Chris Beams joins the show to talk about Bisq, the P2P decentralized Bitcoin exchange and open-source desktop application that allows you to buy and sell bitcoins in exchange for national currencies, or alternative crypto currencies. We get some background on the issues faced by crypto exchanges like CoinBase, and the now defunkt Mt. Gox. We discuss whether or not Bitcoin is a censorship resistant payment system and what it means to have anonymous transaction currency options. Bisq also has an interesting white paper about its own DAO (Decentralized Autonomous Organization) to support its contributors and we discuss that in detail at the end of the episode.
Chris Beams: [01:24:04.19] Yeah, for sure. And some percentage are actually out and out scams, right? I think a lot of people are too quick to say âOh, itâs just all scamsâ, or something like that. Mostly, the things that you run into, I think itâs still safe to say, are actually well-intentioned people saying âHey, Iâve got a bright idea. Iâve got some sort of notion of a kind of economics that I can add into this application, that I can sort of tokenize it, and that I can build a legitimate way to fund the development of this project. People will hold this token and pay for using the application with the tokenâ or whatever different kind of model.
So thereâs hours and hours that we could talk about on all of those models, right? But what Bisq is doing is something if not unique, very unusual, by comparison, to this kind of norm that weâve been seeing in this space. Basically, one thing that makes it unusual is that Bisq is working, running software. Weâve actually built the system, itâs out there, it works, people use it, and people are happy to pay to use it.
When people initiate a trade, both on the maker side and the taker side (both counterparties), they pay a fee into Bisq, in Bitcoin; that fee goes to the arbitrators today. Iâm one of those arbitrators, the founder of Bisq is one of the arbitrators. So people are willing to pay to use this application in this network, because itâs valuable to them to be able to trade. Same reason people pay a fee on a centralized exchange.
So that works to a degree, in terms of economically incentivizing the development of the application. That can help pay the bills and so on, if you will, but it doesnât scale very well with regard to getting that JavaFX UI person to come and contribute that chart implementation, or fix that bug, or whatever it is. Thatâs where this idea of a DAO comes in.
What weâre up to here and what weâre rolling out is a token; we added a token into the sort of larger Bisq system, and that token is actually something based on Bitcoin. This is something that is not a new idea, but not a lot of people do - itâs called a colored coin. What that means is that each BSQ token (we actually call the token Bisq as well, but its ticker symbol would be BSQ) is actually backed by a small fraction of a Bitcoin, a thousand Satoshis, where a Satoshi is one one-hundred-millionth of a Bitcoin. So 1,000 of those, which is a very, very small amount of Bitcoin, actually backs this coin.
What this means is that â and before I get too much into the details of what BSQ is, what can you do with it? Well, we havenât launched it yet, and I can get into the details of the roadmap later, but when itâs fully functional, what people will be able to do is buy BSQ, trade for BSQ on the Bisq exchange - so they might trade Bitcoin for it - and with that BSQ theyâll be able to pay their trading fees at a lower rate than they would pay for it in Bitcoin. So itâll be a cost-savings to them, theyâll be able to do more trades more cheaply when they pay for them in BSQ.
[01:28:04.27] Okay, so what? What good does that do? Well, on the other side, and getting back to the original question you asked, we wanna bring people in, have more people contribute, we wanna fully decentralized the operation and maintenance and development of the whole network and the application and so on. So this is the second role of the BSQ token.
The first role is that you can pay to use the application with it, so itâs a kind of access token in that way. The second utility that it has is that you can be paid in it for the work that you do for Bisq or on Bisq. Somebody comes along and implements the chart that we were just talking about - they would at the end of that month period issue what we call a compensation request, and fundamentally thatâs gonna be a document saying âHey, I did this work.â It might be a link to a pull request, or one or more pull requests or commits, something like that that says âHey, I contributed a chart and itâs merged. That took me this much time, and this is my market rates, what I usually get paid.â Again, just sort of thinking in the units of currency that we denominate our lives in, âHey, this was $1,000 worth of work for meâ, and then they would look at what the market price of BSQ is, and they would issue a compensation request for that amount of BSQ.
What happens is then DAO (Decentralized Autonomous Organization) votes on his compensation request and anybody elseâs requests that were issued during that period, and theyâre voting in the affirmative or negative - âYes, weâre going to pay for that workâ, âNo, weâre not.â And people donât have any guarantee.