EOS is a third generation blockchain solution, which has become the main rival for Ethereum. EOS became famous in 2018 when it completed a year-long ICO worth four billion dollars. What is EOS? And what is the project going to do with all this money? This article is the beginner’s guide to understanding EOS.
EOS is one of the leading platforms
EOS is one of the so-called platform projects. You can also call it an ecosystem, a framework for dApps or an operating system. EOS is not a rival for Bitcoin, but it is a direct rival for Ethereum, Tron and NEO for example.
All these projects are ecosystems for decentralized applications or dApps. They give a framework for software developers to build dApps. More applications are built, more popular the platform becomes. Each platform has a bit different approach and they use also different programming languages.
The official name of the EOS platform is EOS.IO or EOSIO, but it’s usually referred to as EOS. This ecosystem has also a native token called EOS. Just like its rivals. Hence, the word EOS can refer to the native token or the whole platform project.
Next, let’s dive deeper into EOS. Who created it and how does it work?
EOS is created by Dan Larimer
The man behind the EOS is American software developer Dan Larimer. If you haven’t heard of him before, you are new to the crypto space. Larimer has already completed two significant crypto projects: Bitshares and Steemit. Many would argue, that Larimer’s CV is one of the strongest one in the crypto scene.
Bitshares was the first project Larimer created. It is a decentralized exchange founded already in 2013.
Bitshares never reached the success Larimer wanted. Nowadays dozens of other projects have also created their own DEX, but Larimer was simply five years too early with Bitshares.
Next, Dan Larimer wanted to build a social media platform where users could earn cryptocurrency by producing and validating content. Steemit was born in 2016 and became quite successful during the 2017 crypto boom.
This man has certainly an impressive CV from the crypto scene. Steem and Bitshares have already proven that Larimer’s platforms can scale. He said in 2017:
”At this point, Steem and Bitshares have more real world transactions occurring every day than the rest of the major blockchains combined”. (Source)
EOS is the third major project for Larimer. It has also taken advantage of the technologies built for Steemit and Bitshares.
EOS.IO project was launched in 2017 and it’s run by a fintech company called Block One. This company was founded by Dan Larimer and Brendan Blumer. Blumer, who is just 33 years old, has become one of the richest persons in the crypto scene due to the success of EOS.
The white paper of EOS was published in July of 2017. The project has really developed fast after this. What makes EOS so special is the fact that its ICO lasted one whole year. As a result, Block One raised four billion dollars.
Block One’s massive “war chest” has been a hot topic since. One thing is certain: EOS has vast resources and they have been expanding the project as fast as possible.
The first version of EOS.IO, Dawn 1.0, was published in the EOS TestNet in October 2017. After that, a steady flow of updates came out of Block One’s development team. EOS MainNet was launched in June 2018. This caused a big media buzz since EOS had quite a few technical issues in the beginning.
When MainNet was launched, EOS token was also transferred from the Ethereum network to EOS blockchain. EOS was originally an ERC20 token, like almost every single token launched in an ICO at 2017-2018. The token swap has been completed a long time ago, so all EOS tokens are now inside the EOS blockchain.
EOS is a virtual machine
The difference between EOS and its rivals comes from Larimer’s philosophy in software development. EOS wants to provide easy-to-use components for software developers. Some analysts claim, that EOS is the first real blockchain operating system.
”EOS provides parallel processing of smart contracts through horizontal scalability, asynchronous communication, and interoperability. It will provide databases, account permissions, scheduling, authentication, and internet-application communication.
EOS is the operating system that we’ve been waiting for that allows us to focus on building the apps that our users need without getting in the way, without forcing gas, without requiring users to purchase anything before using, and it dramatically accelerates the rate at which developers can build apps.” (Source)
EOS developers have also storage capacity in a cloud, which makes it easy to dive inside the framework and start building. One could see EOS as a virtual machine, which has software developers as resources.
If you want to know how a software developer compares EOS and Ethereum, look at the following video.
One major difference between EOS and Ethereum is the usage of gas. When decentralized apps (dApps) are run, they require resources, which can be considered as virtual gas.
NEO platform has even created a token called gas for this purpose, which can be also bought from cryptocurrency exchanges. In Ethereum, there is no gas token, but you must pay a very small amount of Ether when making transactions.
EOS has a different approach: there is no gas needed to run dApps at all. How is this possible? And how do they prevent spam? Gas and transaction fees were originally developed to prevent unwanted network spam.
In EOS platform, each developer can rent a share of the network’s capacity by staking his EOS tokens. More resources you need, more tokens you need to stake. If someone wanted to spam the network, they’d have to stake a lot of EOS tokens as well.
There is a special marketplace launched in 2019 for buying and selling EOS network resources, which is called EOS REX. You can check it out at eosrex.io. EOS REX has helped to bring down the resource renting costs significantly. This has made it easier to develop EOS dApps as well. It’s certainly one of the reasons why EOS has currently the most popular dApps in the market.
Check out dappradar.com for the most popular decentralized apps!
Delegated Proof of Stake is also created by Dan Larimer
There is a consensus algorithm in the heart of every cryptocurrency. This algorithm defines how blockchain transactions are validated and by whom.
As you might know already, Bitcoin is using an algorithm called Proof of Work. It is used also by a few other older cryptocurrencies, such as Litecoin. A PoW based system requires physical mining machines for blockchain validation. These are powerful computers, which also need a lot of electricity to run.
Physical mining is not really required in third generation ecosystems like EOS. There are always some exceptions, but almost every project is using a variant of Proof of Stake. This concept was first introduced in 2012.
The idea of PoS is to give blockchain validation to those people, who hold the most tokens as well. The logic is this: if you own a lot of tokens, you have a lot to lose. Hence, you have an incentive to make sure the blockchain is maintained properly.
EOS is using a consensus algorithm called Delegated Proof of Stake. This is a Proof of Stake variant developed by Dan Larimer in 2014. Larimer has used DPoS also in his previous projects (Bitshares & Steemit).
There is a big difference between Delegated Proof of Stake and Proof of Work used by Bitcoin. One of the significant differences comes from the participation requirements. Anyone can set up a Bitcoin miner any day, but you cannot become an EOS validator.
The idea of DPoS is that token holders choose a small number of delegates, who validate the blockchain. Each delegate has a certain number of blocks to validate, so the system is never controlled by one single entity. If a certain delegate would act hostile, it would be voted out.
There is a new block every half a second in the EOS blockchain, which enables a massive transaction capacity compared to Bitcoin. EOS claims it has already reached 4000 TPS (Transactions Per Second).
There are a total of 21 delegates in the EOS DPoS system. They are also called as witness and block producers. You can see them as the government of the EOS ecosystem. DPoS fans call this a democratic system while haters see it as a centralized model.
In 2018, EOS validators made the headlines after they decided to freeze some accounts and reverse certain transactions in the EOS blockchain. Some think that no person should have this kind of power, while others argue that it’s good to have some tools against hostile operators.
Dan Larimer has said:
”Decentralization isn’t what we’re after. What we’re after is anti-censorship and robustness against being shut down.” (Source)
Each EOS token holder can vote a block producer. In practice, most people have delegated this task automatically via wallet software.
The future of EOS
EOS has been called “Ethereum killer” since its launch, just like Tron and Cardano as well. It is one of the leading 3rd generation blockchain projects and probably Ethereum’s main rival right now. EOS providers tons of capacity for running dApps without power-consuming mining.
It is obvious, that EOS, Ethereum and Tron and currently dominating the platform market. When you look at the dappradar.com website, it’s difficult to find dApps from there built on any other platform. EOS has also become the second largest platform by market value.
The video below gives a good overview of EOS in May 2019:
EOS has many features that its competitors cannot offer. The resource exchange (REX) is one example of these. EOS REX is explained in detail in the video above if you are interested. In short, users can sell computing power and earn REX tokens while doing so. There is also a decentralized exchange EOSfinex and dozens of other interesting components.
EOS project has also massive funds in its disposal, thanks to the year-long ICO. Block One cannot simply grow the project as fast as they would like.
If you want to invest in EOS, you must analyse its strength and weaknesses against other platform providers. The future is looking pretty good for EOS right now. Ethereum is still far from ready to scale, Cardano is still running a TestNet and Tron is not on the same level either. Dan Larimer is also a name that has a lot of weight in the crypto industry.
EOS real-time price:
EOS was recently added to Coinbase, which is the easiest place to buy with fiat money (EUR, USD, GBP etc.). You can also buy EOS from Binance with Bitcoins, which is the leading cryptocurrency exchange.
If you are interested in EOS, we recommend starting from the video below. Follow EOS also on Twitter and Reddit to keep up with the latest news. You’ll find EOS roadmap and white paper here. The official website of the project is eos.io.
Further reading of EOS: Introduction to EOS, Coincentral – what is EOS?, Reddit – how to prevent spam in EOS?, Explain Delegated Proof of Stake Like I’m 5, What is EOS, EOS – The Decentralized operating system, Investopedia – what is EOS?