We all know and pretty much have no doubt now that blockchain is the future. What we may be less sure of however is which blockchain exactly, how will it be better than the rest and why will the majority of users choose it over the other blockchains? In this article I will try and summon my experience with different blockchains in order to answer these questions and provide insights into EOS that you may not be aware of. All I ask of you is you keep a clear mind until the end. You probably have your own favorite or perhaps have reservations about the the fundamentals of EOS.
I will give you an unbiased and fair review of EOS because the bigger picture here is about this new and innovative tech we call blockchain. If blockchain (decentralized) succeeds, we all do. I'm not very technical so this will be easy to understand for newbies and veterans, so get your coffees or cold beverages because we're about to take a deep look into the technology.
First, let's distinguish between EOSIO and EOS.
- EOSIO or otherwise known as EOS.IO is a blockchain protocol just like any other blockchain. The difference between EOSIO and other blockchains is its philosophies and characteristics.
- EOS is the native currency of the EOSIO blockchain and is used as a utility token to power the ecosystem of that blockchain. It is the main currency used to interact and transact with other platforms such as apps or exchanges (central/decentralized) on this blockchain.
For the sake of ease I will use EOS to refer to both the blockchain and currency, same way people use Ethereum to refer the blockchain and currency (Ether).
A decentralized 'Operating System'
EOS has been described as a decentralized operating system for blockchain. For example, much like Microsoft it allows for different software and applications to run on top of it, inheriting the features of EOS. However unlike Microsoft, developers and users on EOS own the software and applications. Being a user myself of the blockchain I can see the comparison. The usage of EOS sort of feels like I'm in an operating system because of the interaction speed with applications.
I have my address that can be personalized and it acts as my account on the blockchain for me to gain access to applications. If I want to trade on an exchange I simply just connect my account (address) and my balance of assets is displayed on the exchange. On every other blockchain that I've used I would have to create a new account in order to access the exchange, whereas on EOS it's one account for any applications. You can have multiple accounts for different apps.
Wait there's more to your address than just having access to any application without the need for registrations. Your EOS address is a maximum 12 characters which makes it easier to memorize almost like a cellphone number, compared to Bitcoin's 26-35 or Ethereum's 42 characters. Instead of having this '24tpfr7556dghge65fd18tyght...' as your address you have 'gytezeghlvty'.
As mentioned earlier your EOS address can be personalized to your liking into something like 'publishedman' assuming that name isn't already taken of course. Even more valuable is that you also can create a domain name for your website or business and this has led to wide speculation on domain names. People are purchasing "valuable" domain names in hopes of selling them at a much higher price later, names like 'google.com', 'games.vr' have sold for thousands of dollars. Your addresses/accounts are owned by you and only you own the private keys.
Now because EOS provides fee-less transactions and usage of this operating system it requires CPU, NET and RAM to operate. Think of these as the intel chip powering your computer with your EOS account (address) being the computer. Every computer needs memory storage space in order to tackle tasks, the more storage it has the more tasks it can tackle. You may notice there's no mention of ROM that's because thanks to the power of blockchain ROM has been rendered void in this instance. ROM is the memory that stores data permanently on your computer, the blockchain already does that by default. Let's take a look at the CPU, NET and RAM.
- CPU (Central Processing Unit) is like the brain of your account. It is responsible for processing and executing instructions that come from all the applications you interact with on the EOS blockchain. Depending on how active your account is, you'll need to have some EOS tokens allocated to the CPU. When you create an EOS account it already has CPU allocated (0.1 EOS or so), enough for general usage. The heavier your use on the blockchain the more CPU you'd require. Again, transactions are free and any EOS staked on CPU can be unstaked and spent.
- NET (interNET Bandwidth) represents the data transfer rate on the EOS blockchain. It stores your transactions as they're being transmitted on the blockchain.
- RAM (Random Access Memory) is the temporary storage of information on the EOS computer. This is where an accounts balance and keys are stored. Unlike ROM, RAM's data can quickly be moved or changed making it ideal for ever changing information like balances, keys and smart contract states.
Things get even more interesting with regards to how this EOS system works.
Bitcoin uses the 'Proof of Work' algorithm where miners are responsible for the security of the network by verifying transactions and in doing so, they get rewarded for their work in new mined bitcoin.
Ethereum also uses the 'Proof of Work' model but due to scalability issues it was facing it was planned they would switch to the 'Proof of Stake' model sometime this year. Proof of Stake allow for the security of the network from users staking their Ether tokens, who in turn receive dividends on the tokens.
Based on the current scalability short-comings of Bitcoin, Ethereum etc. the developers had to get creative with their solutions to this problem. A new and unique solution, at the time, was introduced to what we now know as 'Delegated Proof of Stake' or DPoS. This required the work of securing the network to be delegated. In other words, only a certain number of chosen people are able to validate transaction and keep the network safe from hacks.
These delegated members are voted upon by the EOS users, that same EOS staked for CPU, NET and RAM enables all users to vote for members they deem fit to secure the network. Only the top 21 of the elected members are able to validate transactions on the network, these members are called/labelled Block Producer's. Any of these Block Producers can be replaced by other candidates should they no longer have enough vote support from the community. This explains the 'delegated' in Delegated Proof of Stake.
The remainder of that term is completed by the users who have EOS tokens staked in resources. There is no minimum to how much a user can stake as long as they've staked enough for their personal usage requirements. The Block Producer's then dedicate time to your account's transactions based on how much resources you have, don't worry even with the little you have transactions are still near-instant.
EOS has its own problems too.
Of course no system involving humans is perfect, yet. EOS has faced much scrutiny way since it was still an ERC-20 (Ethereum) token. Some of those issues have been addressed and some are still persistent. Let's find out EOS' short-comings and I'll try to provide insight and possible solutions based on what I've learned so far.
The following are some of the negative notions:
- EOS is centralized because of the 21 Block Producer's
- Block Producer's can/are buying votes
- Block Producers can lock/confiscate accounts
- EOS cannot scale
- EOS is not safe
- EOS is owned by Block One
- The ICO raised too much money in the ICO ($4 Billion), EOS is a scam
- EOS has no utility
- ...and many others. Did I miss one? Leave a comment at the end.
Okay, let me give you guys my take on these notions, based on my knowledge and experiences with EOS.
1. EOS is centralized because...
This one is the biggest and most persistent impression people have about EOS and its Delegated Proof of Stake model. I don't see 21 Block Producer's who are all independent and competing for blocks as centralized. In fact, by numbers alone EOS is more centralized than Bitcoin because Bitcoin has 16 mining pools (Block Producer's) who control 90% of the network.
2. Block Producer's are/can buy votes
This is a fair statement and an issue EOS is trying to prevent from happening. Buying votes is when a Block Producer pays users for their votes. Currently there hasn't been any known cases where this has occurred but it would happen in private. Such an outcome is bad for the honest producers and corrupts the EOS ecosystem. Buying votes is not something that's easy to do without being exposed obviously there would be whistle blowers against that.
Let's suppose the worst happens and a Block Producer manages to make the list of 21 BP's. They still wouldn't be able to produce invalid blocks because the other 20 BP's would notice. This coupled with the fact that BP's need to have good infrastructures/equipment to facilitate the work required to validate transactions disincentives people from attempting such a thing, maybe later on when EOS is worth thousands.
3. Block Producer's can block/confiscate accounts
This definitely brought unease to me as well when I was researching EOS and brought many questions. I don't want to have my money or access to applications revoked because of a misunderstanding. Could I get my account back and how long would it take? These were some of the issues I had with this as it seemed to give too much power to Block Producer's. I still don't think it's necessary.
It is not likely to affect ordinary users except those trading for large amounts. The clause was put in place to prevent hackers from moving stolen funds out and also platform that scam people would have their accounts frozen. It is important to note that you should still keep your assets and private keys safe from third parties.
4. EOS is not safe
This last paragraph is one reason why EOS is safer. Some may point out that the Block Producer are known and law enforcement could target and shutdown their operations. Law enforcement act when they believe a law is being broken, besides Block Producer's are spread in different jurisdictions all over the world and avoid countries where regulations aren't clear.
EOS has done the best job at complying with current regulations and has worked around certain legal obstacles. It has the best and ever expanding legal team of any blockchain project I know of, rivaled only by Facebook's Calibra. Block Producer's aren't miners but act more as security employees for a company and are paid for the work they do.
5. EOS cannot scale
I've heard this shocking statement over the last and I'm not sure what the basis of it is. EOS can handle a whole entire minute of Bitcoin and Ethereum's combined transactions in a second. Which when it comes to scaling and accommodating masses of people is very important.
6. EOS is owned and controlled by Block One
A common misconception but no it is not. This obviously would bring issues of centralization. In fact, Block One will not be producing any blocks for EOSIO. Block One is simply the company that built the open source software (EOSIO) and builds open source tools, among other resources, to help support the software and on-board new developers. It aims to develop great apps on EOSIO to facilitate mass adoption of the blockchain just like any other company on the blockchain.
7. Block One raised too much money in the ICO, EOS is a scam
It's understandable for people to feel this way because 99% of the time raising this much money is a sign of a money grab scam. Well, one of the benefits of being an early adopter is you are able to follow the growth of the space you're in.
For me personally, I've been following the CTO of Block One (Dan Larimer) since he was still working on Steemit. I remember there was this one encounter he had with Ethereum founder, Vitalik Buterin, where he expressed his concerns with Ethereum and it's ability to scale and I identified with his concerns. My concerns funny enough was because I was a Steemit user where transactions are fast and when I would use Ethereum it felt like going back in time. I always believed that blockchain will get faster as it is still early days and Dan Larimer just confirmed to me that it wouldn't be through Ethereum or Bitcoin at least not anytime soon. I may not have grasped the technical specs of their conversation but that much was clear to me.
Due to regulations for both blockchain startups and investors, Block One had to take a different approach to raising funds in an ICO. Back then there were many blockchain startups raising funds in ICO's many of which had no plans to launch a product. That period of time (2017-2018) is remembered as the ICO boom with more than $20 Billion raise within just 2 years. This obviously caught the eye of regulators as the crypto market was booming, reaching all time highs and nearly reaching $1 Trillion in total market cap.
So the strategy for Block One's ICO came from a proactive approach to look further down the line beyond the bubble. As the creators of EOS and owned 100% of its tokens they structured the ICO as a token distribution to a vast number of people that doesn't favor only the wealthy. There was a limited number of tokens to be sold each day which would then be distributed proportionally based on your contribution. You could get more or less tokens on different days for the same amount depending on how many people partake on that day.
This ICO model basically cemented my trust of EOS and the shared vision of pushing for mass adoption.
8. EOS has no utility
If you've read this far then you can answer this one easily.
This took a while to write and I hope that I've managed to accomplish what I set out to do earlier on. Hopefully this changes your whole perspective on EOS and it's capabilities at the very least you gained a better understanding of the technology. Much like the dot-com boom of the early 2000's some of these blockchain startups will go on to become world leaders and changing the world along the way. It is important to not miss out and just as important to carefully pick your positions not for the next year or two but the next ten years.
Cryptocurrencies are fighting a much tougher battle because of how much the world is dependent on the traditional systems and the people in charge of those systems are looking to fight to protect their interests. It's only a matter of time because you can't fight decentralized code or the math behind it. They can hassle Facebook all they want but they can't hassle Bitcoin.
The are many other blockchains which serve different purposes such as payments, transportation, artificial intelligence etc. I'll be writing more on this in future posts.
A paradigm shift has taken place and change is happening. We are embracing it that's why we're here and those who are opposing it aren't.
I write two blogs here, one for general topics affecting vast cryptocurrencies/blockchains, The Crypto Mandate, and the other is focused only on the happenings of the EOS blockchain - Everything EOS. This was just scratching the surface I have more value added content coming out soon so please follow for regular content and the opportunity to broaden your reach into other blockchains and opportunities.
Thank you for reading!
Please leave comments below if you have any questions or opinions you'd like to share.