In the past 6 months, there has been more hype about EOS in the cryptocurrency community than any other coin for two main reasons. EOS aims to:
- Completely remove transaction fees.
- Conduct millions of transactions per second.
Of course, it must be understood that at the present time these are both just claims. There are many claims put forward by cryptocurrency developers about what they are going to do.
In reality, Bitcoin is still being tested for adoption with wider society, despite having been released way back in 2009 and claiming that it was going to replace the financial system. It is still very much a work in progress. But EOS has the potential to be massive and disrupt the way we do things, along with Ethereum.
EOS was created by Dan Larimer, the founder of Steem and BitShares. The EOS ICO commenced in June 2017, so it is very much a recent project. The ICO will take place over a year to prevent the frenzied investing of early adopters who would soon own all the tokens.
It received the equivalent of over $185 million in the initial 5 days of its token distribution. There are over 1 billion EOS tokens. When the ongoing ICO has finished, EOS will no longer have any association with the Ethereum network.
What is EOS?
EOS is a decentralized operating system designed to support commercial-grade applications. It does this by providing all of the necessary functionality to support these applications.
The company behind EOS is called Block One and Dan Larimer is currently the Chief Technology Officer of this company.
In a nutshell, EOS allows business to build Blockchain applications that resemble web companies using a similar architecture. And it does it all with a nice user interface and zero fees.
EOS is different to Bitcoin in many ways. In fact, it is different from Bitcoin in almost every way. EOS aims to be a decentralized operating system for the release of decentralized applications called “DAPPS”. These DAPPS are the most exciting innovation in recent history, along with smart contracts.
DAPPS and smart contracts were first popularized by Ethereum, the main rival of EOS. DAPPS run on smart contracts which consist of automatically executed code that runs once certain conditions are met.
For example, if you wanted to borrow money from somebody else, you could create a smart contract on the Ethereum/EOS Blockchain. All the terms and conditions would be written in code on the blockchain so you could set the duration, collateral, interest rates and the like. In the event of a non-payment the collateral could automatically be sent to the recipient.
There are an infinite variety of applications and this is why EOS and Ethereum are most often described as operating systems upon which applications are built as opposed to sole applications for a particular function. You can build a smart contract to execute a will, sell a house, trade a commodity, buy a car and more.
Decentralized applications are applications that are not tied to an organization. At present, lots of customer data is held on servers by Google, Facebook, Amazon, Twitter and the like. But with decentralized applications none of the data is held with these centralized corporations.
You will be able to post on social media, buy on Amazon and search on Google (or their equivalents) without giving away any information through the use of decentralized applications.
The applications are managed by a number of different nodes on the network, and there is no way for any node to access specific individual data. It does not have this capability, unless a significant majority of the nodes become corrupted and work in tandem with one another. This is extremely unlikely for various reasons.
EOS is very exciting and has caught the interest of hundreds of thousands of independent developers who are busy building DAPPS. EOS is designed for the launch of DAPPS that could change how the internet works completely. Cryptocurrency is still in its infancy and market dominators have yet to appear.
EOS vs. Ethereum
At this stage people will be asking what the difference is between Ethereum, another platform for the creation and launch of DAPPS, and EOS. The both do the same thing, but there are major differences in the design philosophy of Ethereum and EOS.
Ethereum is a general platform. “Here you go developers, now build stuff” could be the mantra of the Ethereum project. They just build the infrastructure. But EOS has designed their decentralized platform to be as developer-friendly as possible.
They have a web toolkit for interface development, self-describing interfaces, permission schemes and cryptography communication functions. With Ethereum you have to build all of these yourself for whatever DAPP you wish to build on the platform.
It has to be said that at present EOS is flat out better than Ethereum in terms of what it can do. Many have called EOS the Ethereum killer.
But it is also worth bearing in mind that EOS is young and a work in progress, while Ethereum is working and established.
The following are some reasons as to why EOS is apparently superior to Ethereum in its functions:
EOS offers a mechanism to fix broken applications. In contrast, a broken application on Ethereum may result in investor losses or even a hard fork. The Decentralized Autonomous Organization (DAO) was an Ethereum project that actually led to a hard fork of the Ethereum blockchain. Because certain investors lost money there was a vote and developers actually created a new cryptocurrency with updated software.
This is not what one could call good practice, disrupting the entire network due to one faulty application. This cannot happen with EOS and there will be no fork on the EOS blockchain. This is related to the consensus mechanism of the two blockchains.
EOS uses a delegated proof of stake (DPOS) validation mechanism while Ethereum uses a proof of work mechanism, though it is soon changing to proof of stake. There is nothing stopping a cryptocurrency from forking endlessly using proof of stake or proof of work. The Steem network currently has 18 hard forks.
One of the most important considerations for a blockchain is its scalability, which means how many transactions it can process per second. This is what has nearly killed Bitcoin from a technical standpoint, though speculative consumers will pour money into it for quite some time.
The Ethereum network has been overloaded in the past and could possibly be optimized to handle 50 transactions per second. Vitalik Buterin, the founder of Ethereum, states that using the process of “Sharding”, the scalability of Ethereum could be unlimited.
But this is at present a theoretical construct. EOS will rely on Graphene technology, shown on stress tests to handle up to 100,000 transactions per second. It will also use parallelization to scale its network, possibly up to millions of transactions per second.
If this benchmark is realized then EOS should be able to handled thousands of large scale commercial DAPPS. With no transaction fees.
One of the biggest advantages EOS has over Ethereum is that it is user friendly. This ease of use is sorely lacking in many of the newer Blockchain technologies.
Ethereum is difficult for end users to use right now as well as developers and this creates a barrier for normal everyday users. What engineers and developers fail to understand is that while parallelization, Graphene technology, sharding and decentralized applications may be cutting edge technology, the majority of citizens do not understand or care. They want an easy interface to do things. And EOS is much friendlier to consumers.
EOS is free, scalable and user friendly. In many ways it is better than Ethereum. However, it remains to be seen if it will gain widespread adoption and there is no doubt that both Ethereum and EOS will thrive in the near future.
Ethereum has been around longer and there is much to be said for the network effect. Many computer engineers were sure that Linux was going to replace Windows because it had so many extra features. Needless to say, this did not happen. When users get familiar with one technology they tend to stay with it.
Ethereum is more well-known and established than EOS, and it is not as if everybody is going to simply drop Ethereum because EOS is better. People stick with what they know.
Furthermore, Ethereum has a lot of backing and integration already and the team are working on some of the issues on the network.
It is also ironic that EOS and other decentralized operating systems often start their ICO on the Ethereum network, their main competitor, in order to gain support for an improved version of Ethereum.
DAPPS are likely to change the world in many ways and there is room for both Ethereum and EOS, though EOS is technically a little better right now. From an investment perspective there is no harm in investing in both of them.
In terms of development, EOS has better technical features and security but Ethereum has a more established platform where you will reach more people with your DAPP. Very few businesses are using this technology right now so the market is still very much up for grabs.