What is EOS and how does it work? Explained. : Price Analyses

What is EOS and how does it work? Explained.

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EOS was launched on the 31st of January 2018 as a platform decentralized applications. What sets EOS apart from other coins is that it runs as a virtual operating system. To put it another way, EOS’s hardware and software resources are distributed proportionately among all token holders to make practical use of.

What this means as a holder of EOS is that you effectively own as much of the network as you own in EOS tokens. In other words, if you owned 2% of EOS’s total supply, you could perform actions which equate up to to 2% of the platform’s processing power (hash rate).

With that 2% of hash rate you can perform multiple functions. Some examples include sending and receiving transactions or running your own decentralized applications. And because you effectively own a small portion of the network, these actions would require you to pay a very small transaction fee, if at all.

So, the key difference between EOS and others is that you can leverage the network’s power by staking EOS tokens, which is unlike its main competitors bitcoin and ethereum.

EOS Initial Coin Offering (ICO)

EOS held an Initial Coin Offering from June 26th 2017 to June 1st 2018. When the ICO concluded in June, it raised a record breaking USD 4 billion dollars. This dwarfed the Telegram ICO – the largest coin offering at the time – by more than doubling its USD 1.7 billion investment. The EOS token sale was also the longest running ICO of all time at 350 days in duration.

During the token sale period EOS tokens were sold for Ethereum at $1.03 each. At the conclusion of the token sale, EOS had raised 5,148,884.15 ETH, which accounted for 5.2% of Ethereum’s total supply.

700 million EOS tokens were released to the public. The rest of the 300 million tokens were reserved for the EOS team, ecosystem development and for research and development.

EOS Team Members

EOS is claimed to have a wealth of talent at the helm of the platform along with parent company Block.one.

Brendan Blumer
CEO
Daniel Larimer
CTO
Ian Grigg
Partner
Brock Pierce
Partner

The founder and CEO of EOS is Brendan Blumer, who is also the founder of Block.one. Daniel Larimer is the platform’s CTO and is credited for the launch of two successful blockchain ventures: Bitshares and Steemit.

EOS’s other partners are Ian Grigg and Brock Pierce; both of whom have years of experience in developing blockchain technologies.

How EOS Compares to Ethereum

Described by some analysts as the “ethereum killer,” EOS has some distinct advantages over its primary competitor.

The first difference is that EOS can process a far higher number of transactions per second than ethereum. At present, ethereum can handle 16 transactions per second, which is far too low to support widespread adoption.

Ethereum’s scaling problems have shown to be evident in recent years. One notable example is the blockchain game Cryptokitties that congested the Ethereum network to a standstill in 2017.

EOS intends to solve the scaling issues of ethereum and other blockchains. In fact, the network intends to increase its number of supported transactions to over a million per second.

But how?

The proposed solution for the blockchain’s scalability problem by EOS is to change how transactions work on a fundamental level.

Ethereum uses proof-of-work (PoW) for consensus, which is the same technology that bitcoin uses. The downside of PoW is that it’s known to be slow, expensive, and difficult to scale.

As a more effective alternative, EOS uses Delegated-Proof-of-Stake (DPoS) for it to reach network consensus.

What is Delegated Proof of Stake (DPoS?)

With DPoS everyone who holds EOS tokens can elect block producers. Once elected, block producers then verify blocks in proportion to the votes they receives to all other producers.

Blocks are produced in 21 rounds and there are also 21 block producers which are nominated by others. The first 20 block producers are chosen automatically while the 21st producer is chosen based on the number of votes it receives.

Transactions are usually confirmed within 1.5 seconds from the time it is broadcasted to the network. As a security feature, nodes in the network need to have a 2/3rds majority to reach consensus.

Unlike other chains such as Bitcoin or Ethereum, EOS works on a model where you can use network resources in proportion to your stake in the network.

A simple way of comparing EOS to its competitors is that you get ownership of your resources on EOS; while for bitcoin, NEO, Cardano and others, you pay a fee for the privilege of using its network resources.

A brief overview the features offered by EOS is below.

Features of EOS

Constitution
An 18 point constitution outlines the regulations of the EOS network and apply to every block mined.
Parallel Processing
Allows the EOS network to run faster, smoother, and easier to integrate for developers. Parallel processing also helps the network settle transactions.
Decentralized
EOS is a decentralized operating system. Nodes are disbursed throughout the globe and consensus is tied to a 2/3rd majority for settling transactions.
Self Sufficient
The network has a designated limit of 5% inflation per year. This inflation amount was designed to control the number of EOS tokens in circulation and to support organic growth.
Free Usage
Developers do not need to pay network fees in order to test and run their applications.
Low latency
Decentralized apps on the blockchain are fast and run with a low latency.

Where to buy EOS?

Like all cryptocurrencies, the fastest and easiest way of purchasing EOS is through an exchange such as Binance (click the button below).

Holding small amounts of coins on Binance should not be a problem. For larger amounts, however, it might pay to look into a hardware or software wallet for enhanced protection.

The two main wallets for EOS are MetaMask and MyEtherWallet.

Matthew North

I have a passion for trading, behavioral finance, technology, travel, and writing. Contact: matthew@priceanalyses.com.