My Top 5 CryptoCurrency Picks to Buy Today and Stash Away - Detailed USPs and Original Compilation! Part 1 of 2 - BitShares and Decred

markyzmark (36)in #cryptocurrency • 7 years ago

Hi there folks! Thank you very much for checking out my post!
This is part 1 of 2, it is important to note that the two coins outlined below are simply the two I finished first, it does not necessarily mean that they are more or less desirable than the other three coming in Part 2. However! I will be officially ranking them within their group of five as part of Part 2, including justifications and reasoning based on technical analysis, macro-economic factors and sentiment analysis.
So Please Stayed Tuned!

BitShares (BTS) - $0.003968 USD on January 1st, 2017 ---> As of writing, the price is $0.338559 USD -- A whopping 8,532% growth YTD

The BitShares platform itself is run and maintained by the BitShares community–an open consortium of individuals and organizations committed to providing universal access to the power of smart contracts.

Working together, this community has designed and developed the BitShares platform to include numerous innovative features which are not found elsewhere within the smart contract industry:

Price-Stable Cryptocurrencies - SmartCoins provide the freedom of cryptocurrency with the stability of the dollar

A SmartCoin is a cryptocurrency whose value is pegged to that of another asset, such as the US Dollar or gold. SmartCoins always have 100% or more of their value backed by the BitShares core currency, BTS, to which they can be converted at any time at an exchange rate set by a trustworthy price feed. In all but the most extreme market conditions, SmartCoins are guaranteed to be worth at least their face value (and perhaps more, in some circumstances). Like any other cryptocurrency, SmartCoins are fungible, divisible, and free from any restrictions.

Industrial Performance and Scalability - Graphene is capable of 100,000 TPS when we pay for the network to go with it

High performance blockchain technology is necessary for cryptocurrencies and smart contract platforms to provide a viable alternative to existing financial platforms. BitShares is designed from the ground up to process more transactions every second than VISA and MasterCard combined. With Delegated Proof of Stake, the BitShares network can confirm transactions in an average of just 1 second, limited only by the speed of light.

Decentralized Asset Exchange - A fast and fluid trading platform

BitShares provides a high-performance decentralized exchange, with all the features you would expect in a trading platform. It can handle the trading volume of the NASDAQ, while settling orders the second you submit them. With this kind of performance on a decentralized exchange, who needs risky centralized exchanges?

Dynamic Account Permissions - Management for the corporate environment

BitShares designs permissions around people, rather than around cryptography, making it easy to use. Every account can be controlled by any weighted combination of other accounts and private keys. This creates a hierarchical structure that reflects how permissions are organized in real life, and makes multi-user control over funds easier than ever. Multi-user control is the single biggest contributor to security, and, when used properly, it can virtually eliminate the risk of theft due to hacking.

Recurring & Scheduled Payments - Flexible withdrawal permissions

BitShares is the first smart contract platform with built-in support for recurring payments and subscription payments. This feature allows users to authorize third parties to make withdrawals from their accounts within certain limits. This is a convenient way to “set it and forget it” for monthly bills and subscriptions.

Referral Rewards Program - Network growth through adoption rewards

BitShares has an advanced referral program built directly into its software. Financial networks derive their value primarily from their network effect: more people on the same network increases the value of that network for everyone. BitShares capitalizes on this by rewarding those who sign up new users, and does so in a fully transparent and automated way.

User-Issued Assets - Regulation-compatible cryptoasset issuance

The BitShares platform provides a feature known as "user-issued assets" to help facilitate profitable business models for certain types of services. The term refers to a type of custom token registered on the platform, which users can hold and trade within certain restrictions. The creator of such an asset publically names, describes, and distributes its tokens, and can
specify customized requirements, such as an approved whitelist of accounts permitted to hold the tokens, or the associated
trading and transfer fees.

Stakeholder-Approved Project Funding - A self-sustaining funding model

BitShares is designed to be self funding and self-sustaining by giving the stakeholders the power to direct where blockchain reserves are spent. BitShares has a reserve pool of 1.2 billion BTS (about $8 million dollars) that automatically grows as transaction fees are collected and the share price rises. Each day, the blockchain is authorized to spend up to 432,000 BTS (about $77,000 per month), which is enough to hire a small team to maintain the network for years, even with no price
appreciation.

Transferable Named Accounts - Easy and secure transactions

Named accounts enable users to easily remember and communicate their account information. We don't use IP addresses to browse the internet or numbers to identify our email, so why shouldn't we have human-friendly account names for our financial transactions?

Delegated Proof-of-Stake Consensus - A robust and flexible consensus protocol

Delegated Proof of Stake (DPOS) is the fastest, most efficient, most decentralized, and most flexible consensus model available. DPOS leverages the power of stakeholder approval voting to resolve consensus issues in a fair and democratic way. All network parameters, from fee schedules to block intervals and transaction sizes, can be tuned via elected delegates. Deterministic selection of block producers allows transactions to be confirmed in an average of just 1 second. Perhaps most
importantly, the consensus protocol is designed to protect all participants against unwanted regulatory interference.

Decred (DCR) - $0.483748 USD on January 1st, 2017 ---> As of writing, the price is $31.97 USD -- A whopping 6,609% growth YTD

Distributed timestamping protocols were first applied to decentralizing a financial network in the ground-breaking paper on Bitcoin by Nakamoto. The field has seen explosive research follow-up from both amateurs and professionals, competing to offer extensions, adjustments, improvements, and refinements of the existing protocol. Notable implementations of new ideas include Ethereum, which extended scripting, CryptoNote, which refined privacy, and Sidechains, which investigated two-way pegs with 1:1 Bitcoin tokens. These protocols all utilize proof-of-work (PoW) as originally described in the Bitcoin whitepaper.
A common extension to the Bitcoin protocol modifies the consensus mechanism to either completely or partially use proof-of-stake (PoS), or the use of one’s stake (tokens) rather than one’s computational power to participate in the timestamping process. The first proof-of-stake blockchain based on the Bitcoin protocol was implemented in 2012 by King and Nadal5, and includes both PoW and PoS that gradually skew towards complete PoS over time. Criticisms of pure PoS consensus systems have themselves been abundant, with the most vehement opposition coming from those working with purely PoW blockchains. The most common argument against PoS for distributed timestamping is “nothing-at-stake” or “costless simulation”, describing the systematic instability resulting from stakeholders being able to generate alternatively timestamped histories with no cost to themselves.

Despite the controversy, it is apparent that systems with a PoS overlay dependent on a PoW timestamping system may be able to independently achieve consensus. This is mathematically explored by Bentov and colleagues in a paper on their scheme, proof-of-activity (PoA), and appears to be a viable extension to the PoW protocols that may enable some interesting new properties. A similar design called MC2 was earlier proposed by Mackenzie in 20139. Here we describe the construction and implementation of a similar consensus system that we have named “Decred”.

Research work in Decred is currently organized around the following subsections:

Hybrid Design

The major contrast to the follow-the-satoshi scheme previously described1 is a new lottery system in which tickets must be purchased and then wait on a maturity period before they can be selected and spent. Selection of tickets for a block is performed lexicographically from a mature ticket pool based on pseudorandomness contained in the block header. Because manipulation of this pseudorandomness is difficult in a PoW system, manipulation of ticket selection is associated with a fundamental cost to the PoW miner. The selection of tickets over a time period can be described by a probability density function similar to the probability of obtaining a block in PoW at a constant hash rate over time at a constant difficulty, yielding a probability distribution with a mode approximately equal to half the ticket pool size. The price to purchase a ticket is regulated by a new stake difficulty that is determined by the exponentially weighted average number of tickets purchased and the size of the mature ticket pool in prior blocks.
The validation of PoW blocks is explained by the following steps:

A block is mined by a PoW miner, who selects the transactions to put inside it. Stake system related transactions are inserted into the UTXO set.

PoS miners vote on the block by producing a vote transaction from their ticket. The vote both enables a block to be built on top of the previous block and selects whether or not the previous regular transaction tree (containing the coinbase and non-stake related transactions) is valid.

Another PoW miner begins building a block, inserting the PoS miners’ votes. A majority of the votes cast must be included in the following block for that block to be accepted by the network. Of the vote transactions in this new block, the PoW miner checks a flag to see if the PoS miner indicated if the block’s regular transaction tree was valid. These voting flags are tallied and, based on majority vote, a bit flag is set in this block to indicate if the previous block’s regular transaction tree is valid.

A nonce is found that satisfies the network difficulty, and the block is inserted into the blockchain. If the previous block’s regular transaction tree was validated, insert these transactions into the UTXO set. Go to 1.

To discourage manipulation of the included votes, a linear subsidy penalty is applied to the current block if they fail to include all the voting transactions into their block. The “soft” penalty of invalidating the previous transaction tree helps prevent the discarding of work, which is necessary to secure the system, and makes the assumption that the next block will be obtained by a miner who is disinterested in preserving the subsidy of the former block in favour of their own. Even in the case that this is not true, a malicious miner with a high hash rate will still need at least (number for majority/2)+1(number for majority/2)+1 votes in favour of their previous block’s transaction tree in order to produce a block that gives them any subsidy from the previous block.

Bit flags are explicitly added to both the block header and votes so that either miner can easily vote in new hard or soft forks.

Decentralized Stake Pooling

One issue arising from previous PoS designs is how to perform pooling in PoS mining analogous to PoW mining pooling.
Decred solves this problem by allowing multiple inputs into a ticket purchase transaction and committing to the UTXO subsidy amount for each input proportionally, while also committing to a new output public key or script for these proportional rewards. The subsidy is then given to those generating the ticket in a trustless manner, and the ticket can be signed round robin before submission to the network. Importantly, control over the production of the vote itself is given to another public key or script which can not manipulate the subsidy given to the recipients. Production of the vote in a distributed manner can be achieved by using a script in the ticket that allows for multiple signers.

Elliptic Curve Signature Algorithms

Although secp256k1 is widely considered to have a secure choice of elliptic curve parameters, some questions about the origin of the curve remain. For example, the selection of the Koblitz curve,
(y^2 + xy = x^3+ ax^2 + b and a = a^2, b = b^2; a = 1 or 2, b!=0)

is typically done by enumerating the binary extension Galois fields GF(2^m) where m is a prime in the range {0, ..., higher limit} and x, y ∈ GF(2^m). For 128-bit security, m is required to be ⩾257 and typically the smallest prime possible in this range to facilitate fast calculation. In this case, the obvious choice for m is 277, a = 0; despite the existence of this appropriate $m$ value being known by the curators of the curve parameters and the fact that it was the most computationally efficient solution, the parameters m = 283 and a = 0 were selected out of three possible options:

(m = 277, a = 0; m = 283, a = 0; m = 283, a = 1).

For all other Koblitz curve specifications, the most obvious m value is selected. Although this is curious, there are no known attacks that can be applied by using a slightly larger $m$ value for the Galois field. Other objections to the parameters used by secp256k1 have also been raised.

Another extremely popular digital signature algorithm (DSA) with 128-bits of security is Ed25519. This uses the EdDSA signing algorithm over a curve birationally equivalent to Curve25519 and is widely employed today. Unlike secp256k1’s ECDSA, Ed25519 uses simpler Schnorr signatures that are provably secure in a random oracle model.

Schnorr signatures have also been proposed for Bitcoin. However, instead of using an OP code exclusive to Schnorr signatures utilizing the curve parameters for secp256k1, Decred instead uses a new OP code OP_CHECKSIGALT to verify an unlimited number of new signature schemes. In the current implementation, both secp256k1 Schnorr signatures and Ed25519 signatures are available to supplement secp256k1 ECDSA signatures. In the future, it is trivial to add new signature schemes in a soft fork, such as those that are quantum secure. Having these two Schnorr suites available also allows for the generation of simple group signatures occupying the same space of a normal signature, which for both is implemented. In the future, threshold signatures using dealer-less secret sharing will also enable t-of-n threshold signatures occupying the same amount of space.

BLAKE-256 Hash Function

SHA256, used in Bitcoin, has a number of technical shortcomings due to its Merkle-Damgård construction. These vulnerabilities led to the SHA3 competition for a new hash function based on a different fundamental construction. Decred has chosen BLAKE256 as its hash function, a finalist for the competition. The hash function is based around a HAIFA construction that incorporates a variation of the ChaCha stream cipher by Bernstein. The hash function is notable for its high performance on x86-64 microarchitecture, being faster for short messages than SHA2563 despite being considered to have a much higher security margin at 14-rounds.

Script Extensions

Aside from the previously mentioned OP_CHECKSIGALT and OP_CHECKSIGALTVERIFY, other modifications to Bitcoin scripting have been made. A version byte has been added to output scripts to enable simple soft forking to new scripting languages, as first suggested by Wuille1. All math and logic related OP codes have been re-enabled and now operate on int32 registers. Various byte string manipulation OP codes have also been implemented and re-enabled. The remaining unused Bitcoin OP codes have been repurposed for future soft forks. Some longstanding bugs in the Bitcoin scripting language have been also been fixed.

Signature Script Isolations and Fraud Proofs

To prevent transaction malleability, the ability to generate a transaction with the same input references and outputs and yet a different transaction ID, input scripts have been removed from the calculation of the transaction hash. The origins of this modification have been controversial, although it appears to have been implemented in both CryptoNote coins and sidechains in the past. It is now being proposed for Bitcoin as a soft fork referred to as “Segregated Witness”. As in the Elements sidechains implementation, commitments to the witness data are included in the merkle tree of the block. In addition, fraud proofs, as suggested for Bitcoin’s soft fork, are set by miners and also committed to as part of the data in the merkle tree.

Transactions Extentions

Transaction expiry has been added, which allows one to prune transactions from the memory pool if the blockchain has reached a certain height. Previously the only way to remove a transaction from the mempool was to double spend it.

Schnorr Signatures

Schnorr signatures have been proposed for Bitcoin. They have also been used extensively in other cryptocurrencies, such as Nxt and CryptoNote coins.

For more information on Schnorr Signatures these two links are helpful:

https://docs.decred.org/research/schnorr-signatures/

https://decred.org/research/wuille2015.pdf

Miscellaneous Improvements

As in Bitcoin, subsidy decays exponentially with block height. However, Decred’s algorithm, though also extremely simple, better interpolates this decay over time so as not to produce market shock with steep subsidy drops similar to CryptoNote. Like PeerCoin, the PoW difficulty is calculated from the exponentially weighted average of differences in previous block times. However, this calculation is also interpolated into Bitcoin-like difficulty window periods. The “timewarp” bug in Bitcoin is corrected, by ensuring that every difference in block time in incorporated into the difficulty calculation.

It should also be noted that many well known mining attacks, such as selfish mining and stubborn mining, will no longer function advantageously in a system where there is effective decentralization of stake mining and no PoW-PoS miner collusion. This is simply because it is impossible to generate secret extensions to blockchains without the assistance of stake miners. Resilience to previously described mining attacks, and newly conceived mining attacks specific to our system, will be a fruitful area for future research.