What Is EOS and How Does it Work?
By now you may have heard of Bitcoin. You may even have heard about blockchain, the technology underlying this multi-billion dollar asset.
It's true that Bitcoin has taken all the headlines when it comes to digital currencies. It's far from the only one, though. In fact there are hundreds of different projects on the market relying on the blockchain way of writing code.
EOS is one of them.
What Is Blockchain?
To understand EOS, we first have to step back and understand what blockchain is.
In a nutshell, blockchain is a data storage format. It lets programmers store data securely using what's known as the "public ledger," a database shared across multiple computers linked on a single network with the information encrypted behind a private key. The public nature of this database means that it's very difficult to hack because each computer on the network (or "node") checks itself against all the others.
Think of it like a physical ledger. Traditional databases are like having a single book on a shelf. To forge account numbers, all you need to do is break in and unlock that one book. Blockchain is like giving copies of the ledger to a room full of accountants. Even if you manage to fudge the numbers in one accountant's ledger, he'll just check it against everyone else's and correct the error.
The main value of blockchain is to correct what economists call the "double spending problem." It's arguably the single biggest problem created by the internet. Any asset that exists online can be copied by any computer that can see it. If you have a dollar in real life, you cannot will a copy of it into being. If you have a dollar online, all you have to do is hit "ctrl-c" to make another. The same goes for songs, movies or billion-dollar patents. If something exists online it is made of nothing but computer code, and any user can duplicate any code infinitely.
Blockchain lets programmers solve that problem. This is why so many people in technology treat it with the excitement usually reserved for liberation from a hostile power. The nature of blockchain security lets someone create an asset that is unique and has a single owner even if someone copies the asset's code. If someone records a song, you could label that file Song Copy ABC123 that's owned by John Smith. Someone can make as many copies as they want, but it will always be Song Copy ABC123 and that copy will always belong to John Smith.
This has led most companies that use blockchain to create what are called "tokens." These are essentially digital coins that the project uses to track value and users. Some are explicitly replacements for currency, like Bitcoin. Others are significantly more sophisticated. Like EOS.
What Is EOS?
EOS is a platform built for developing dApps (distributed apps). We will explain much more about that below.
Like most (if not all) blockchain projects, it has its own token that it uses to raise money and track usage. The project has been called an operating system for blockchain. The goal behind this project is to provide developers with all the tools they need to build apps and full-scale applications using the EOS blockchain network.
It was formally launched in 2017 by Block.One, a company that develops blockchain projects (although it focuses on EOS). Customers who want to develop their programs on the EOS platform buy tokens to fund this development. Access to the platform requires that the developer own a certain number of tokens, which they buy on an open market.
A higher price indicates greater demand for access to the EOS development platform. At time of writing, the EOS token sold for $4.29.
Why Was EOS Founded?
To understand the idea behind EOS, you need to understand the concept of distributed apps, or dApps.
• What Are dApps?
An ordinary app, like your phone's copy of Angry Birds or Spotify, stores its data on your device's hard drive. When you tell the device to launch the program it finds the appropriate files on your phone and runs them. When you tell it to access data within that app, say you play a downloaded song, your device once again reaches for files stored locally.
A dApp is an app designed to store its data through a blockchain network instead of locally on your device. If your copy of Spotify
SPOT were a dApp, for example, it might keep all of your saved songs stored on a blockchain database. Or it might even keep the files for the Spotify player itself stored on that database. When you launch a dApp, instead of looking for the necessary information on local storage, your device will look for files stored on a blockchain network.
This architecture is not limited to data storage. A dApp can use the blockchain network for access to processing power, short term memory and pretty much any hardware issue short of the physical display.
Note to readers - This is a very simplified, very stripped-down explanation. A complete explanation of distributed apps is beyond the scope of this article.
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Many developers like the idea of working with dApps because they believe that blockchain networks will create a high speed, high security format for accessing storage and computing power. Instead of having to build applications around the limits of a single device, they will be able to build applications limited only by the scale of a potentially immense network.
EOS hopes to take advantage of this growing market. Both the blockchain network and the development kit that this project offers have been specifically designed for developing dApps. The goal is to make it easier for programmers to work within EOS than any other blockchain project. Ultimately, EOS was founded to be the platform on which blockchain enabled apps run, the same way that iOS is the platform on which iPhone apps run and Windows is the platform on which PC applications run.
This, of course, counts on blockchain development becoming a mass market, consumer-friendly option. That kind of widespread adoption has not happened yet.
What Are the Features of EOS?
EOS is not the only blockchain project that addresses distributed apps. One of the most widely-used projects, Ethereum, arguably created the idea through its introduction of "smart contracts." Users on the Ethereum network can make a deal and, when the terms of the deal have been met, the network automatically transfers its proprietary ether tokens in payment. This was perhaps the earliest form of dApp. (Another way of putting it is that smart contracts create dApps, by inventing the idea of blockchain-based software confirming transactions.)
However, EOS does advertise new features specifically intended to help developers create apps on blockchain networks. Most notably these features include:
• Scalability
Blockchain apps often run into resource limits. As noted above, this architecture has not yet caught on in the mass market. This is a problem for a technology that depends on networking and network effects for its efficiency.
EOS offers new scalability solutions, such as asynchronous access to resources and parallel execution. These will help numerous developers use the network at the same time, helping to overcome resource bottlenecks.
• Token Holding Model
Most blockchain projects require users to consume tokens, like coins at an arcade. Someone buys a token and then spends it to access the project for a period of time. (This is known as the transactional model.)
EOS has advertised what it considers a free access model. This isn't quite right, but it is much closer than just about any other blockchain project out there. Instead of consuming tokens, the network only requires that you own EOS tokens. It then grants you access proportional to the number of tokens you hold. This means that developers can pay once up front (when they buy their tokens) in exchange for essentially permanent access to the EOS development network.
• Development Kit
Block.one has released a development kit for EOS that is generally regarded as more feature-heavy than most competitors. A development kit is the set of tools given to programmers to create apps and applications, giving them access to what the platform is natively designed to do. The more sophisticated a development kit, the more likely it is that a developer can solve problems and create similarly sophisticated apps.
• Authentication
Unlike many blockchain projects, even those focused on app development, EOS offers developers the ability to create new user accounts directly on the blockchain database. This can help make creating new apps quicker and easier. It also makes the network more efficient by taking an essential, often-repeated task (user authentication) and making it part of the system's architecture.
• Proof-of-Stake
EOS is built on what is called a "proof-of-stake" model. This means that the network of computers that make up the EOS blockchain are organized according to how many tokens each participant owns. The more tokens someone holds, the greater a role they play in storing and resolving data on the EOS network. This is generally considered to be more efficient than the model originally developed for blockchain, called "proof-of-work."
• Inflation
This is simple, but might also be the best idea on the entire EOS network. This project is designed with inflation in mind. The EOS project will continue to release new tokens as its network and user base grows. If done right this will avoid the Bitcoin hyper-valuation problem, instead letting the value of an EOS token remain at a consumer friendly price point.
How to Buy EOS
Buying EOS is a similar process to buying any other blockchain token.
First, you need to choose and set up an EOS wallet. This is place where you will store the code that gives you access to your EOS tokens. You can do this in a number of different ways, but generally the best two options are to store your token in an offline device (typically similar to a thumb drive) or an online account. Coinfunda has a good selection of recommended EOS wallets here.
Next, go to a token exchange. If you have a preferred one you can start there, otherwise Coinbase is a popular cryptocurrency exchange website. You will need to create an account and fund it by entering your payment information (few exchanges will accept credit cards, so anticipate needing either your debit card or your checking account and routing information). If you are using an online wallet you will then connect that wallet to the account that you created in this exchange.
Purchase your tokens. Depending on the exchange you might be able to do this directly. If so, you will make this purchase in much the same manner as any other online transaction. However, many exchanges might require you to pay for EOS tokens using another blockchain token. Typically, they ask for either Bitcoin or Ethereum. If that's the case you will have to buy the necessary amount of that token, then trade it for EOS.
Finally, if you want to use your EOS tokens for development you will need to create an account on the EOS blockchain. EOS Account Creator is one good place to do so. Once you have made an account, and paid for it using a small number of EOS tokens, you can begin to develop on the project's blockchain network.
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