22] bytemaster: There is no waiting period at this point in time. But, privatized bitAssets can specify a waiting period. And yes there is a maximum amount that can be force settled at the price feed per day. I’d actually have to go look at the blockchain to know what it’s currently configured to be.
[00:35:45] bytemaster: The Committee account has the ability to change those parameters, the maximum forced settlement amount per day and the waiting period. Because the Committee account is the technical issuer of those tokens. So that’s the other thing we need people to step up for, is to be Committee members. Being a Committee member involves discussing and evaluating all proposed changes to blockchain parameters, fees, block intervals, transaction sizes and market pegged asset properties.
[00:36:30] bytemaster: Right now the user interface does not have an easy way, the GUI interface does not have an easy way to view the proposals and vote on them. So it requires a little bit more advanced launch of the command line to view the proposal and vote for it. That’s one of the things we want to improve going forward is seeing the proposed transactions and having a button in the GUI that would allow you to accept it. That’s actually a relatively high priority because it applies not just to Committee members but all users who want to use the proposed transactions to do advanced multi-sig.
[00:37:26] bytemaster: Someone asked the question, “How to vote for lower fees?”. In order to get lower fees you need Committee members who support the platform of lowering fees. Because Committee members are the only ones who can change that. So right now the init Witnesses have all the votes. The init Committee members have all the votes and you’re going to have a hard time convincing me to change the fees. But if it is a significant issue then obviously the major stakeholders in the system will nominate someone else in the Committee and vote them in and vote us out.
[00:38:28] bytemaster: I do not want to be on the Committee long-term, so please if you’d like to be on the Committee and you’d like to take charge of this stuff, step up and be proactive about getting that position. We need decentralization there as much as we need decentralization everywhere else.
[00:38:55] fuzzy: One questions from the forum from Delulo, “Long-term do you think percentage based transaction fees make sense? They could allow microtransactions as well as bringing more revenue to the DAC from individuals who can afford it. It’s a trade-off I recognize, the most wealthy individuals are also valuable because they can store their money in bitUSD which drives the price of BTS”.
[00:39:31] fuzzy: Any thoughts on that?
[00:39:32] bytemaster: I think there’s some value to percentage based transaction fees. It allows you to do price discrimination. People with a lot of money will pay more when they transfer and people with little money can pay less. Which does maximize the potential income. The challenge we have there is that would require a hard fork to implement.
[00:39:55] bytemaster: And there’s lots of hard forking ideas out there. So it’s just a matter of is that a higher priority than everything else we have going on.
[00:40:05] bytemaster: I’d like to get back to, “What’s Cryptonomex going to do next?”, the next thing we’re going to do is get the Muse blockchain launched. That’s what we’re actively working on. As far as BitShares is concerned we are going to get the Worker creation and Voting interface in the GUI so we can create a Worker Proposal and have you all vote on it. That way we can actually get some income to continue to fund development and improvement of BitShares.
[00:40:41] bytemaster: That will probably be in the next month or so you’ll have the ability to vote for us on various Worker Proposals and the Committee will get to decide what they think is the most {audio cuts}.
[00:40:55] fuzzy: So you guys are going to be working on Muse, along those lines is Muse still planning on being traded on the decentralized exchange or is that going to change upon rollout?
[00:41:09] bytemaster: On rollout Muse will be a clone of BitShares with a reset of the user accounts and the allocation proportional to the NOTES at the time of the BitShares 2.0 snapshot.
[00:41:22] fuzzy: OK so you don’t see, at least initially, NOTES or a derivative thereof trading on the BitShares blockchain, it will just be trading on the Muse blockchain?
[00:41:37] bytemaster: I would expect that people like Blocktrades, OpenLedger and possibly other exchanges will provide a gateway between NOTES and BitShares so that BitShares can trade on the NOTES platform and NOTES can trade on the BitShares platform.
[00:41:53] fuzzy: Just real quick back to the referral system because there are a couple of questions, Brindleswan is asking, “Is the referral system up and running? How are Lifetime Memberships going? Is the referral fee split with CCEDK up and running and who gets all the transaction fees?”.
[00:42:24] bytemaster: The referral system is up and running on the blockchain. All accounts are registered by a Lifetime Member, so if you want to upgrade your account you can do so. If you’ve registered your account through OpenLedger then you’ll see that OpenLedger is the referrer. And there’s no affiliate program right now so OpenLedger gets 100% of the referral income.
[00:42:54] bytemaster: We’ve got a deal between Cryptonomex and CCEDK, who is the owner operator of OpenLedger, to pay for our services. But that’s independent of what the blockchains doing. From a blockchain perspective 100% of the referral income is going to OpenLedger aka CCEDK. And then they’ve got a private deal with Cryptonomex. So that’s where we are on that.
[00:43:24] bytemaster: I have not gathered statistics on how many Lifetime or Annual Subscriptions have been made. It’s really easy to become a Annual or Lifetime Member right in your account you go to the Membership section and it lays out everything very clearly for you.
[00:43:45] Brindleswan: What do you need to do to be able to start getting income yourself … to setup to get the fees when someone becomes a Lifetime Member?
[00:43:55] bytemaster: We’re working to add the referral tracking for affiliates of OpenLedger. So if you recommend someone to OpenLedger and they create an account then OpenLedger will link your account to receive some of the referral income. That’s a feature that has to be implemented in the faucet and it has to track all of those stats behind the scenes.
[00:44:26] bytemaster: The other thing we’re going to be adding to the faucet is the ability o put in a referral code. So that when someone goes to create an account and they put in your referral code, then you will get the referral credit for it. If they don’t put in a referral code then it’s going to rely on the automatic tracking system of referral links and session data and things like that in the users browser. Unfortunately we were not able to get all the server side infrastructure in place in time.
[00:44:59] bytemaster: I’d like to take some time real quick here at the end to just get some feedback from you all. What’s your impression on how the upgrade went? What do you think about the user interface? Do you think it is a step up from BitShares 1.0? One main thing I want to get feedback on is, did we go forward or backward with this upgrade in terms of user experience?
[00:45:29] Thom: Before we get to that question bytemaster can we finish up on the referral thing? I know fav was very intent on pushing forward with a pretty dramatic blast in the BitShares market space with referrals and he was disappointed because that didn’t happen. I’m curious to, you mentioned referral codes. Are these going to require hard forks and what’s it going to take to get individual referral codes implemented in the system? Because that’s a big deal for incentives.
[00:45:57] bytemaster: Everything on the blockchain is done. Everything in the wallet is done for the referral system. All that’s required is for you to setup a server like OpenLedger did and register accounts for users. And then host the wallet. So right now it’s a little bit more work to get into because you have to host your own wallet like OpenLedger is doing. It’s just the final step to make it {audio cuts} person who doesn’t want to host a server to be an affiliate to someone who is hosting a server. That’s the last piece and so the blockchain, no hard forks are required. You can get referral income today. The blockchain has all of the incentives built in, it’s all there.
[00:46:45] Thom: In terms of setting up your own server, the only piece of the puzzle that remains to be done to accomplish that is the documentation in order to do that. When do you anticipate on getting that completed?
[00:46:57] bytemaster: We’re actively working on documentation on how to set this type of thing up. It will be out sometime within the next month.
[00:47:05] fuzzy: Is this xeroc’s documentation or is that different?
[00:47:09] bytemaster: This is Valentine’s documentation on how he setup the server.
[00:47:14] fuzzy: When it’s done where will that be found? Do you know yet?
[00:47:19] bytemaster: We’ll publish on the forum then the Docs section of the Wiki.
[00:47:29] Brindleswan: Another option still is doing a deal with Cryptonomex to handle the technical heavy lifting?
[00:47:36] bytemaster: Yes, if you’d like us to provide the heavy lifting of setting up a server for you, with your wallet to register accounts … basically a clone of OpenLedger, then you can contact us and we’ll set it up and we’ll work out a deal with you for a split of the fees.
[00:47:55] fuzzy: 38PTSWarrior ask, “Are the old referral links to the faucet working at the moment?”.
[00:48:02] bytemaster: I don’t’ know, I’ll have to check with Valentine.
[00:48:24] CryptoPrometheus: bytemaster was asking earlier for feedback on how the rollout went, I remember seeing the biggest concern as far as constructive criticism and testz had a question in chat, “bytemaster we have a lot of spam accounts created for the last two days. Please explain what we will do with it. What about the basic members expiration. As I see the basic account should be expired at some point”. So could you briefly talk about the issue that happened with the account creation spamming at the beginning.
[00:48:53] bytemaster: We initially set the fee to 5 BTS. There was a bug in the fee calculation. We had some code to automatically scale the fees if there was a flood and there was an issue there that scaled it down instead of up. We worked around that, we had a proposal that the Committee members approved to increase the fees and to disable the scaling. All that was done without any hard fork required whatsoever. We took care of that
[00:49:27] bytemaster: So the fees for account creation have been raised to 95 BitShares. But of course to create an account you have to be a Lifetime Member, so it’s really just 20% of that, so about 20 BTS is the cost of creating an account now. Since we increased the fees the spam has decreased. And it wasn’t really that bad of spam, it was about 1 or 2 registrations per block at most. So I’m not too concerned about that. They generated some fees for the network. They’re obviously investing in the network on names and they’re going to go out there and start to promote and sell those names.
[00:50:13] bytemaster: So whoever you are that’s doing that, congratulations on taking advantage of a discount. I think we have resolved that.
[00:50:20] fuzzy: Phillyguy says here, “I think spam accounts were only around 3,000 which is not too bad”. And he was impressed by the responsiveness of the Community. And mindplush, “Get a new Committee member on board and get the change implemented”. So it seems like everything was dealt with pretty quickly.
[00:50:43] bytemaster: We’ve tested a lot of features on a lot of networks since launch. We’ve done proposals, we’ve voted in Committee members. Things are working, we’ve reacted to things, it’s been great. I’ve been really pleased.
[00:51:01] bytemaster: I’d like to get less questions and more feedback on how you all think the interface went, is it an improvement, what do you like the most about what we’ve done? It’s really easy to get focused on all of the things that remain to be done, but let’s take a moment and talk about all the things that people are really pleased by.
[00:51:22] fuzzy: I know from what I’ve been watching, I haven’t seen anybody say that that GUI interface is worse than the experience in BitShares 1.0. Everybody I’ve seen has been loving it or at least saying it’s a world of difference between the earlier interface. I haven’t gotten to actually dig into it as much as I’d like to, but I’m kind of interested also. What do you guys think, has anyone had a chance to dig into it and play around a lot?
[00:52:03] Community: It’s definitely an improvement over the first version. I haven’t been able to test it as much as I’d like to. I’m stuck on doing odd command line stuff right now. I can say that setting up a Witnesses node is far simpler and smoother. When it came time to the live network it just went right up. I’ve been doing some of that stuff, but everything seems to be much smoother. I like the exchange interface, I like that you can click on the graph price and the built in block explorer is awesome. And overall just nicer interface, so I think it’s a great start for 2.0.
[00:54:10] bytemaster: Onceuponatime made post that he hasn’t been able to migrate yet. This is an issue I’d like to bring up with people. Just so that you’re aware becasue it’s something that people have been struggling with. Wallet has lots of keys and the biggest reason why your old wallet would have lots of keys is if you did a lot of market operations and trading, if you’re an exchange that had a lots of deposits or if you were trying to recover funds at one point and said generate keys and you gave it an obscenely large number like 100,000 or something. When you import those keys into the JavaScript wallet, it has to query the blockchain to find out if there are any accounts for each and every one of those keys, are there any balances for each and every one of those keys. And it has to process those keys in JavaScript to do all of the cryptographic operations to get the private key and all that stuff.
[00:55:10] bytemaster: JavaScript is not C++, it’s a lot slower. Even native applications trying to process 100,000 keys or 30,000 keys can be time consuming. So if you’re trying to do this in a browser what you’ll sometimes see is the browser give you a warning that, “hey this script may be busy or stopped responding”. The browser basically thinks the page went into an infinite loop when in reality it’s sitting there chugging through all of your keys and the server is being pinged constantly for querying all of those keys trying to find your accounts.
[00:55:47] bytemaster: If you’re in that particular situation, I recommend using the command line wallet. It’s a lot more efficient at handling that process. There is instructions on how to do that linked directly from the release page. And if you’re still having trouble getting your funds there’s some other things that we can do to filter down the keys that you have to import to just the ones that were actually in use in BitShares vs all the keys that existed in your old wallet.
[00:56:25] bytemaster: So go to the forum, people will be able to help you. Your funds are there, it’s just a matter of the browser chugging through it and taking a long time to get to things. I apologize for the confusion of the migration. I encourage everyone to try it from a new users perspective. It’s very easy to create an account, you just enter your name and password twice and you’ve got an account up and running.
[00:56:56] bytemaster: We spent a little bit less time on the migration of the existing users. It’s a slightly more difficult problem to migrate existing users. I apologize for the rough edges around the migration process and I hope that you can try to look at the upgrade from the perspective of new users and post-migration experience. I apologize for that.
[00:57:39] Community: WIll there be any final updates to v0.93 to fix the GUI to make it easy to export or do I just need to go through the instructions more clearly and do the export?
[00:57:57] bytemaster: I’ve asked Dan and Eric to build a new version that has the proper version of the GUI code. So yes there will probably be one last update that makes it work from the file menu in the Mac version, but for some reason the Windows build didn’t get that change incorporated. If you use it on the Console in the Windows GUI it should work if you specify the path right for Windows. Then you know where to look.
[00:58:26] bytemaster: Go to the forum, people will help you export it. I’m gathering there are Windows users in this Mumble session who’ve successfully exported?
[00:58:36] bytemaster: Yes cube reports that it works. So it is possible to do from what’s out there right now, but we will be having another release that makes it a little bit easier.
[00:58:49] fuzzy: I’ve been talking a whole lot about the DKP, Brownies and all that good stuff and the value of maybe being able to pay some people to help with various task that are pretty important. Especially during something like the rollout. Now I notice a lot of people were helping people free or charge, which is amazing first off. Thank you to all of you, it wouldn’t be possible without all the volunteers that have joined up in the cause. However with that said, would you be opposed to the idea of having somebody who kind of sticks around in Mumble or in one of these other areas that our Committee has for talking to kind of help people through these processes for various operating systems?
[00:59:43] fuzzy: Kind of like help move them through as almost like a tech support?
[00:59:48] bytemaster: I talked with you a little bit about this earlier. I’m going to send you a lot of Brownies so that you can distribute Brownies for all the people that are helping in this way. If you see someone helping feel free to distribute those Brownies and I’ll make sure you have a big stash to hand out. I really appreciate everything you are doing here with this Mumble session.
[01:00:13] bytemaster: And I would like to support a movement for you to be a Committee member. That is a position that I think you have earned. I also think that you should be a proxy fuzzy. So please let us know if you’re willing to take on those extra responsibilities because I think your value and contribution to this Community is invaluable.
[01:00:40] bytemaster: You have single handedly gotten all of us to talk and communicate, it opened up the lines of communication and that is our biggest weakness and you’ve stepped in there and made a significant improvement there. So I really want to voice my support of fuzzy for a proxy and fuzzy for a Committee member.
[01:01:07] fuzzy: Well I appreciate that. I have to say one thing, it wasn’t singled handedly however. Our Community is full of amazing people. We really have to admit that because we wouldn’t be as big as we are today without you guys, all of you. So I do appreciate it and I appreciate that you guys recognize the things that I do. But I cannot take all the credit because we have some really amazing people working for the Beyond Bitcoin team too. And they do it for, I would argue pretty low wages. So they’re doing it becuase they’re passionate about it, that’s for sure.
[01:01:56] bytemaster: On that note, I would like to let everyone know that I’m interviewing Adam from Let’s Talk Bitcoin, so be on the lookout for that.
[01:02:09] Community: Any update on Stan’s conference experience?
[01:02:11] fuzzy: Good question. Stan was in Asia, right?
[01:02:18] bytemaster: He’s been in Asia along with Cass and a few others in the Community. I have not talked with him since he’s been there. I got a few little emails here and there. I’m sure I’ll get the run-down when he gets back here next week. I might be able to provide some information next week on how that went.
[01:02:41] CryptoPrometheus: bytemaster to you have any conferences on the near horizon that you’re planning on attending?
[01:02:45] bytemaster: I don’t have any conferences scheduled for me. I am doing some travel for other business related things, but no conferences for me. Stan, Max Wright and a few others are doing the conference thing for us and they’re going to be in Dublin at a big conference on the 3rd of November. So that’s the next big event. It’s not a Bitcoin conference, it’s a broader conference with more industries and bigger investors.
[01:03:20] fuzzy: Is it a Fintech conference?
[01:03:22] bytemaster: Yeah I forget the name of the conference, but yes it is Fintech related I believe.
[01:03:35] fuzzy: Fintech really kind of gets all the people who are nerdy about {audio cuts} … into the BitShares arena looking around.
[01:04:26] bytemaster: I thank the whole Community for getting us to where we are today. This is just the first step towards continued improvement of BitShares. This is not the end. This is us upgrading BitShares as soon as we felt we had a product that was better than what we had before. So now everyone can enjoy the latest BitShares 2.0 while we continue to enhance the experience and feature set of BitShares. So I hope you all enjoy the update and let’s keep on pushing. Let’s take this thing as far as we can!
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I created a short screencast to step beginners through the process of setting up their first Bitshares 2.0 account and backing up their wallet.
A couple of small corrections: You’ll hear me say that Bitshares is capable of 100 transactions/second. It’s actually engineered to perform at 100k transactions/second. Also, my first version of this video had a repeated track. Uploading the corrected version now.
Click below before starting the video so you are ready to follow along:
Create Bitshares 2.0 Wallet
In case you need a coinbase account, you can create one here as well:
OpenLedger allows you to convert bitcoin to fiat-pegged SmartCoins instantly or by limit order. SmartCoins can be withdrawn directly to cash via NanoCard, PayPal, Ripple gateway or money transfer.
