EOS is probably the most popular token in the cryptocurrency market news as it continues its seemingly unstoppable ascent to new highs. Ethereum is now the fifth biggest cryptocurrency by market capitalization behind, Bitcoin, Ethereum, Ripple, and Bitcoin Cash. In the year-to-date period, EOS has delivered gains of 115% while Bitcoin has dropped 35%, Ethereum has declined almost 11%, Ripple has crashed by 63%, and Bitcoin Cash as dropped 48%. However, before you rush out to buy EOS coin in the hopes of profiting from the bullish rally, it is important that you know the fundamentals driving the movement.
For some people, EOS is an amazing cryptocurrency with huge potential to succeed where Ethereum had struggled in the past. For others, EOS is probably an overhyped project that might find it hard to live up to its name. This piece examines some key features behind EOS’ hype as Ethereum’s killer – it should be noted that the buzz and hype is driving the current rally in EOS.
For the most part, both EOS and Ethereum are designed to do the same things but in different ways. EOS and Ethereum are fundamentally designed to be platforms for creating and running smart contracts. Smart contracts are essentially coded contracts built and stored on the blockchain to be self-executing without the instrumentality of a middleman or broker. Ethereum is generally credited with being the brains behind the idea of smart contracts but a number of new platforms are working hard to perfect the art of smart contracts.
On Ethereum, once a smart contract is written and deployed, it can’t be edited, recalled, or updated. The problem however is that the people that create the smart contracts are human and they are prone to making mistakes. Hence, the fact that Ethereum smart contracts can’t be edited often leads to loss of time, energy, and resources every time there’s a programming error. In contrast, EOS is outfitted with a tool for reviewing and editing contracts; hence, mistakes are not necessarily permanent.
The fundamental differences between Ethereum and EOS will appeal to different kinds of clients with different needs. Businesses that need the practical feature of being in control will love EOS while clients that like the immutability that Ethereum provides might prefer the former. As an investor, you might want to take the time to review the pros and cons of both value propositions in order to make a smarter decision towards the long term horizon.
One of the key features that determine the sustainable growth of any blockchain is its ability to scale. Many blockchain systems are riddled with scaling difficulties. Bitcoin was in the center of a scaling challenge in late 2017 when as much as 250,000 transactions were stuck in the graveyard of “unconfirmed transactions”mempool and people were forced to pay exorbitant fees to hasten the processing of their deals.
Ethereum will also potentially have its fair share of scaling challenges down the road because its network can only handle between 15 to 30 transactions per second. Unless, Ethereum finds a way to ramp up network speed to process more transactions – 15-30 transactions won’t be enough to meet the needs of the increasingly blockchain-friendly enterprise market.
EOS has the potential to sidestep the scaling issues that has plagued the Bitcoin and Ethereum blockchains. For one, EOS is coming to the market with a delegated prof of stake (DPoS) architecture, which has many benefits over Ethereum’s proof-of-work (PoW) architecture. EOS could potentially pull off the processing of 1000 transactions per second while still maintaining the capability to scale higher.
However, it is important to note that Ethereum is already in the market whereas EOS process is still largely unproven in real-world use cases. EOS mainnet is not expected to be live until June, hence, it might be a little too early to conclude that EOS has a leg up over Ethereum in terms of scalability.