What is EOS and EOS vs Ethereum

What is EOS Token and Why Investors jump on It

EOS (EOS vs Ethereum also called EOS the Ethereum Killer or Ethereum On Steroids) might be the “Most powerful infrastructure for decentralised applications”. EOS is a decentralized Blockchain system and performs similar functions as Ethereum but with a bigger capacity and performance. It helps support the development of big-scale decentralized applications that can be used by businesses for commercial purposes.

We all should take into account, Bitcoin has been running about 10 transactions per second, while Ethereum runs about 20 transactions per second, but EOS promises a capability of about 100,000 transactions per second. On June 3rd, the EOS blockchain goes live and we will see if they can keep their promises.

*As mentioned in previous articles, this is no investment advice!*

What is EOS ?

EOS stands for Economy Operating System? Maybe yes maybe no. If you check the FAQ on EOS.io you will see there is no clear definition.

“We believe that EOS means different things to different people. We have received numerous amazing interpretations of what EOS stands for or what it should stand for so we have decided not to formally define it ourselves.”

EOS is used to create decentralized applications. While there is no real form and definition as to what the project really is, it’s main purpose is to allow programers to create decentralized applications the same way web based applications are made.

It supports app development, hosting, security authentication, and more. Users also have access to a toolkit that will allow them to create decentralized apps easily and automatically. It is quite the same as how regular web developers would make apps that you can download on the Google Play or Apple Store.

EOS might be the first blockchain supporting the interchain communication, which means it can run paralell blockchains at the same time. As a result tokens can be transfered from 1 chain to the other in less than 2 seconds. In other words one of the chains could be used for online gaming or social media while the other is used for any other financial business.

What Are EOS Tokens?

If EOS.IO is the operator of the network, then the EOS token is the currency, or more specifically, the cryptocurrency of the network. The EOS tokens are used to gain access to resources and materials in the network. These resources and materials can be used for the overall development of your decentralized app.

EOS tokens are unique in a sense that the users don’t spend them to buy resources. Rather, developers have to hold them and collect them. After collecting a certain amount of tokens, they will be allowed to buy certain resources. The resources in the network have their respective “prices”. For instance, if a developer collects X amount of tokens, he or she will be eligible to get resources worth the X amount of tokens.

Who Created EOS?

EOS was created by well-known software programmer and cryptocurrency enthusiast Daniel Larimer under the development of company block.one. Larimer, who was also known for creating Bitshares and blockchain platform Steemit, is the Chief Technology Officer of block.one and also the brain behind the concept of EOS.

Why Choose EOS?

While it is true that there are already other decentralized app development networks running on the Ethereum network, EOS works in a unique way that most of these other networks don’t. The key focuses of EOS are speed, flexibility, and size.

Because of the number of users and the scalability of projects, they want to ensure that the speed throughout the network will not be an issue. This is why they also focus on size and capacity so that even businesses can create big scale applications and run them through the Ethereum network.

Furthermore, they also want to make it as flexible as possible to make app development easier for the users.

Another problem that EOS aims to solve are cramps in the network due to a lot of bogus transactions, false requests, spam, and other constraints found in the network. The network tends to slow down due to these transactions, spam, etc. Thus, the legit transactions and requests suffer as a result.

By offering a larger capacity, the network can still cater to big developers even if there are a lot of junk transactions. That way, the sheer volume of data won’t create a bottleneck in the network that may affect speed.

EOS boasts of its power through their separate modules, making each process work independently from each other. This ensures total efficiency in the network when creating apps. An example would be the authentication process.

Right after the data is authenticated, it immediately is executed in one swift step. However, EOS separates the two into two different steps so that each step will be completed more swiftly and efficiently.

EOS token holders own a proportional share as network bandwidth, storage, and processing power. Users will receive an amount of network bandwidth and processing power with the option to upgrade by buying more EOS.

EOS is also beneficial to the users since it’s free to use and does not charge any transaction fees when the users avail more features. This gives the users and developers more room to create their budgets and also save on extra costs that would add to the expenses of their businesses.

In order to make the development process faster and more effective, EOS also has a permission feature that allows designated stakeholders to make decisions instantly. This fixes bugs, broken codes, and other problems easily and quickly.

How Do You Acquire EOS Tokens?

Unlike most cryptocurrencies, you can’t mine for EOS tokens. Instead of miners, there are block producers who create a needed volume of blocks and get EOS tokens for their production. When these block producers get paid, their pay is computed with the average expected pay of all the block producers in the network.

In regular mining, miners have the freedom to mine tokens until the number of those tokens run out. EOS doesn’t have this feature but instead caps their token supply so that the block producers don’t abuse the system. Also, stakeholders have the rights to eliminate block producers who want to produce more blocks than the required number just to get more EOS tokens.

How Is EOS Distributed?

EOS’s model for distribution was rather unique but very fair to those who wanted to invest. 200 million of the total number of tokens was offered for five days which started last year June 26, 2017. After that, the developers significantly shrank the number of tokens distributed daily.

70% of the total (700 million) number of tokens were then distributed in increments of 2 million tokens for the next 350 days. The remaining percentage will be used for development and incentives for the EOS community.

EOS vs Ethereum

The Verdict

You need to be aware that EOS is a new player in the market. For now not much can be seen yet in terms of results. Just keep in mind, the potential of the platform is revolutionary as it is able to solve all the pain points of the developers who develop decentralised applications on the Ethereum network.

The predictions of the EOS developers are quite bold. Claiming to be able to handle 100,000 transactions in a mere second. As that’s a very gutsy prediction, it did receive a lot of criticism from various blockchain experts.

Another questionable feature of EOS is the requirement to hold on to the token in order to access resources in the network. If developers do hold on to the tokens, then they will be exposed to very rapid changes in price movement. This means that the value of the tokens they’re holding can dip extremely low the next day. When that happens, they won’t be able to access certain resources anymore.

If EOS will deliver on the mentioned “millions” of transactions per second and promote and grow the development of an active, productive developer community, it’s very possible and reasonable the token will rise heavily in value. But what if they don’t deliver?

Of course, all of these questions are just speculations as the network hasn’t been fully implemented yet. A lot of things will come to light once the EOS network starts to work in full force after the 3rd of June.

After some more observations we will know if EOS can reach its full potential or not. This is why investors are carefully looking at the progress of the network. What do you think? Leave us a comment.

When it comes to EOS we hope this article helped you a bit to understand “What is EOS?”. If you have any questions, feel free to leave us a comment or simply write us.