What is EOS?
The EOS project belongs to a third generation of blockchain and cryptocurrency. Its ambition is simple: to overtake Ethereum. During its ICO (Initial Coin Offering) it rode on an unprecedented wave of hype which meant that Daniel Larimer, EOS’ founder, could raise funds of $4.1 billion (£3.15 billion). However, was it just that – hype? Or is this staggering figure worth it? Let’s have a deeper look at this record-breaking cryptocurrency.
What is EOS’ purpose?
Before you think about investing in any coin, it is good to take an interest in the project that tickles your fancy by looking at who’s behind it and what its objectives are, as well as by following news updates. With EOS, you can easily follow its latest news by clicking on this link.
Its main goal is to go beyond what Ethereum offers, by allowing transactions at no cost and by authorising the validation of thousands of transactions per second, up to 300,000 in fact (compared to just seven for Ethereum). Another one of its objectives is to facilitate the development of decentralised applications (dApps) and smart contracts (contracts based on defined conditions that can be automatically executed on the blockchain).
To achieve this, Daniel Larimer and the EOS community are developing a new blockchain architecture, notably through the delegated proof-of-stake (DPoS) consensus mechanism. This protocol works by designating several nodes to make important decisions without needing the consensus of all users. Instead of creating a decentralised infrastructure, EOS stakeholders focus their energy on deploying their own blockchain.
When viewed in this light, EOS is referred to as a decentralised operating system that allows developers to create new dApps. The EOS architecture allows for the interoperability of different blockchains, using advanced proof (consensus) systems: ‘Completeness proof’ and ‘merkle proofs’ for ‘light client validation’.
What are EOS’ strengths?
Let’s look at some of the advantages of this cryptocurrency:
- Its creator, Larimer, who has huge respect and notoriety in the industry – an essential ingredient for the project’s success
- Excellent transaction speeds
- High bandwidth (high data transfer rate) = high network responsiveness
- Network can be updated in order to develop scalable dApps
- Free-to-use blockchain storage
- Log storage (event history files) and transparent bug fixes for users
What about its disadvantages?
Buying EOS is obviously not without risk, and this is why it is important to have the full picture of the cryptocurrency. Firstly, there is competition from other cryptocurrencies and blockchain projects like Ethereum or Ripple that could outdo EOS. Secondly, critics target Dan Larimer and accuse him of having a fickle profile, drawing up exciting plans before abandoning them.
While the EOS project is ambitious, progress remains rather slow, which raises some concerns. We can in particular quote the technical problems which slowed down the EOS mainnet in 2018. We can also mention the fact that the governance of EOS is far from perfect, illustrated by the lengthy exchanges and the divisions on the issue of blocked ‘eosio.saving’ accounts. Finally, EOS is too centralised for some, especially when compared with other DPoS projects which have more flexibility. The reason it can process so many transactions is because the EOS blockchain has only 21 validators. This is compared with the 53 that the ARK blockchain has for example, and far fewer than on non-DPoS based blockchains.
Why choose EOS?
Choosing EOS to diversify your cryptocurrency portfolio makes sense for all the advantages previously mentioned. While some may be happy just HODLing EOS, others will try and trade to earn a profit. Don’t know anything about trading? Come and follow our Trading Column to learn all the basics!
Why invest in EOS?
For speculators, it is not a question of storing tokens in their private wallet but using derivatives, such as CFDs (contract for difference), to bet on the price going up or down. Since EOS is a well-known cryptocurrency, it is available on many exchanges and brokers.
Remember, if you are going to become the an EOS trader, make sure you have a solid investment plan which covers these basic principles:
- A list of your daily, weekly or monthly objectives
- A list of target prices
- A risk profile combining available capital and capital that can be lost
Our advice and opinion on EOS
Investing in this cryptocurrency means it is paramount to identify the factors influencing its price.
It is important to know that EOS’s initial supply was one billion tokens, but its supply is increasing by around five percent each year. In contrast, the absence of an EOS limit favours demand rather than supply. We believe that only demand can stimulate the price of a virtual currency.
There are, of course, other parameters to take into account when evaluating the future trend of the EOS price. This includes: public opinion, its partnerships, the use of its blockchain, the general use of cryptocurrencies for everyday transactions and the capacity of EOS’ teams to promote their products and services.
For those new to cryptocurrency, be sure to check out our guide of the best practices to adopt when wanting to invest in cryptocurrency. For those who have already taken the plunge, we would love to hear your opinion on EOS! You can also take a look at our guide on how to create your own token on EOS here.
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Just your average global millennial embracing, and interested in, the future of money and finance. Excited by blockchain tech as well as fintech but have a special passion for DeFi and Yield Farming, what will this technological disruption bring next?
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.