Introduction to Cryptocurrencies: EOS, another Star in the Cryptocurrency Field
Written by the CoinEx Institution, this series of jocular and easy to understand articles will show you everything you need to know about major cryptocurrencies, making you fully prepared before jumping into crypto!
EOS (Enterprise Operation System) is a brand-new blockchain-based smart contract platform developed by Block.one. The goal of the EOS project is to implement a blockchain architecture similar to an operating system that supports distributed applications. The EOS coin we are talking about today is a token based on the EOS project.
You may have heard this popular saying before: “In the cryptocurrency circle, only 10% of people buy Bitcoin, and only 10% do not buy EOS.” Exaggerated as it may sound, it is a telling proof of EOS’s popularity.
Since the birth of Bitcoin, the digital currency market has never stopped the innovation. Cryptocurrencies have emerged in an endless stream, like LTC and XRP, which we have introduced before. But as you know, the market is always the touchstone, and only those that have stood the test of time can survive. One person named Daniel Larimer stands out among many innovators. He is known as a blockchain wizard. Many people refer to him as BM, the abbreviation of Bytemaster , which is also his username at bitcointalk on the Bitcoin forum.
BM observed that centralized exchanges caused too many unnecessary troubles due to some artificial factors, and many of exchanges even closed down, leaving a mess behind. Therefore, BM decided to create a decentralized exchange — Bitshares as we know it. However, two years later, he left Bitshares and founded Steemit. Later, he left Steemit and started to engage in the EOS project in 2017. After several twists and turns, the story of an unusual “grapefruit” starts.
Everyone knows that Bitcoin only supports up to seven transactions per second, and Ethereum up to 15 transactions previously. At the end of 2017 and the beginning of 2018, CryptoKitties, a game built on the Ethereum blockchain directly caused serious congestion on the network. To accelerate transactions, users had no other options but to increase the gas for miners in exchange for priority in packaging. Obviously, such a processing speed can never meet the growing user demand. The bull market at the end of 2017 also witnessed serious congestion of the Bitcoin network, sending miner fees up to several hundred yuan. These problems in both Bitcoin and the Ethereum networks inspired BM to solve the deficiencies in the design of Ethereum’s inherent architecture at the start of the EOS project.
EOS is a blockchain architecture platform similar to an operating system. Some people liken it to Microsoft’s Windows platform. By creating a developer-friendly blockchain underlying platform, it supports multiple applications to run simultaneously, providing the underlying template for the development of DAPP. EOS provides accounts, authentication, databases, asynchronous communication, and program scheduling on hundreds of CPUs or clusters. The final form of EOS technology is a blockchain system architecture that can support millions of transactions per second and save ordinary users from paying for usage fees.
Unlike BTC, EOS cannot be mined. To be specific, BTC requires a proof-of-work consensus protocol (that is, POW), and thus consumes a lot of power and can only handle limited transactions; instead, EOS allocates 1 billion tokens (i.e. EOS) in a year of ICO, and later creates the blocks that make up the blockchain employing a consensus protocol called Delegated Proof of Stake (DPOS).
Speaking of DPOS, we cannot skip the new word invented by BM — Block Producer or BP for short, which is interpreted as a super node. There are 21 such super nodes in EOS, which need to be elected. Only those that have won the election can generate blocks. In other words, the 21 super nodes that win the election will generate blocks in turn. According to the EOS white paper, EOS will issue an additional 1% (previously 5%, and later adjusted to 1%) every year to those who maintain the nodes. There is a total of 1 billion EOS tokens, and 1% of it is 10 million EOS tokens. That means each super node can be allocated to 476,000 EOS tokens.
People always make fun of the story between BM and Satoshi Nakamoto. At first BM had many questions about BTC on the forum and then he turned to Satoshi Nakamoto for help. Yet Satoshi Nakamoto replied, “If you don’t believe me or don’t understand what I said, then I’m sorry, I have no time to convince you.” Doubtlessly, battles between two masters are about more than words. In the end, it is the achievement that defines them. BM’s achievement is EOS, which is quite different from Satoshi Nakamoto’s BTC:
1. Consensus mechanism of BFT + DPOS. DPOS is a consensus algorithm based on voting and elections, which is somewhat similar to the US Congress, and the 21 super nodes of EOS are the congressmen. The “Congress” has a big say for the entire ecosystem of EOS. It needs 15 votes from the super nodes to implement a certain plan. The reason for adding BFT Byzantine fault tolerance is to improve the security and stability of the system.
2. Free transactions. Transfers via Ethereum cost certain gas. Yet with inflation, EOS issues an additional up to 5% every year to reward super nodes, so that users do not need to pay the nodes miner fees in trading. Contrasting that to miner fees of dozens of or even hundreds of yuan when Ethereum is congested, users will find EOS quite attractive.
3. EOS software provides a complete account system that helps developers quickly create their own DAPP. If you want to develop DAPP on Ethereum, you need to spend more time developing the underlying module, and the technical team will be thrown into optimizing the process of block construction and DAPP. In the new model, the block is created by the API sequence applied to the block. That ensures one same code path is followed, and minimizes the possibility of inconsistencies between producers and verifiers when confirming validity.
According to Google’s popularity analysis, EOS enjoys the biggest fame in China, which is credited to the super node election. Amid the positive market sentiment towards its prospect, it receives high expectations.
However, the super node election is by nature a competition for EOS control and the mirror of ugly features of major capitals, making the process a bit unpleasant. Unfortunately, BM has already deviated from the decentralization of blockchain technology for the sake of the efficiency. After the EOS Mainnet went online, problems such as online delay, security loopholes, and Mainnet downtime have unexpectedly emerged.
Looking back on the development of EOS in the past two years, has it fulfilled its mission of “finding solutions for the free market and safeguarding all life, freedom, and property” as BM had hoped? Can the super node mechanism help EOS take one step further?
The road ahead is long, and time will show the answer. If you have any ideas, please follow CoinEx and contact us!
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