Ethereum vs EOS: A Comparative Study

Supporters of EOS were able to breathe a sigh of relief when the recently publicized segment from John Oliver and its subsequent infamy finally died down.

However, it seems that the cycle of negative publicity has not yet ended for the blockchain development platform.

EOS has gained newfound traction across the cryptocurrency community after Ethereum co-founder Vitalik Buterin shared his views on the delegated proof of stake mechanism used by EOS.
This caused EOS CTO Daniel Larimer to respond to Buterin in a post of his own, and since then, supporters of both platforms have been going head to head in online discussions.

These heated discussions and debates call for further clarity and an in-depth analysis of the matter. We will be diving into the world of Ethereum and EOS studying a variety of key factors.

Then we’ll be checking if they are comparable to one another and if so, which one is better.

Let’s start off with a refresher on Ethereum, and then move onto EOS.

What is Ethereum?

Ethereum is a decentralized application and blockchain development platform. Based on the programming language Solidity (created by Ethereum developers), Ethereum was formed as an “open blockchain platform that allowed anyone to build and use decentralized applications that run on blockchain technology.”

Ethereum was proposed by the Russian-Canadian developer, Vitalik Buterin.

Buterin saw the need for a blockchain network that would allow the use of a scripting language which would assist developers in simply and safely generating new decentralized applications.

Buterin’s proposal for Ethereum came to light in 2013 and was received with significant enthusiasm from the general blockchain community. The project launched with an Initial Coin Offering in 2014.

The Ethereum Platform continued to the momentum and was released in 2015.

The project did not disappoint. It went on to deliver what it had promised, an easy to use platform with never seen before capabilities for blockchain application development.

Ether

While the network itself is named Ethereum, its native cryptocurrency was introduced as “Ether” with the market ticker of ETH. However, Ether is often referred to as Ethereum, after the network’s name.

Ether functions as a regular cryptocurrency where it can be traded on popular exchanges as well as in peer-to-peer transactions through supported wallets, all over the world. In fact, after Bitcoin, Ethereum is considered to be the most popular and widely accepted cryptocurrency.

Ether also fuels network operations on the Ethereum platform, where the network charges its fee in Ether and calls it “Gas”, which is levied when developers need to utilize the network’s functionalities for their needs. Gas costs are present for conducting any of sort of transaction or operation on the Ethereum platform.

Consensus Algorithm

The Ethereum platform uses a proof-of-work consensus algorithm at the moment, but it plans to switch to a proof-of-stake consensus soon, starting with its next major upgrade (Casper).

The Value of Ethereum

The value of the Ethereum Virtual Machine (EVM) comes from two components, Turing completeness and rich statefulness.

The Turing-complete language integration allows for interesting features such as smart contracts and programmable money. Smart contracts are systematically set agreements that carry out specific functions and can also supplement the development of decentralized applications. Elaborating further, say a project leader named Jacques needs a task completed. Jacques then finds Bob, a freelancer who states that he can complete the task.

Jacques would use Ethereum to run a smart contract that states that when Bob completes the work and can prove he completed it, the smart contract would automatically release the funds that Bob is owed.

In that interaction, there was no need for third parties, just Jacques, the smart contract and Bob. The transaction was trustless, seamless and effective.

The second component, rich statefulness of Ethereum allows for transparency at the blockchain level. These two combined components allow for a powerful variety of decentralized use cases.

The functionality of smart contracts allow for the creation of interesting decentralized applications like CryptoKitties, Etherbots and more.
Ethereum’s development capabilities don’t end there. The Ethereum platform also allows developers to create their own tokens.

These tokens, named after quality standard rules, are technically referred to as ERC20 tokens. However, the developer of each token can name them whatever they want (for instance, popular exchange Binance has its own ERC20 token that serves the purpose of reducing trading fees on the exchange).

With the creation of these tokens also came the possibility of them being used for an initial coin offering (ICO).

Many of the tokens that were created on the Ethereum platform went on to have their own crowd sale events.The Ethereum network was used for a significant portion of ICO events that took place in 2017.

These elements coupled with other notable aspects have made Ethereum one of the most sought-after platforms in the cryptocurrency industry.

Lastly, Ethereum is currently the second largest cryptocurrency in terms of market value, only behind Bitcoin.

Statistics Taken from CoinMarketCap

Ether has faced immense fluctuation in the past few months after enjoying its high by the end of 2017. Yet, thinking that Ethereum will die because of this drop in value is extreme because the platform is too integral to the cryptocurrency ecosystem to simply vanish due to a drop in value. It might happen years into the future, perhaps, but it is not happening anytime soon.

Will Ethereum Die?

Speaking of Ethereum’s potential demise in the years ahead, if it could be brought about by one thing, then it would be due to the network’s usability and scalability issues.

With the growth in usage that it saw last year where interest in the cryptocurrency industry had reached an all-time high, Ethereum started to face lagging issues over the network. Where not only financial transactions fell prey to slower transaction times and higher transaction costs, but even the development engine went through the same slew of issues.

Yet another significant issue that is affecting the Ethereum network is the aspect of usability.

The Ethereum platform is designed in such a way that all who use it in any form or fashion must pay. This poses quite a problem for potential use as applications become more diverse.

If a decentralized version of Twitter was built on top of the Ethereum platform, would you want to pay the network to write a decentralized tweet? Certainly not.

Potential Solutions

The network is planning to resolve scalability issues by an update called Sharding, which would process information in fragments on the network while making it appear in its complete form to the end user. This would ensure that the network is not overwhelmed with the processed information, providing users with a superior blockchain based experience.
With an infinite token supply, if the core developers behind Ethereum play their cards right, the network could enjoy its run for a long time.

Competition

But Ethereum has started facing competition from other new platforms.

Some of these platforms have proven their capabilities when it comes to development and would be direct competitors of Ethereum. Whereas, others boast of features that are yet to be demonstrated in the real world.

And that brings us to EOS.

What is EOS?

EOS.IO was introduced to the world in 2017. Official credit in the creation of the platform goes to a company called block.one.

The EOS platform is said to involve horizontal and vertical scaling to perform millions of transactions per second, and thus will be providing industrial level, enterprise solutions that could also be utilized by the everyday user.

If and when an implementation of this is revealed to the world, it would surpass Ethereum’s current transaction speed by an undeniable significance, and could most certainly establish EOS as the authority in blockchain development.

EOS is positioning themselves as a solution to all of the problems that are facing Ethereum in both scaling and usability.

In addition the powerful potential of performing millions of transactions per second, EOS will also design their system with the idea of making creators of decentralized applications pay for use. This makes it to where a user would not have to pay a slight fee to post on a decentralized Twitter.

Another way that EOS has made things seem simpler has been through the way that it will be deploying smart contracts, they will be written in regular code as opposed to machine code, making them simpler to read and inspect.

Designing for use would allow EOS to truly cater to a variety of development applications. Making EOS more appealing for creators, as more connections with smart contracts and other possibilities are made present with fewer restrictions.

EOS and its claims for high speeds, scalability from the start and designed for a variety of decentralized user experiences make it a potentially compelling platform.

Keep one thing in mind though, with EOS, it is all about potential.

Potential Ethereum Killer or Vaporware?

While many term EOS as the “Ethereum Killer” or “Ethereum on Steroids” – no kidding, Google it – the platform actually created its EOS tokens and held its ICO through the Ethereum platform – which will go on until June 2018.

EOS has reportedly ended up raising a staggering about $1 billion in cryptocurrency investments so far in return for EOS tokens.

And remember, the EOS ICO is still active. It is gathering funds as you read this – provided that you are reading this before the mid of June.

And it gets more interesting.

“The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.”

The aforementioned statement is not us trying to instill fear, uncertainty, and doubt (FUD), but a direct excerpt from the project’s website.

Here is another excerpt.

“block.one is building the EOS.IO Software but it will not configure and/or launch any public blockchain platform adopting the open source EOS.IO Software (the “EOS Platform”). Any launch of an EOS Platform will occur by members of the community unrelated to block.one. Third parties launching the EOS Platform may delete, modify or supplement the EOS.IO Software prior to, during or after launching the EOS Platform.”

There you go.

This is just to show you that when people compare EOS.IO with Ethereum, they might not be aware that EOS actually does not plan to be deployed as a blockchain platform of its own but that it will work like Ethereum Virtual Machine, where it will provide a software to be leveraged by interested developers who want to develop blockchain solutions of their own.

As for the part about EOS tokens having no value, supporters believe that this is just “legal language” which is being relayed by the company so that it could steer clear of regulatory authorities such as the U.S. Securities and Exchange Commission (SEC), which is clamping down on digital assets sold or termed as “securities”.

EOS war chest to the rescue ?

Supporters also cite the fact that block.one will be investing their war chest of approximately $1 billion, in startups who will use the EOS.IO software to create their own blockchain based solutions.

The company will be doing so through a specially launched EOS Venture Capital fund (EOS VC). Through it, it has formed alliances with the likes of Galaxy Digital, the crypto-asset bank headed by famous investor Mike Novogratz.

However, it does not change the fact or the uncertainty of how EOS tokens are supposed to work.

Investors who took part in the ICO and received EOS tokens in return were asked to register their holdings of the ERC20 EOS tokens with the company before June 2018. As the tokens are to be moved to the EOS software with the Ethereum tokens going void no later than June 1, 2018.

A moderator of the main yet unofficial subreddit thread for EOS states:

It has not been announced how and when the “snapshot” of the blockchain will be created.

EOS has unveiled its testnet for developers, but the long-awaited software will only be launched around the month of June as well.

The company also published the EOS code on GitHub in September 2017.

While these developments add weight to EOS’ claim to develop an enterprise solution, it remains unclear how the platform’s EOS cryptocurrency will function without a working implementation of its planned public blockchain.

EOS plans to provide enterprise-level blockchain solutions and is said to surpass Ethereum with its capabilities and functionalities, but the way that things are being handled with block.one providing funding to new ventures at one hand and denying any responsibility for providing a working blockchain, on the other hand, creates a lot of questions.

Further Issues Surrounding EOS

Other things, or rather people, that add to EOS’ credibility are its CEO Brendan Blumer and CTO Daniel Larimer.

Perception

Blumer is the founder of ii5 (1group) and okay.com, while Larimer created BitShares and co-founded Steemit.

However, Brock Pierce, the former face of the project who served as block.one’s chief strategy officer is a figure who is riddled with scandals ranging from failed ventures to sexual assault. It was not until John Oliver’s segment calling out Pierce on his misdeeds that block.one took the decision to separate itself from Pierce.

Yet, at present a benefit and a drawback for EOS in perception, is the fact that it is largely theoretical and has yet to be fully deployed. Being theoretical helps it to be able build support and strength while offering potential. But being theoretical also means that it hasn’t been proven and can only claim to have a superior platform.

Consensus Model Controversy

EOS uses a Delegated proof of stake consensus model and has a couple of other protocol changes as well. Yet, there are some detractors of this consensus model.

Vitalik has argued that the delegated proof of stake model does not account for security, and this is an issue which is further exacerbated by the lack of potential voters. Vitalik argues that if there aren’t as many voters participating in the process, then the security of the network might not be that strong. He further states that there might more issues with the underlying EOS protocol, making EOS itself hackable.

These technical concerns will only be truly tested after the EOS platform is deployed.

EOS token value?

The token value of the coin comes from supply and demand factors but also rest on benefits like potential airdrops that are available to holders of EOS tokens. The EOS token is trading around $6.20 and has fluctuated with the general market.

Statistics Taken from CoinMarketCap

Which One is Better? Ethereum or EOS?

Image credits: 

The question of better in this situation is an interesting one.

Ethereum is a tried and true platform and the Ethereum community has been through a lot and has a history. Ethereum had a breakup, this resulted in Ethereum and Ethereum Classic, we saw a divergence in philosophy and a specific vision for the future.

We see that Ethereum is continuously sticking with this vision for the future.

We know that Ethereum needs to evolve and account for issues such as scalability and usability.

We see that the members of Ethereum acknowledge the flaws in the platform and are in the process of refining the platform while trying to stick with the fundamental principles of decentralization and inclusion.

Our fears for Ethereum stem from the fact that we don’t really know if others will move faster than Ethereum and provide a better service. We don’t really know how the different updates in fixing issues such as scaling will have on the value of the currency and the strength of the ecosystem.

We know Ethereum as it is now but will we understand it and like it as it evolves?

This is the speculative aspect of Ethereum and this is what we need clarity on, if we find this, we have assurance and can rest easy at night.

For EOS, it’s the new kid on the block. Better speeds, better blocks, better experience, better everything. EOS is walking around telling everyone that it will make blockchains great again. EOS has gained support from a wide community of enthusiasts as well as serious investors.

EOS has very little to show so far though. The community released the EOS 1.0 code and is building out an ecosystem by bringing in projects like Everipedia onto their platform.

Yet, EOS is all potential, is it building a rocket ship that will take its community and potential decentralized projects and user base to the moon? Or will it experience technical failure and stay grounded? Is EOS simply smoke and mirrors or something more?

Only time will tell.

We’ll have to check back in at quarter 3 or quarter 4 of this year, once EOS has finally launched and has had some time to perform, only then can we make a strong, unbiased and rational judgment.

For now, we will leave it up to you to decide which one is superior.

That being said, cryptocurrency investments should be made with caution. While this post was written to provide an overview, it should not be taken as definitive investment advice.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.