What Is EOS?
EOS is a platform token.
A platform token is not a crypto “currency” like many people have been led to assume all “crypto’s” are. Its most likely comparison in centralised computing is a Linux operating system with My SQL and Drop Box loaded on to it with a (free hosted) domain (web address) so it can be accessed from anywhere over the net. As the name suggests, it is a decentralised operating system designed for very large organisations.
How is the Initial Coin Offering (ICO) Structured?
Firstly, the ERC20 EOS Token currently on sale will not be a token on the eos network. A lot of people have called EOS a scam coin due to the fact the company developing eos.io software (Block.One), clearly state the ERC20 token being sold will have no use or value on the new eos network.
Block.One also make some seemingly odd statements like "IF the public decide to launch a block chain using the eos.io software... "
This eludes to there being a choice, (or a vote) to begin the eos.io network. And therein lies the genius in eos.io’s design.
Block.One have designed the eos.io protocol but without a public network the protocol is essentially useless. The ERC20 token is a smart contract vote to begin a new blockchain adopting the eos.io software protocol.
Just owning the token does not mean you will be part of the new blockchain adopting the eos.io software protocol. To cast your vote, you need to generate an EOS Key pair (public and private address). This public and private address IS your voting address and will be the repository for your STAKE on the new block chain (if more than 1 person votes to begin the new block chain, as there is no such thing as a single person “network”).
Each ERC20 EOS token will represent a single vote on the new block chain. As eos.io protocol is a proof of STAKE network, the number of votes you cast (tokens you own in a registered location) will be equal to your stake on the new block chain.
For example. If there were 100 ERC20 EOS tokens registered as votes, and you owned 5 of them, you would own 5% of the value of the new network and would receive 5% of the new EOS tokens on the new block chain which (through the smart contract vote) has voted to adopt the eos.io protocols.
If you take the time to fully comprehend what is being done here, you will see the genius in the token roll out design.
The design creates a disincentive to day traders buying in early as they rely on the market buying and selling on largely emotional grounds. At the same time the token release of 2 million tokens per day keeps the price low over a long period and as such, it incentivises people with not a lot of money to buy small lots of ERC20 EOS tokens in many purchases over the course of the year.
In essence, it is designed with the intent to create the widest possible network with the lowest possible price inflation while keeping the big dogs at bay…
True genius in design is rare. If you take the time to understand the eos.io software combined with the ERC20 EOS token sale, you’ll no doubt see the genius at work as I do.
EOS (ERC20) Token Registration
This is critical. I cannot state this strongly enough. If you buy the EOS tokens being sold during the yearlong ICO you have bought ERC20 tokens.
If you do not register the ERC20 EOS tokens correctly, by the 31st of May 2018 the tokens you own will be completely worthless and you will not be able to redeem them in any way for tokens on the new blockchain utilising the eos.io software.
Some exchanges have already committed to supporting the token distribution for the new eos.io tokens however I would always recommend holding your own private keys (which means moving your tokens away from an exchange). If taking this step, you should seriously consider a hardware wallet such as Ledger Nano S for additional (critical) security.
Below is a guide I found to assist in token registration. Again this is a critical step and MUST be done prior to June 1st 2018
Click here to go to the Token Registration Guide
What is the EOS token? (this refers to the EOS token on the new block chain utilising the eos.io software and not to the ERC20 token available during the ICO sale)
The token is three things:
- A web address / domain
- A Hosting Platform for the domain
- A Database
- Computational Capacity
- Cloud storage
What’s more, a company will be able to sell their eos tokens as and when they’re finished with them. Imagine a company being able to recover 100% of the cost of running their back-end infrastructure when they wind up their business!
To be clear. A company who uses eos.io as their online infrastructure including storage would ELIMINATE the following operating costs:
- Hardware purchase and maintenance
- Site costs to house the hardware
- Wages to IT staff to maintain the hardware
- Electricity
- Insurance
- Other costs associated with having to have a physical presence in multiple locations to run a global, online business effectively
How Would Owning eos.io Tokens Benefit a Large Organisation?
It’s estimated that global business spending on hardware in 2017 would be well over $1 Trillion USD.
Hosting costs are estimated at roughly 3% of revenue for a large internet based company with over $1M visitors per month. For many it’s even more than that!
If we use Facebook as an example, we see Facebook reported $2.52 billion in expenditures on data centres, servers, network infrastructure and office buildings in 2015 against a total revenue of almost $18 billion dollars. That represents circa 14% of Facebook’s total revenue is being spent on IT infrastructure. Even if we halve that to account for the fact they would still need some of the site offices etc., Facebook spend over $1.2 billion dollars annually on costs that could be eliminated by placing their business on eos.io
Here’s the kicker, if Facebook bought 50% of eos.io tokens and decided to port across to eos.io and close up their old infrastructure, it would likely cost them around $1.2 billion dollars to buy the tokens currently. Let’s say they spend another billion on the project to move across to eos.io so the total cost is $2.2 billion dollars for the move. The project would pay for itself, 100%, by the end of the second year on eos.io, and would permanently decrease operational expenses by 7%.
What’s more, the eos tokens are an asset which can be leased out to other businesses to “load share” network capacity to other companies who may only need high volume access in small peak periods (like ticket sales outlets etc.)
By adopting eos.io, Facebook could:
• Simplify their business
• Make customer data far more secure
• Increase revenue by 7% annually
• Stay ahead of their competition
• Turn an expense into an asset on their balance sheet
• Rent out tokens to add revenue stream to bottom line
Of course, this is an over simplified assessment. It is however indicative of the decision-making process many companies are about to have to undertake.
How many of these companies could run on eos.io?
With parallel processing and continued development, hundreds or thousands of these types of companies could be running on eos.io.
In reality, cross chain communication and parallel processing mean scaling is infinite. Let that sink in for a moment…
Can We Apply a Price Target / Valuation to the Tokens?
It’s all a question of scaling. When eos.io is hosting thousands or even millions of companies, tokens will be worth an immense amount. For example, if Facebook needed to own 0.01% of the network to operate for free on eos.io, tokens would be worth many, many thousands per token.
The interesting thing is, the higher the price of the token, the more incentive for Block Producers to increase their capacity to process transactions and add storage. The more BP capacity there is, the more the network can handle and more companies will be able to adopt eos.io software as the infrastructure base for their company.
In essence, there is no dollar limit on price as infinite scaling + limited token supply = uncapped token price potential (especially when valued in fiat currencies which are inflationary by nature)
That said, my personal target before I begin selling any decent percentage of my eos holdings is $1,000 (AUD) or circa $750 USD
As far as time lines are concerned, I expect to be well within this price target by December 2019.
Who is Behind EOS?
In short, Block.One is the company who are developing the eos.io software.
So who are Block.One?
You can find out more about Block.One HERE at the company website however I’ve listed the below people specifically (as I see them as having particular relevance to this project).
The People Behind EOS:
• Brendan Blumer Founder & CEO Linked In
Brendan has been active as an entrepreneur since the age of 15 and has several high profile successes on the
international stage by combining his technical skills with the real estate sector. His experience in disrupting
one of the oldest industries on the planet is very promising indeed.
• Daniel Larimer – CTO Linked In
Dan is one of the main reasons I’m so bullish on EOS. The design and implementation of the token ICO are enough for me to build a reasonable position for EOS in my portfolio. With Dan as CTO that reasonable position (10%) will go to a large position (70%) of my total crypto portfolio. Here’s Why;
Dan has already developed THE two most popular crypto currencies (by transaction volume, SteemIt and BitShares).
The transaction volumes are not transaction of the tokens / coins being bought and sold, they are transaction of users on the network.
This is extremely important due to the types of businesses that will benefit from moving on to the block chain. In essence all the block chains are, is a way of tracking transactions and having everyone agree the records are 100% accurate. So it’s high transaction businesses that will benefit most from this decentralised transaction recording world computer we call block chain technology.
Currently, all EOS competitors have to charge a fee for every transaction. This is “baked into the cake” so to speak and they are unable to change the fee model without significant changes to the technology itself.
EOS transactions will be 100% free for the user. Of the 5% increase in tokens per year, 1% will go to the block producers (essentially block chain miners similar to bitcoin mining companies) and the remaining will be alocated by the community for "worker proposals" (system improvements).
By using a capped inflation of 5% rather than fees, the network can essentially pay for itself through inflation for eternity, giving unlimited free transactions for all end users.
Ian Grigg – Partner EOS Linked In
Ian has been a leader in the tech space since the 1990’s
Ian is an expert in “Messaging” and this is critical to the development of the eos.io software as it’s transactions are essentially ‘messages” to and from the decentralised servers.
Ian has been working within the digital commerce space since 1998 has worked with major banks and financial institutions to help them develop their secure payments systems
Basically Ian is a guru in the field who has been working on crypto payment systems well before Bitcoin ever existed.
Competitors
Etherium is the current, dominant platform token. Etherium’s token is ETH and they are currently (4th Nov 2017) $968 AUD / $725 USD and $606 EUR Coin Market Cap
ETH opened at $2.83 USD on 7th Aug 2015, hit a low of $0.72USD on 10th Aug 2015. In one year it was $11.09 and at the two year mark it was $271.96.
Currently at $725 USD Ethereum has enjoyed a whopping 101,000% gain since it's all time low in Aug 2015
EOS' all time low was 0.48 (USD) around October 24th 2017. Application of the same % gains as ETH puts EOS at aroud $485 USD ($645 AUD for all my Aussie friends).
The best bit.., ETH price rise was based almost purely on speculation of eventual mass adoption. The only use case ETH has been able to actually achieve is an ICO platform. This (while useful) is not even 1% of what eos will be capable of from day one.
If you’ve never seen a block chain based success story you may think these kinds of gains are impossible. Not only are they possible, it is extremely likely the ETH price increase will be a mere blip on the radar in 10 years’ time.
There are also other platform tokens currently in various stages of conceptualization, Initial Coin Offering (ICO) and Implementation. Most competitors seem to be moving towards a Proof of Stake (POS) or Delegated Proof of Stake (DPOS) as they recognise the functional superiority of Dan's design.
What does DPoS offer?
FREE TRANSACTIONS! as well as Super Fast transactions per second and no need for hard forks to upgrade the network
All Crypto platforms in competition with EOS have some form of transaction fees. This is fine in a low transaction volume, high value business model such as high value financial transactions. In these cases, the fees involved are lower than those currently already paid by the businesses for making similar transactions.
The issue of fees becomes critical when trying to bring other, non-financial businesses onto the block chain. Imagine trying to put Uber, Twitter, Facebook, Ebay etc. on the block chain and every user having to pay a micro fee every time they clicked on anything.
That’s the current capability of eos’ competitors. Every interaction with the network will require a fee on those platforms. That means a simple “like” on Facebook would cost the user money. This obviously excludes almost all non-financial businesses from practically using blockchain as their back-end infrastructure.
Now remove the fees and what happens?
What Will EOS Do?
• Provide an open source operating platform for blockchain applications (both public and private)
• Provide dApp owners with computational capacity in line with their stake in the network (token ownership and staking)
• Provide dApp owners with storage capacity in line with their stake in the network (token ownership and staking)
• Take block chain tech mainstream…
How is EOS Unique?
• EOS uses a custom consensus mechanism called Byzantine Fault Tolerant Delegated Proof of Stake. Transactions are immutable within 3 seconds while block times are 0.5 seconds.
• EOS is capable of parallel processing while most competitors are not
• EOS will be capable of millions of transactions per second while its competitors are barely capable of 10 transactions per second. This will be achieved by many eos.io chains being able to interoperate and hence scaling will be infinite from day 1.
• EOS transactions will be free for the end user. There are no other platforms with free transactions
• EOS will be owned by the token holders (mainly dApp developers and companies who use eos.io software) while many of its competitors have single or small groups of owners will huge stake in the platform which can lead to decisions being made for the betterment of a few rather than the whole
• The token rollout is a master stroke and should serve as a lesson to future block chain companies on how to build a network through hybridisation of old and new funding methods
Who Will Use It?
• DApp developers
• Companies
• Start Ups
• ICO’s
• Local, State and Federal Governments
• Every internet user (without necessarily even knowing it)
What Is the Size of the Opportunity?
This is currently extremely hard to pin down. This is because the use cases are still evolving. Basically, any time a company or person needs their transactions to be fast, secure, free for the end user and provably correct…, eos.io will surpass current technology.
How Will They Obtain Market Share?
- By being - Better, Cheaper, Faster
- Block.one have allocated over $1 Billion USD to fund application developers to build new dApps on eos.io
- Multiple VC firms have also allocated seed funding for dApp development. So far this seed funding is over $500 Million USD and is still pouring in
Does it Have Longevity Potential?
Eos.io is the only upgradeable block chain on the market. All other chains have to “hard fork” to make software changes meaning the entire network is disrupted each time a new feature is added or a bug is fixed.
This will ensure eos.io is able to keep up with developments in this new tech industry.
Barriers and Roadblocks?
Regulatory – Block.one have kept their ICO away from USA and China (to buy in directly) meaning they have removed circa 90% of their regulatory risk.
Adoption – Block.one have used existing infrastructure (Ethereum) to create their network even before the launch goes live. Adoption is no longer a rick / road block given the wide token distribution and the war chest of circa $2B USD to fund development on top of eos…
Use Case – This has been a challenge for other chains. The main reason is that they all charge transaction fees. This has reduced or eliminated all but expensive financial transactions. Having free transactions means the use cases are as wide as the imagination of the dApp developers…
Conclusion
EOS.IO is the next generation in block chain and in business. It is my assessment that EOS.IO will be a fundamental part of how we transact and communicate online for the next quarter of a century.
Since BTC came along we’ve been waiting for block chain to be mass adoptable… Now is that time and EOS.IO is how.
Useful Links
Technical White Paper
Roadmap
Interview with Dan Larimer – Prior to EOS
Consensus Presentation – May 2017
Block.One CEO Brendan Blumer and Developer Ian Grigg mini talk
Block.One CEO Brendan Blumer – Shanghai Meetup July 2017
Interview with Dan Larimer (23rd Aug 2017) – This Interview answers the all important ERC20 Token questions many people have had with the EOS Token sale at 1:04
Interview with Brock Pierce and Vinny Lingham of Civic
The Governed Block chain with Ian Grigg
29th October Presentation by Dan Larimer
eos.io website
PART 1 - presentation by Dan Larimer explaining BFT+DPoS (eos.io consensus mechanism)
PART 2 - presentation by Dan Larimer explaining BFT+DPoS (eos.io consensus mechanism)
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