EOS | Explained
EOS is a development platform for decentralized applications (dApps), which looks close to an operating system, as it emulates a real computer: hardware (CPU + GPU) for processing, memory (local/ RAM/ HDD) for storage and software, distributed equally among EOS holders.
EOS is a blockchain protocol, which aims to operate a smart contract development platform for decentralized applications, with advantages of being fast, highly scalable (thousands and “potentially millions” of transactions per second) and virtually free (almost zero transactions costs and fees for users).
Basically, we can see the resemblance of EOS.IO to an operating system on the blockchain that allows developers to create applications on it.
Software EOS.IO has been created by block.one, a Cayman Islands company, but it has employees all over the world.
Daniel Larimer is the Chief Technology Officer of block.one, the person who has also been involved in developing the BitShares project (as a founder).
EOS is a blockchain and an infrastructure that supports smart contracts for dApps (decentralised applications) and is trying to solve a serious fundamental problem of earlier blockchains to become highly scalable and flexible.
Its software can be described as very powerful for the goal of running dApps. The basis of the blockchain is the cryptocurrency EOS.
The major advantages of EOS in comparison other smart contract platforms (for example Ethereum) are its scalability and flexibility.
Moreover, applications, created in the EOS.IO ecosystem, will look very similar for the user resembling centralised applications but will have all advantages of decentralisation.
In my humble opinion, the valuation might be relatively high to the achieved results, according to the whitepaper.
Furthermore, I am not 100% convinced with the professionality for the documented actions.
EOS has raised over $4 billion via its ICO, which started in June 2017, and it is the biggest ICO to date by capital raised.
The price of EOS currency is relatively stable both in BTC and USD amounts in the last 3 months, and it is currently (13:00 UTC 12/11/18) worth $5.41 or BTC 0.00084566 (=1/1183) with a market cap of almost $5 billion and circulation supply of approximately EOS coins of 900 million. This places EOS as the 6th biggest crypto as of yesterday (according to its market capitalisation, based on circulation supply).
The total market cap of EOS is around 1/4 of that of Ethereum, if we put both platforms in direct comparison. For EOS, I personally find it useful to use ETH denominations (and not BTC or USD) as a “base” currency, for the purpose of both fundamental and technical analysis.
For a typical tech-savvy long-term hodl investor, the main and first driver of EOS (and Ethereum) is to monitor the present and forecasted future usability of the platform. There is a strong (and almost linear) correlation between the returns (strictly speaking the rise in price) and the growth of fundamental infrastructure and development in the ecosystem. This will fuel the price long-term, and not the technical charts, expressed in USD.
A major direct competitor of EOS is Ethereum, and Ethereum was in 2017 and 2018 and will remain in the next several years the main competitor for all decentralised applications on the blockchain. Some people would definitely agree that Ethereum is not the most user-friendly system, and it also charges commissions for transactions. But Ethereum, compared to EOS, is already working for a long time, it is magnitude bigger than EOS or anything else, and it still is in the very fast growth phase, with CAGRs of hundreds of percent.
Cardano and NEO can be also considered as competitors.
Cardano is a decentralised public blockchain and a cryptocurrency project, which is fully open source, and runs the cryptocurrency called Ada in its blockchain. The platform works on the secure proof-of-stake algorithm (named Ouroboros), which eliminates the need for energy-consuming proof of work protocol, which partly resolves the scalability problem. Cardano’s goal is to become an advanced smart contract platform.
NEO, also called “Ethereum of China”, includes a blockchain and cryptocurrency, with the aim of creating “Smart Economy”.
NEO defines “Smart Economy” as
- Digital Assets (anything that exists in binary format and with the right to use); plus
- Digital Identity (information on an entity used by computer systems to represent an external agent); plus
- Smart Contracts (automated contracts = self-executing with specific instructions written on its code which get executed when certain conditions are made).
Investors, that consider an investment in EOS, might pay close attention to Ethereum and to a slightly lesser extend to Cardano and NEO.
Ethereum has higher valuation and potentially less upside, scalability problems, but Ethereum’s strong sides are: already working platform, huge community, strong and healthy projected growth in the user base in the next couple of years at least and potentially less downside volatility/risk.
NEO’s strong side is also the fact that it has very good ties to the local market, including regulation, which is extremely important in China.
Cardano, on the other hand, has a very ambitious roadmap, extremely strong academic foundation and a relatively higher risk/potential and eventually longer holding period/investment horizon.