Kyle Samani is co-founder and managing partner of the Multicoin Capital investment fund, a programmer, graduate of the Leonard Stern School of Business at the University of New York. In his article published by Forbes, he analyzes the arguments of the supporters of EOS and their opponents.
The first blockchains
The Multicoin Capital investment fund, the founder of which I am, recently published a 29-page document containing the analysis and evaluation of EOS. In this article, I intend to outline the main reasons for possible optimism and pessimism about EOS.
Reasons for optimism
The main reason to be optimistic about EOS, if expressed as simply as possible, is that the project will take the share of the market from the etherium. How and why this can happen? Block.one, the software company of EOS, is ahead of the Ethereum Foundation in the following areas:
scalability and performance;
emphasis on convenience and ease of use;
attention to the demands of the market.
Scalability
As I wrote earlier, Ethereum Foundation preferred decentralization to the detriment of scalability. Block.one, on the contrary, placed the cornerstone on scalability, partially sacrificing decentralization. Scalability is not just a characteristic. This is a fundamental ideological decision.
Since its inception, Ethereum Foundation has advertised the etherium as a "world computer". Although the etherium can really be called a world computer, in practice it is not so, because its performance is limited. Relying on a different set of ideological principles, Block.one positions EOS as a worldwide computer capable of successfully developing from the very beginning. It is expected that by the time of launch, EOS-based block shops will be able to handle more than 1000 transactions per second, while the etherium now only processes about 15 transactions per second. Moreover, Block.one has a clear plan for increasing the performance of EOS chains to 10,000 transactions per second or more.
Priority for the Ethereum Foundation is scalability. The authors of the project try to resort to different solutions. First of all, this is shading (fragmentation of transactions) and Plasma (child chain of blocks). Although these solutions have considerable potential, they are still far from realization. The first versions of Plasma have limited functionality and will not be able to fully work with smart contracts. Sharding is much more complicated. It will be implemented over several years and will require many significant changes.
Thus, the advantage of EOS is that application developers who want to write effective programs today will do this on the block that provides the required speed.
Convenience and ease of use
The co-founder and technical director of Block.one, Dan Larimer, has already created two blocking applications: BitShares and Steem. Compared to any other applications on the etherium, such as Cryptokitties, Peepeth or Ethergoo, they are much more convenient to use. Although these applications have not gained universal popularity, they are considered to be the best block-based solutions. They carry out more transactions per day than all other blockboys, including the etherium. Larimer knows how to create a software-based software that meets the expectations of consumers.
Many new ideas that emerged during the development of Bitshares and Steem, Larimer implements in EOS. Although these innovations are not unique, they have never before been implemented on a platform with standardized smart contracts. Let's look at three major innovations.
Transactions on the EOS network will be free of charge. This is a major breakthrough, allowing consumers to use EOS dozens of times a day without worrying about commissions. Imagine a social network in which you have to pay for each picture, rating and comment. Or a game in which you have to pay for every action. Consumers would never have adopted such a system.
EOS software allows you to restore an account at the protocol level. The importance of this parameter is difficult to overestimate. Many consumers are slow to buy and store large amounts of crypto-currency assets, because they are afraid: "What if I lose my password?" Although bitcoin and etherium networks can create backup programs using multi-signature schemes, this is an inefficient, complex and confusing process. In turn, EOS provides an opportunity to restore the account at the protocol level, which gives consumers a guarantee of control over the funds, even if the password is lost.
Finally, EOS provides readable addresses. Unlike bitcoin and etherium, where users exchange long series of random letters and numbers, EOS allows you to create short and simple addresses that are transferred between applications. Here is an example of the address in the etherium system: 0xdbd838ae88d71bbd465d8f7ddf6b0c9156002d7e. And here is the address of EOS: @KyleSamani.
Again, bitcoin and etherium make it possible to create convenient names in their protocols, but this process is rather complicated. Block.one aspires from the very beginning to make life easier for users.
The emphasis on convenience will help to expand the EOS client base and attract developers to the platform.
Attention to the needs of the market
To date, Block.one has the largest capitalization in the crypto-currency sector. According to some estimates, during the ICO the project collected more than $ 2 billion.
The company actively invests this capital in its ecosystem. It is noteworthy that Block.one announced its readiness to invest $ 1 billion in funds ready to develop projects based on EOS.
In addition, Block.one employs experienced management personnel, launches cooperation programs with universities, which will provide training courses for working with EOS, and develops relations with developers and government agencies.
Unlike many teams in the crypto-currency sector, who are inclined to believe that it is enough to create a working prototype, and customers will catch up, Block.one experts borrow methods of promotion from the traditional market. They do not believe that it is enough to create a product and it will become popular in itself, but actively and knowingly invest in growth and development. Although many Evangelicals crypto currency are mocked at the idea of raising solid funds to finance growth, Block.one considers this model to be an innovative and unique approach, differing in this respect from crypto-teams with little experience in the market.
Reasons for pessimism about EOS
The arguments of pessimists as a whole boil down to the fact that this crypto-currency is not properly decentralized, and it is this characteristic that will ultimately become the cause of its collapse. Moreover, pessimists say that the network effect of the etherium is unique, and the development community does not know itself equal.
Let's analyze these arguments.
Excessive centralization of EOS
Pessimists say that the EOS system is too centralized: only one company (Block.one) writes software, the creators of the block can be no more than 21 (whereas there can be more than 10,000 units in the network of the unit's airframe etherium), there is one implementation of the system (in the etherium of their at least four), and the nature of the distribution of coins raises questions.
All this criticism is fair. EOS is in almost all respects more centralized than the etherium. However, it is not centralized entirely, like Google and Facebook.
In particular, the notion of "too centralized EOS blocker" relies on the fact that the network consensus algorithm allows you to create a block at a time for only 21 users.
Maximalists believe that the main characteristic of the blockade should be the ability to resist censorship. However, as Larry Sukernik explains in his excellent essay, there are two levels of resistance to censorship: at the sovereign level and at the platform level.
People who adhere to the radical approach to decentralization believe that blockades should be resistant to censorship on a sovereign level, whereas Block.one does not promise that EOS will be endowed with such a characteristic. Rather, it will simply be resistant to censorship at the platform level. What is the difference?
Resisting censorship on a sovereign level implies that the system's system allows to withstand attacks from powerful structures, namely governments. On the other hand, the resistance to censorship at the platform level simply means the absence of a single operator capable of censoring the use of the system (an example is the episode when Twitter disabled access to the API for third-party developers).
Ultimately, according to the maximalists, the insufficient decentralization of the production of EOS blocks will lead to the authorities ceasing to exist.
Team Multicoin Capital finds this point of view unreasonable. We just do not know how effective will be the global platform of smart contracts with 21 block manufacturers. Instead of thinking about what will happen, when "the system becomes successful and it is declared war," we prefer to first make it available and popular, because without this, we can not talk about any attacks at all.
The etherium network and community are too strong
As a rule, etherium enthusiasts say that any other platform of smart contracts is too late to compete; that the network effects of the etherium, the community of developers, the brand and the ecosystem as a whole are so strong and evolve at such a speed that another platform, most likely, has no chance.
Network effects have great power. It is thanks to these effects that Microsoft, Google, LinkedIn, Amazon, Facebook, Apple and other major technology companies have become dominant in their areas. As soon as such a factor as the network effect begins to outstrip development, it is almost impossible to stop, as competitors can not keep up with the leader.
It is believed that the number of users of the etherium is about 20-30 million people, and on the blockbuster etherium released more than 2,000 unique tokens. Teams ICO collected billions of dollars and these funds are hired by the developers of the etherium. Everyone agrees that the nether effect of the etherium is real, and the ecosystem is growing at a rapid pace.
In the past two or three years, many external ecosystems and projects, including hardware / mobile / software wallets, exchanges, depositories, etc., have added support to the etherium. EOS has virtually none of the above.
Supporters of the etherium analyze other competing smart-platform platforms, such as NEO, Qtum and Cardano, that have not found a warm welcome from the community, like the etherium, and quite reasonably state that the nether effect of the etherium leaves no chance for competitors. Indeed, competing projects are struggling to "take off", but in vain, although they advertise themselves and their communities as very mature and developed, which is not true.
However, other projects are not as promising as EOS. EOS has a chance to become the most effective rival of the etherium. The project boasts a large developer community, and its launch will be loud and bright.
Conclusion
Efirium was the first viable platform of smart contracts. Everyone agrees that this is the dominant platform. With its success, the etherium inspires competitors to a fierce struggle. At present, the most serious rival of the etherium is precisely EOS, as its creators try to act asymmetrically, focusing on those aspects where the etherium is weak.
The battle between the platforms of smart contracts is just beginning. We are to witness an incredibly interesting process.