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2.5 BitSharesBitShares is a polymorphic digital asset which can be used to create fungible assets pegged to particularmarkets (e.g., US dollars) [18]. It is similar to a colored coins system, with BitShares acting– 11 –as an internal currency (like XCP for Counterparty). One of the innovative features of BitShares isits delegated proof of stake consensus algorithm. The founders of BitShares are now developing Bit-Shares 2.0, an enterprise-grade financial smart contract platform utilizing several technologies fromBitShares including DPoS.Delegated proof of stake in BitShares relies on the concept of witnesses. Stakeholders can selectan arbitrary number of witnesses to generate blocks. Each stakeholder has a number of votes equalto the amount of BitShares he possesses; votes can be distributed among witnesses in an arbitraryway. Besides witness candidates, a user also selects a number of witnesses he estimates is sufficientfor decentralization. Naturally, a user cannot vote for more witnesses than he believes is necessary.After results of voting are tallied up, the top N witnesses are selected. N is defined as the minimalnumber satisfying at least 50% of stakeholders’ votes. Selected witnesses produce blocks every twoseconds in turns. After each of N witnesses has had his turn, the list of witnesses is shuffled so thatthe order of block minters constantly changes.Similar to witnesses, users of the system elect delegates, who have the privilege to change networkparameters, including transaction fees, block sizes and intervals, as well as witness rewards. To makechanges to the network protocol, delegates co-sign a special account (so-called genesis account). Afterthe majority of delegates have approved a proposed change, stakeholders then have a two-week periodwhen they can recall their delegates and cancel the changes. Unlike witnesses, delegates are notrewarded for their efforts.
...delegated PoS solves the “nothing at stake” problem and prevents short range attacks on the system.