EOS (EOS)

As blockchain technology advances and new ideas towards its applications pop up a mile a minute, there is one constant refrain.

Scalability.

The limits of how scalable a blockchain may be is most evident in the case of Bitcoin. With transaction fees over $20 and response times in the hours instead of seconds, it became clear to many that future blockchain applications needed to be different.

EOS is trying to tackle the scalability issue by creating a blockchain that has no transaction fees and can handle millions of transactions per second.

These are lofty goals, but worth pursuing if the blockchain is going to stand a chance at decentralizing the internet.

Buy EOS (EOS)

There is currently no way to buy EOS directly. So the only way to buy EOS is to purchase BTC to use on an exchange, and then switch it to EOS.

Step 1: Choose Your Trading Platform

Firstly you will need to decide on your cryptocurrency trading platform and create an account there. The choice of platform isn’t very important as a beginner, what really matters is a trading platform that you are comfortable using..

Choose one of these platforms and complete the follow steps to get started:

Binance

Go to Binance and create a new account if you do not already have one.

Once your account has been confirmed, log in to your Binance account and click on funds at the top right, then “Deposits Withdrawal”.

EOS Binance Deposit Address

Select and copy your bitcoin address.

Look in the “Bitcoin” list and click the Bitcoin deposit button. Then a series of numbers appears in the “BTC Deposit Address:” field. You must copy this series for the next step. This is your bitcoin wallet address.

STEP 2: BUY BTC

The second step is to get your Bitcoin, you can do that at a broker such as BTCdirect .

If you’re buying BTC for the first time from these brokers, you will be asked to confirm your bank account.

Upon payment you will be asked to enter a bitcoin address. You must fill in the address that you have copied at Binance.

STEP 3: WAIT UNTIL YOUR BTC HAS ARRIVED

Once you have purchased Bitcoin and entered the correct BTC deposit address with the payment, you have to wait until the BTC arrives in your wallet.

This process can take up to ½ hour, so don’t worry if it’s not immediately visible on the exchange.

STEP 4: BUY EOS

Once your Bitcoin has arrived at your trading platform, it’s time to buy some EOS.

Binance

Go to the Binance trading exchange (click the top left on exchange and choose Basic) and use the search function within BTC Markets to find the EOS/BTC trade.

Once on the EOS/BTC trade page you can look in the left box marked with Buy EOS. Here you can decide how much EOS you want to buy using your Bitcoin.

If you then press Buy EOS your order will be placed. When the order is filled you will see your number of EOS on the right-hand box or on your balance page.

Congratulations you’re now the proud owner of EOS.

What is EOS?

The easiest way to conceptualise what EOS is, is to imagine it as a next generation operating system.

The people behind EOS see the possibility of a blockchain whose purpose is to enable decentralised applications (Dapps) on a blockchain rather than in a central location.

Where EOS and Ethereum are different is in the implementation of how consensus is achieved and how smart contracts are made and the ideology behind them.

In an operating system, a user has to communicate with the software that runs the computer without needing to know how to speak the programming language. So, a blockchain that enables Dapps also has to do the same thing. There has to be a process where the programming machine language gets “translated” so that it can be run.

EOS, then, is the way to communicate between the application and the operating system, in this case, the blockchain.

This solves the scalability issue inherent in many blockchains and still gives users the same experience as they are used to. No app developers want their users to have to pay every time they interact with it

At first blush, this sounds a lot like the Ethereum blockchain. And in many ways they are similar.

Where EOS and Ethereum are different is in the implementation of how consensus is achieved and how smart contracts are made and the ideology behind them.

Ethereum wants to use immutable, decentralized smart contracts mainly for financial transactions, but in a more robust way than the Bitcoin blockchain.

EOS wants to replace centralized servers and build out more mainstream applications.

Ethereum uses Proof Of Work to validate a block, currently. And EOS uses Delegated Proof of Stake, instead.

Proof of Work in theory is decentralized and scalable, however it has become apparent that there still requires a lot of GAS and computing power to achieve consensus through a Proof of Work protocol, which is hard to scale. Not only that, but mining pools have developed which is putting the validation of blocks in fewer hands, which then starts to seem like a more centralized system.

Delegated Proof of Stake, on the other hand, though it seems to be more centralized, is proving to be a more efficient way to validate blocks. Diverging from a simple Proof of Stake protocol, in which a token holder is able to validate a block and it is his financial stake in the process as motivation to stay honest, this protocol makes a stake holder a voter.

These stake holders vote on a witness to validate the block according to how much currency in tokens they have. In other words they delegate the responsibility. But only the top 21 witnesses can validate a block, and thus, get tokens, so that creates competition which helps keep any malicious intent to a minimum. Since they have a stake in the platform, nobody would want to undermine it.

It also creates a sort of centralization in which there are only a few witnesses that validate the blocks. These people could always be changing so the power is spread out, but a similar scenario to mining pools could evolve where witnesses converge into data centers. However, since there will always be 21 witnesses, even if those witnesses become data center mining pools, there will still be more of them than what is happening in Ethereum where there are 5 mining pools operating.

The other big difference is in the smart contracts. Ethereum’s smart contracts requires a specialized language to form a contract. That requires a steep learning curve. Building an app on the Ethereum blockchain means transferring the script of an app to a new language which limits how usable it is to host apps.

The smart contracts on the EOS blockchain can read any programming language. When a company or app developer wants to start a smart contract and build an app on the blockchain, they can use the language they want. This has big implications on scalability of decentralized apps on the chain.

How does EOS work?

You can think of the EOS blockchain as being like a highway with no speed limit and no tolls.

An app developer can set up on the chain without needing to charge users to use the app. Much like Facebook doesn’t charge people for using it.

To date, that has been the major challenge with blockchains that allow decentralized applications. It costs too much to produce the GAS necessary to validate the blocks to eliminate transaction fees.

EOS plans for the fees to be paid with the 5% inflation of the tokens. As the value of the tokens rises, the costs of operating the chain will come out of that.

And that is very important.

The EOS token is never consumed, so there are no fees. It requires no GAS to be mined.

EOS hopes to be the place where the next Facebook, Uber, Airbnb etc will want to set up shop. Understanding that the people who use those apps don’t really care much about decentralization and democratizing the way apps work, they want to replicate how a centralized server works with those apps. With the bonus being that they are cost effective, i.e. no central server costs, and with a super fast, low latency implementation.

To see how this can work once it is implemented we can take a look at the Steemit social network, which is built on the Steem blockchain. This blockchain works exactly the way the EOS blockchain will function. The witnesses validate the block and 90% of the Steem, the currency of the blockchain, gets paid to them for “mining” the block with the other 10% going to the content creators. More about the content creators in a moment.

The Steem blockchain was built by Dan Laremur who is the founder of Blockone, the company behind EOS. Steem was built as a proof of concept to see if the idea could work in the real world. Once he saw it could, he left to form Blockone and put a new blockchain together.

Steemit is very similar to Reddit, a place where users can post discussions about just about anything. News, information, pictures of your cute cat, etc. On a social media platform like Reddit, or even Facebook, people can like or upvote the content they like. In the case of Reddit, these upvotes are called karma. Karma has no value and is useless in the real world. Actually, it’s even useless on Reddit.

On Steemit, the likes or karma is actually paid out in Steem. So, users who post popular content actually profit with currency that they can cash out and use. The more blocks that get validated, the more Steem is produced and the more popular your content is the more money you make.

The whole system is built on a blockchain exactly as how EOS hopes to operate. The users of Steemit don’t need to pay to use the platform and likes and shares are also not paid for by the user. There is no software to download and no knowledge of how the blockchain works to be able to use it.

The biggest benefit to being on the blockchain means that there is no middle man, aka a central server.

It can’t be shut down since the servers are the nodes validated by the witnesses so the hard drives are located all over the world. It can’t really be hacked because of the way the validation of the blocks work. It can’t be throttled or slowed down by any hostile corporation or government.

Those are some big reasons to use the blockchain over a central server or traditional operating system.

With the issue of the internet being in the hands of monopolies in the US eliminating net neutrality, and governments like China shutting down access to certain cryptocurrencies, it is more important than ever to have a decentralized system that lets the market decide how it will function rather than one actor.

How does the EOS token work?

The EOS token is never consumed, so there are no fees. It requires no GAS to be mined.

The tokens are used to access a portion of the network. For example, if you have 1% of the available tokens, you then have access to 1% of the available bandwidth of the network. Rather than burning the coin when you use your storage, it is held. You get your tokens back when you release the storage.

So, tokens shouldn’t be seen as a share of a company or platform. The tokens are meant to be used as access to the bandwidth of the platform.

It is a leap of faith on your part to buy in with the promise that something great will come out of this.

The currency is a way to develop and use the software necessary to build out a viable platform. Once the apps are built on the blockchain, the users of an app won’t have any use for the currency or even need to know there is a tradable token associated with it.

App developers or hosters will need the tokens to use the platform and the value of the currency will rise and fall based on how many players there are on the platform. The higher the demand for bandwidth the higher the value of the token.

Then the tokens will pay for the witnesses to validate the blocks, but that will come with an already agreed upon inflation of up to 5%.

As of right now, there are no EOS tokens. To buy in, you need to buy ERC-20 and at a later time they will be converted to EOS.

Also, there still is no actual EOS blockchain. The developers are hoping to use the funds generated from the ICO to build out the platform. What kind of guarantee do you have that when you buy the ERC-20 that you will ever receive the tokens or that the platform will be built?

In a word, none. It is a leap of faith on your part to buy in with the promise that something great will come out of this.

This may not seem as scary as it sounds, since there is already proof that this type of blockchain will work as I noted in the section about Steem. But, there is a big red Buyer Beware signs hung up on this blockchain’s door. Be aware of that, and do your due diligence before buying in.