EOS is a smart contract cryptocurrency platform that has attracted attention for two claims: it seeks to completely eliminate transaction fees as well as allowing users to conduct millions of transactions per second.
Launched in 2018, EOS is superficially similar to other smart contract platforms such as Ethereum and Ripple, but it promises to supersede them through the aforementioned features.
The ultimate goal of EOS is to provide a platform that supports industrial-sized decentralized application hosting, decentralized enterprise storage solutions, and smart contract capability, combining existing smart contract functionality with cloud computing for an all-in-one technology solution.
While EOS has technically not launched yet, it is currently possible to buy EOS tokens on the Ethereum blockchain, the sale of which will fund the launch of the EOS blockchain itself later in 2018.
EOS’ developers are making bold claims, but they have shown themselves capable of backing those claims, making EOS a worthwhile investment for crypto investors interested in smart contract platforms.
EOS launched on January 31, 2018 by Block.one, a cryptocurrency development firm based in the Cayman Islands. The specifics of EOS were revealed in a white paper published in 2017, with the full platform set to launch as open-source software on June 1, 2018. To fund development, Block.one initiated a sale of EOS tokens on the Ethereum blockchain. EOS also boasts one of only two B-ratings from U.S.-based financial rating agency Weiss, with the other being awarded to Ethereum. (1, 2, 3)
As mentioned above, Block.one seeks to use EOS to solve two of the biggest problems with cryptocurrencies: transaction fees and transaction speed. Most cryptocurrencies have slow transaction times due to the nature of blockchain technology, with Bitcoin speeds in particular becoming increasingly slow due to the size of its blockchain. Fees are used to speed things up by paying miners to prioritize certain transactions, but these too have become increasingly expensive with certain cryptocurrencies such as Bitcoin. (4)
EOS aims to solve the scalability problem of currencies like Bitcoin by using multi-threaded technology, allowing it to run on multiple computer cores. Additionally, EOS uses a decentralized proof-of-stake system for its consensus protocol, making it similar to systems such as Cardano and Stellar that utilize all machines connected to their network to verify transactions, keeping the network from becoming centralized. (5)
EOS also seeks to function as an operating system, much like Windows or OS X, allowing programmers to develop decentralized applications. Two examples of platforms that utilize EOS technology are Steemit, a Medium-like blogging and content creation platform that is based on blockchain technology, and BitShares, a fully decentralized cryptocurrency exchange. (6) (7)
In addition to this, EOS’ native token, in additional to serving as currency, also doubles as bandwidth and storage, allowing anything contained on the EOS network to be instantly delivered to anyone who is connected to it. How much storage and bandwidth is allocated to each EOS user is determined by how many tokens they own. EOS tokens will allow users to participate in governing the blockchain, also in proportion to how many tokens the user owns. (8) (9)
Although not formally released, EOS has become popular among cryptocurrency enthusiasts and developers. As mentioned above, both Steemit and BitShares are being developed with EOS technology. Everipedia, a Wikipedia-like online encyclopedia, is also using EOS technology to incentivize content creation on its platform as well as defeat censorship. By using decentralized EOS tokens to store and deliver their site, Everipedia will be able to evade censorship from countries such as Turkey and Iran that ban Wikipedia and similar sites. (10) (11)
EOS is effectively positioning itself not merely as a cryptocurrency, but as a software development suite and content delivery system. EOS’ potential to host decentralized websites and applications as well as combat online censorship have made it a hot commodity among traders and a worthwhile investment.
EOS cannot be mined due to the proof-of-stake system it will use to verify transactions.
Much like Cardano, EOS’ proof-of-stake system verifies transactions not through mining, but through achieving consensus from all users on the network. This is part of what makes EOS’ claims of faster transaction speeds and no transaction fees possible, but it precludes users from being able to mine their own EOS. (12)
While it is technically possible to mine EOS at the moment, this is because the EOS tokens available for sale right now are based on the Ethereum blockchain, meaning that EOS miners are technically mining Ethereum. Once EOS’ own blockchain launches, this will no longer be possible. (13)
EOS represents a unique niche in the smart contract ecosystem: an all-in-one system for creating, hosting, and delivering Internet content.
EOS makes it possible to host any kind of web content—from blog posts to videos to podcasts and music—in a decentralized form that is impossible to censor. This makes it a valuable commodity in an era in which social media and the Internet is increasingly centralized and censorship is arguably becoming a problem.
Furthermore, EOS pledges to solve the problem of cryptocurrency scalability, which has dogged the growth of Bitcoin and other cryptocurrencies. By eliminating expensive fees and shortening transaction times, EOS could easily become as useful and indispensable as traditional financial systems.
EOS’ one major problem is that a good deal of what it promises is just that: a promise. Because the EOS blockchain has not launched yet, there is no definite way of seeing how the platform can live up to its claims. While Steemit and other platforms have achieved success through using EOS technology, there are no guarantees that EOS will work as advertised when it finally becomes available to the public.
Having said this, EOS has the potential to become one of the leading cryptocurrencies on world markets. Its unique niche of offering content creation and delivery services that can’t be censored by governments or corporations sets it apart from its competition, and its pledge to eliminate transaction fees and speed up usage have plenty of appeal to all crypto users.
Because of this, EOS is worth keeping an eye on for both smart contract enthusiasts and traditional investors alike. No other major platform is doing what it is doing.