BlockBits is a decentralized open-source investing platform. Its most innovative feature is that it eliminates blind trust requirements (i.e., it is trustless), thus providing a significantly safer investing experience. This is achieved via built-in features that allow it to become fully maintained and governed by its token holders.
In 2017 the Initial Coin Offering market blew up. Tons of entities started raising ETH through this method that offered no guaranties of success. Investors where required blind trust on the project’s perspective while having no ability to hold the project owners accountable. We saw that numerous investors where getting scammed so we decided to take action and created Blockbits.
Blockbits eliminates blind trust and relies on a set of smart contracts onto which we’ve built a complex ecosystem of rules and business logic. This fully open source protocol allows token holders to moderate and validate the development process of any project launched through it.
Creating a widely adopted protocol and changing the way startups are financed on blockchain. Ethereum Smart Contracts, are immutable by design. That means that once deployed their code is not changeable. In order to facilitate a milestone based development process, we created a modular upgradeable architecture that allows the swapping of logic entities with new ones
In the following text we will present a short summary of our solution. However feel free to take a deep dive into our safe investment blockchain protocol by clicking the links bellow.
Blockbits is the platform that provides the optimal solution to the problem of risk and trust in investing. Our innovation consists of built-in features and mechanisms that take into account general rules of human psychology in relation to risk and investment.
Our ultimate goal is to provide a safe investing experience, where:
1. Projects advance insofar as they are viable
2. Risk inherent to human bias or error is minimized.
This, in turn, will mean that investing will become accessible and relatively risk-free.
Ethereum Smart Contracts, are immutable by design. That means that once deployed their
code is not changeable.
In order to facilitate a milestone based development process, we created a modular upgradeable architecture that allows for the swapping of logic entities with new ones. In order to preserve mutual interest, such changes can only be initiated at first by the platform owner, and accepted by investors through a democratic voting process, where the owner has no vote.
Once the project reaches the “Development Complete” stage, any token holder can initiate code upgrades, and all token holders including the development team ( that just got their tokens unlocked ) can approve or disapprove the proposed upgrade. If approved, the contributing party will be compensated using an amount of ETH available in the revenue
Each Investor has their own separate smart contract, that stores and locks ETH and tokens until an action is available. This contract mitigates issues that can arise from hacking attempts, by enforcing 2 hardcoded output addresses, namely, the platform and investor wallets.
Just like in software development, most projects can be split up in “Phases”. We call them Development Milestones and each one has a percentage of the raised funds linked to it, and requires community acceptance in order for funds and tokens to be released.
In practice, an investor has the choice to fund a project by locking up their ETH in a smart contract, that upon their vote will release the funds to the project, in case the project delivered on what it promised. Otherwise, the investor can use the CashBack procedure to take their money back.
This will require some involvement from the investor at validating the project’s roadmap, and voting accordingly. Of course, they also have the choice to opt out of the voting process at any time by choosing to do nothing. In other words, the investor gets to validate if the project is actually delivering on its promises, or take their money back.
Each time a major event happens in the system, a Proposal is automatically created. Any proposal that leads to a change in the system, or release of funds can only be voted by investors that have contributed using Milestone Funding.
Proposals that moderate the platform, like delisting a project from the website, can be created and voted on by all token holders.
If the project is successfully funded, it enters the “Development Phase”, which cycles through its Development Milestones. At the end of each Development Milestone, the project’s team will present evidence that the work was done and investors that contributed using the “Milestone Funding” will be able to vote on whether the team delivered or not.
If at this point an investor votes NO, and the majority result is also NO, the investor can then choose to use the “CashBack” functionality in order to retrieve their remaining funds, thus receiving their remaining locked ETH, while the project owner gets their tokens back.
If the investor does not “CashBack”, they just express disagreement and the funding release process is not interrupted.
Votes can be toggled at any time during the voting period and are treated as final only once the period ends and votes are counted.
Milestone development and funding process in itself mitigates some economic issues by allowing the investor to use the CashBack procedure when the team does not deliver, the team bails out or when the team is betting against their own project. In all such cases, the investor gets the remainder of their investment back and the project team get back some useless tokens,
From the team’s point of view we look at the most asked question, “What if the ethereum price got 2-5-10 times higher? What’s stopping investors from just cashing out for the sake of it ?”.
The answer is: Nothing. In most cases, if an investor leaves, the project tokens already
have a value and can be sold on the free market or to the token buyback system by the team
to recover the lost funds.