Over a decade ago, the mysterious Satoshi Nakamoto introduced the world to the peer-to-peer electronic cash system, Bitcoin. With that simple paper explaining the details of a decentralized P2P network and how it can be utilized for the cryptocurrency, the cyber world was changed forever.
Since then there has been a veritable arms race between cryptocurrency developers and tech companies. Bitcoin paved the way to the modern digital currency era, but it is far from the only superior contender in the field of the electronic cash system. For the past decade, alternative crypto coins have popped up and gained traction in the market. More and more are being developed even as we speak.
Though most, if not all, of these alternative coins, were modelled after how Bitcoin works, each coin has their distinctions. Of course, not all crypto coins are created equal, and the competition is fierce as cryptocurrency developers hone and improve their systems. Right now, the rivalry between Ethereum and EOShas shot up dramatically.
But before we get into those two particular crypto coins and their advanced blockchain platforms, let us first have a short refresher course on how the blockchain works.
A Brief Summary on Blockchain and Cryptocurrency
Blockchain has been a technology that everyone around the world has been obsessed with because of its incredible potential. More than just for Bitcoin and cryptocurrency, the blockchain is a revolutionary innovationthat has been posited as an alternative to digital transactions. It is incorruptible, fast, secure, transparent, and, best of all, decentralized. No one entity has authority over the blockchain which makes it next to impossible to be manipulated or hacked.
The blockchain is a digital public ledger that can record financial transactions. The main thing you will need to remember about how the blockchain worksare that it is a distributed database which means its storage database is not connected to a central processor (unlike how the Internet works). Because no central location holds the database, the blockchain is shared across a huge network of computers known as “nodes.” Each node has a copy of the blockchain and is updated in regular intervals, so each computer always has the newest version of the blockchain.
The nodes verify the transactions made by users. These transactions are then recorded in “blocks” and added to the chain in chronological order. Each block has a timestamp and a link to the previous block on the chain so retroactively changing something within the blockchain is impossible. A blockchain is constantly expanding as new transactions occur every single day.
Meanwhile, cryptography guarantees that the users will only be allowed to edit the parts in the blockchain that they own. Users have private keys that can let them write on their file.
By its very design, the blockchain is more secure but also more accessible than traditional transactions. User data will not be at risk even if one of the nodes get compromised. The rest of the nodes will simply pick up the slack.
With the way the blockchain operates, it is not that difficult to understand how cryptocurrency can benefit from such an airtight network. However, it should be worth noting that the blockchain is not synonymous with Bitcoin. Newer players like Ethereum and EOS have upped their game and developed their blockchain platforms. Though the general concept of their blockchain platform is the same with Bitcoin, they do have their distinctions and improvements, which have caused quite a stir in the crypto community.
The question on everyone’s mind, however, is which blockchain platform is better: Ethereum or EOS?
What You Need to Know About Ethereum
Launched in 2015 by a young Canadian-Russian programer, Vitalik Buterin, and his team, Ethereum has experienced rapid and aggressive growth in the relatively short time it has been available to the public, set to surpass Bitcoin’s success. Buterin was a programmer who worked on Bitcoins before he left to develop his cryptocurrency and blockchain platform.
Buterin believed that the people in the Bitcoin community were not approaching blockchain technology the right way. He envisioned a platform that could trade more than just cryptocurrency and developed Ethereum.
Ethereum – An Improved Bitcoin?
Ethereum is an open-sourced public software program developed based on blockchain technology. While it shares some resemblance to Bitcoin, Ethereum is said to have been created to solve the flaws of Bitcoin. Both use blockchain technology, but they use blockchain differently. While the Bitcoin blockchain only tracks ownership of its digital currency, the Ethereum blockchain focuses on running the programming code of any decentralised application (dApps).
Bitcoin is limited to being a peer-to-peer electronic cash system. Ethereum, on the other hand, features smart contract functionality, which is a computer application that can facilitate the exchange of not just electronic money, but also property, content, shares, basically anything of value. It runs these smart contract applications simultaneously and autonomously. Ethereum is so much more than just cryptocurrency. Essentially, the main goal of Ethereum is supposedly to replace internet third parties.
Moreover, Ethereum also has a cryptocurrency known as Ether (ETH) which is also similar to bitcoin. Ether can be traded on most cryptocurrency exchanges since it’s so popular. There are around 100 million coins in circulation to date though Buterin has implied that he might restrict any more coins to be created in the future.
Smart Contracts Explained
The primary innovation Ethereum brought to the table was its offering of smart contracts. With Ethereum, developers can create whatever digital operations they want.
Smart contracts are applications that can be programmed to run automatically without any need for user’s to type any input. Because these smart contracts operate within the blockchain, there is no risk of malicious third-party influence, downtime, a possibility of censorship, etc.
Smart contracts run on a network of thousands of computers, known as nodes. To create a smart contract, you need to set up a new coded account and upload it to the EVM. They are activated by funding them with Ether, and they execute “If” and “Then” conditions for trading to provide a level trading ground.
These smart contracts use the Ethereum Virtual Machine (EVM) which is a Turing complete software that enables anyone to run any program no matter what the programming language. The EVM is the engine of the Ethereum blockchain platform, and it vastly improves the process of creating blockchain applications. Rather than having to build an entirely original blockchain for each new application, Ethereum allows different applications in one blockchain platform.
The Case for Ethereum
Imagine being able to decentralize a digital service that is typically centralized. That is what Ethereum aims to do. Besides financial transfer services, you can utilize the platform for things like title registries, regulatory compliance, even voting systems. Services of that kind have always had a central authority overseeing the operation – a system that has always been ripe with manipulation and privacy violations – but Ethereum allows services to be completely decentralized. Decentralized applications have the potential to seriously affect industries like finance and banking, insurance, and real estate.
There are obvious advantages to this type of decentralized system such as:
Incorruptibility. Since Ethereum was built with the same blockchain principle as Bitcoin, the decentralized apps are verified on consensus, so it is impossible for one party to tamper with the data. Transactions are conducted on shared computers which allow users to be able to check records. Once data is validated, it becomes changeless.
No downtime. Unlike with typical apps that crash whenever there is a problem within the network, dApps can never experience any failure. If ever a node breaks down for some reason or other, the other nodes are not affected. The dApp will continue to be powered by the other nodes in the blockchain.
Tight security. Cryptography assures users that the dApps are constantly secured against any hacking attacks or attempts at manipulating the system. User data is kept completely safe so you will not have to worry about your privacy being breached. This is one of the main flaws of the traditional Internet; your data is often left unguarded and sold to the highest bidder.
Ethereum can also be used to create Decentralized Autonomous Organizations (DAO) which, as the name suggests, are fully autonomous, decentralized organizations with no single authority. Anyone who buys tokens owns a certain DAO. Rather than each token equating to equity shares and ownership (like a stock), tokens are considered contributions which give users voting rights within the DAO.
DAOs are powered by a programming code that is on a collection of smart contracts on the blockchain. This code replaces the rules and structures of a traditional organization and eliminates the need for centralized control.
Simply put, there is just much more flexibility with Ethereum. Transaction time is also much quicker compared to Bitcoin so there is a reason why people have said that Ethereum might overtake Bitcoin in the near future.
That being said, how does EOS hold up compared to Ethereum?
What You Need to Know About EOS
Although it is a newbie in the community, EOSboasts to be the most powerful infrastructure for decentralized applications, rivalling Ethereum and obliterating Bitcoin. EOS was launched by Dan Larimer and is currently owned by the Block.one organization.
Larimer founded and developed projects like Bitshares and Steem before leaving to work on EOS. For both of his previous projects, Larimer had to build radically different blockchain architecture. He is also the first to grow a dApp to gain widespread adoption. Block.one’s CEO, Brendon Blumer, on his end, has also been involved in blockchain as early as 2014. The core team of EOS has more than enough experience with blockchain technology.
One thing that makes EOS so fascinating (and controversial) is its initial coin offering (ICO) period. An ICO, for the record, is one way for crypto projects like EOS can raise funds to operate full scale. The EOS initial coin offering started towards the end of June of last year and ended in the first of June of this year. Its ICO lasted for nearly a year which is the longest ICO ever recorded. The EOS team has said that they have extended their ICO so that everyone would get the chance to be a part of the project.
EOS– An Overly Ambitious Alternative to Ethereum?
EOShas what can only be described as lofty goals for a blockchain project that is just emerging in the cryptocurrency market. Just like Ethereum, EOS is a platform used to use and develop decentralized apps. However, what EOS plans to offer to the cryptocurrency community is a blockchain platform that won’t be plagued by typical blockchain problems like processing speed, flexibility, and scalability.
The EOS team aims to create a blockchain network that is capable of processing millions of transactions per second. For some perspective, Ethereum, which has been around a little bit longer than EOS, can only handle 15 transactions per second through the Ethereum team are still working out the kinks in their platform. Also, in a single second, more than 52,000 Facebook likes are transacted.
So EOS’s goal of processing millions of transactions per second could solve the main problem of current blockchain platforms. Blockchains might recognize smart contracts, but none can process them at a speed that people are unconsciously used to with the traditional Internet.
Not only does the EOS blockchain platform aim to offer a faster processing rate, but it also wants to eliminate the need for transaction fees, so each service is as good as free. Individual developers (or companies) can, however, determine if their dApps should be for free or if they will have transaction fees (which are typically extremely low).
Of course, EOS also has its crypto coin known as an EOS token. Users can choose to spend their tokens or hold them to be able to use the EOS network resources. Developers can then create and run dApps.
That is one other interesting facet about EOS is that its a platform that supports all required core functionality which allows businesses or individual users to create blockchain-based apps almost like web-based applications. EOS provides secure access and authentication, data hosting, usage management, and even communication between the blockchain app and the Internet. Moreover, it is supported by a web-toolkit for interface development. Picture something like Google’s Play Store or Apple’s App Store, only for decentralized apps.
How EOS Works
Similar to how Ethereum works, EOS has smart contract functionality and allows for developers to launch their dApp. While Ethereum has the EVM, EOS has the EOS.IO which uses blockchain architecture built to enable vertical and horizontal scaling of decentralized apps. EOS aims to provide a complete operating system for dApps focused on the web. It also focuses on critical pain-points of blockchain so EOS can be as efficient and user-friendly as possible.
EOS solves the bottleneck issue of other blockchain platforms by providing services like:
Cloud Storage and Server Hosting. Developers will not be limited by the demands of securing storage and bandwidth because EOS already provides it with the system. DApp developers can build and launch apps and web interface with cloud storage, hosting, and download bandwidth. And they can pay for these services with EOS tokens.
Authentication System. Users will enjoy full security with the EOS’s built-in authentication system. The EOS network features user accounts with different permission levels. Users can also share database access between accounts and store data on a local machine outside the EOS blockchain. Additionally, stolen or compromised accounts can be recovered through various methods of proving your identity so you will not have to worry about being permanently locked out of your account should something happen.
Maximized Performance. Each block in the EOS blockchain platform is structured in fine “cycles” which are sequentially performed. This reduces latency and improves performance. Blocks are produced every three seconds and test at half a second too. These cycles are organized into threads that run in parallel within the cycles. This way, messages, and transactions are sent and responded to within a single block and between blocks.
Is EOS the “Ethereum Killer”?
Because of EOS’s proposed goals, people in the community have dubbed it as the “Ethereum killer.” To be sure, EOS does appear to offer a considerably better service than the Ethereum, especially in terms of speed and scale.
However, EOS was only launched a little over two months ago, and there is not yet any conclusive results to back up the EOS’s bold claims. Since Ethereum has a year’s head start, it has quite the advantage in the cryptocurrency and dApp market.
That being said, it can’t be doubted that EOS does offer a lot of potentials that could give the mighty Ethereum a run for its money.
Ethereum vs. EOS
While both blockchain platforms will need a significant number of smart contract engineers and blockchain developers, they differ in philosophy and approach. To better understand the two, here is an in-depth comparison between Ethereum and EOS:
The two platforms use different mechanisms for reaching consensus. Ethereum uses a hybrid of Proof-of-Work (like in Bitcoin) and Proof-of-Stake. This keeps the crypto community on the same page and encourages a more efficient understanding and utilization of the network code.
EOS, on the other hand, uses the Delegated Proof-of-Stake (DPOS) which poses no risk of competing chains using a hard fork. This mechanism utilizes stake-weighted voting to decide self-funded community benefit apps.
Decentralized Applications (dApps)
While Ethereum has the early mover advantage when it comes to running and developing dApps, EOS – being the newer platform – has taken advantage on recent tech advancements. It is more advanced tech allows EOS to process a higher volume of transactions per second compared to Ethereum.
Ethereum may have had the head start in the dApp market, but EOS is set to overtake it pretty soon.
In this aspect, you will see how different Ethereum and EOS are. Ethereum has required fees for gas in exchange in exchange for every use of calculation, bandwidth utilization, and storage. Miners have the option to select the transactions depending on required fee size.
EOS makes use of an ownership model, so the EOS blockchain platform has no transaction fees, no network development cost, and only requires the initial purchase of EOS tokens. Users benefit from this by receiving a predictable amount of network bandwidth and computing power. Purchasing more EOS also gives users the option to upgrade.
Because of how the Ethereum network is designed, it can only handle a meager 15 transactions per second. EOS, meanwhile, claims to be able to process millions of transactions per second. The difference between the two is staggering. However, Ethereum is planning to implement improvements in the near future.
Ethereum is just behind Bitcoin when it comes to popularity in the cryptocurrency market. Last year it reached an all-time high of $130 billion in market capitalization. More importantly, hundreds of alternative crypto coins have been built on top of the Ethereum blockchain. Plus it houses over a thousand decentralized apps. In this way, Ethereum is more established and has a more stable presence in the cryptocurrency market.
EOS, on the other hand, is more recent and has yet to prove itself in the market truly. Despite its lofty claims, EOS has not achieved anything close to what Ethereum has achieved. If the EOS blockchain platform can fulfill its promises of being faster, accessible, and more efficient, then it will definitely surpass Ethereum.
On paper, EOS seems to be better and more powerful than Ethereum. However, that is all just in theory. EOS is still unproven while Ethereum, though faulty and potentially risky, has established itself in the crypto community.
The debate over which blockchain platform is the best is still ongoing, and crypto enthusiasts are still observing how EOS fares in the market. Maybe Ethereum will continue to reign supreme, maybe EOS will outperform Ethereum by a long shot. Cryptocurrency is an incredibly unpredictable market, so it is anyone’s game.