EOS has often been referred to as the “Ethereum Killer”. So let’s get down to the basics. if we already have Ethereum, why do we need EOS?
Dan Larimer, the creator of EOS, BitShares, and Steem believes (as many of us do) that in the future, everything will be on the blockchain.
This will require a whole new scale of performance, and that’s where EOS comes in.
What is High Perfomance for the Blockchain?
In existing technologies other than blockchain, we have examples of requirements of 20K transactions per second for credit cards, 52K likes per second on facebook (not including posts, comments and other actions), and 100K trades per second in financial markets, sometimes on a single market pair.
These are just a few examples. The use cases for blockchain technology are nearly endless.
Use Cases to consider for Blockchain Performance
Let’s look at some of the blockchain use cases beyond currency and dApps:
- Capital Markets & Securities
- Supply Chain Management
- Real Estate
- Record & Identity Management
- Non-Profit Agencies
- Legislation/Complicance & Regulator Oversight
- Big Data & Data Storage
- Internet of Things
These are all systems that stand to benefit HUGELY from blockchain technology.
Just to take a couple examples, bringing the features of blockchain to Voting, Media, and Non-Profit Agencies would prevent a sustantial number of ills that plague modern society.
These would include corrupt politicians, fake or dishonest news media, and phony non-profit organizations.
The Blockchain Industry Requires Massive Scale
If all these systems and more migrate onto the blockchain, they will easily create millions of transactions per second.
There’s a big gap between where we are in today and where we need to be to handle millions of transactions per second when we look at the most widely used blockchains.
Among the top cryptocurrencies, ripple is the fastest with 1,500 transactions per second. This number is dwarfed by visa, which can handle 24,000.
Moving these systems onto the blockchain is indeed a big and radical change on a global scale. There are many unknowns about the potential impacts moving to blockchain will have on current systems, but there is a grand vision many of us share for blockchain technology.
Introducing Dan: The man with the plan
Dan Larimer is a programmer and visionary systems architect who created successful blockchain platforms BitShares (the world’s first fully decentralized exchange) and Steem (a social media platform that pays its users).
Dan’s mission in life is “to find free market solutions to secure life, liberty, and property for all.”
He is also an anarcho-capitalist whose current goal is to “engineer the economic incentives which make freedom and non-violence profitable.”
Right now Dan is working on something that will be bigger than Steem. In fact, its potential is so massive, it has earned the nickname “The Ethereum Killer”.
After successfully building and launching Steem, Dan moved onto EOS, otherwise known as “Ethereum on steroids”.
A Breakdown of EOS
EOS is an intricately designed system that can be difficult for the average person to understand. It took me months of curiosity to dig deep enough into it to get a good understanding.
The key to understanding EOS and the true potential it represents, is to understand the problems it is trying to solve.
Problems EOS wants to solve
- Scaling (e.g. Bitcoin’s scaling war and Ethereum’s crypto kitties)
- Cost (e.g. High gas fees on the Ethereum network)
- Interoperability (Legacy businesses have difficulties navigating & integrating)
Blockchain technology is redefining the internet as we speak, but most businesses are still facing technical hurdles that prevent them from adopting the technology.
EOS plans to make blockchain technology easy to use and to adopt by creating a blockchain operating system for companies.
The EOS Solution to Blockchain’s Problems
The EOS whitepaper addresses the three problems above in this except below:
“The EOS.IO software introduces a new blockchain architecture designed to enable vertical and horizontal scaling of decentralized applications.
This is achieved by creating an operating system-like construct upon which applications can be built. The software provides accounts, authentication, databases, asynchronous communication and the scheduling of applications across hundreds of CPU cores or clusters.
The resulting technology is a blockchain architecture that scales to millions of transactions per second,eliminates user fees, and allows for quick and easy deployment of decentralized applications.” –EOS White Paper
A Deeper Dive into EOS
EOS has some key features that make the project stand out as an intricate and well-designed solution to the problems blockchain faces foday.
- Parallel Processing: The ability to do things in parallel, faster transaction speeds and more scalability.
- A Constitution: A set of rules on which everyone agrees upon. The rules are linked to every block mined.
- Self Sufficiency and Evolution: The current model allows for a 5% inflation. This will be used to develop the network further.
- Decentralised operating system: EOS is similar to a decentralised operating system, in practice this means that developers can build applications on EOS.
The utility of EOS tokens
Owning EOS coins is a claim on server resources. A developer needs to have EOS coins to use the EOS blockchain.
Developers will not spend the coins to use the server resources. They just need to prove they hold them. The EOS operating system will be hosted on servers that also act as block producers. Block rewards on EOS are the incentive for servers to host EOS applications.
The applications running on this decentralised OS will be able to communicate with each other. They can share frameworks or libraries which make development faster, more secure and less technical.
EOS will allow developers to create blockchain applications that are easy for end users to interact with. Probably most users will not even know that they are interacting with one when using EOS as this will be completely transparent to the users.
Are EOS Strengths a match for Ethereum weaknesses?
CryptoKitties, a program that allows users to own virtual cats has exposed serious scaling issues for the Ethereum blockchain.
As a proud owner of my own litter of these unique digital cats, I have first-hand experience with how congested the Ethereum blockchain became with these simple transactions.
Here is one of my favorite kitties. I named him “Edgy Brah” after Eddie Bravo because of his world views.
Note that the types of transcations you make with Cryptokitties are all very simple, including: Buy, Sell (Reverse Action style), or Sire (Breed).
Currently, the two other blockchains designed by Dan Larimer (Steem and BitShares) are accounting for a larger share of transactions than both Bitcoin and Ethereum. For Steem, this volume of transactions is not even utilizing 1% of the throughput capacity.
EOS plans to be an even higher performing blockchain than Steem.
Interacting with the Ethereum blockchain is not a user-friendly experience. One of the main reasons is because Etherum demands users to pay for every transaction.
EOS will not have fees. This will increase adoption. When ICOs can be hosted on EOS without gas fees this will surely help with adoption.
EOS is being developed with capabilities for interoperability with multiple blockchains, so that for example Ethereum could leverage EOS for its superior performance.
As Ethereum continues to struggle to scale at the rate needed by its fast growing ecosystem of large-scale applications, it may one day in the near future face a choice. Either (A) Integrate EOS or (B) Failure
Can EOS and Ethereum work together?
Upon further examination into the strengths and weaknesses of the two projects, one may want to revisit the “Ethereum Killer” concept and consider another probable outcome.
EOS and Ethereum are potentially complimentary components of a system in which Ethereum can benefit from the superior performance of EOS and EOS can benefit from the volume of applications on the Ethereum network.
The Long-Term Perspective
One assumption I am more than comfortable making is that the adoption of blockchain technology is set to hit a tipping point of mass adoption within the next couple of years that will require MASSIVE scale.
EOS is far more likely to succeed on a massively bigger scale through such a partnership with Ethereum. Due to Ethereum’s first-mover advantage, it has grown to a size that gives it an upperhand that will be a challenge even for a far superior technology to overtake in short time.
Integration with Ethereum and EOS will provide a win-win for network effects, scale and performance, and costs and interoperability for end-users.
Current Price & ICO
EOS is just entering the final quarter of a year-long ICO that started last June. The EOS ERC-20 token is currently trading on many major exchanges and can later be redeemed by investors for EOS tokens on the EOS blockchain once it is live in June.
The current price of EOS is $8.00, which is down a solid 50% from some short-lived all-time-highs in the altcoin rally in January. Anyhow, the current price is substantially higher than it had traded for most of the prior year and we can expect to see the price rise further in anticipation of the official launch of EOS in June 2018.
Some find a year-long ICO odd or frustrating, but it’s due to Dan Larimer’s decentralization philosophy. The year long ICO maximalizes distribution of EOS to a wider userbase.
If EOS can deliver on its promises, it may bring huge upsides for early investors.
Come June, EOS is going to be big.
Always Do Your Own Research.
Hold on for dear life.
Originally published at hodlcrypto.org on March 4, 2018.