Everything you need to know: EOS.IO and Ethereum
Organizations experimenting with smart contracts will have heard of Ethereum, the distributed computing environment based on public blockchain.
Ethereum* is an excellent network on which smart contract apps can be developed with relative ease – all code is, of course, open source, plus there’s a vast community of support and more how-to guides and online courses than you can shake a stick at, that help even the lowliest of developers get started.
(*There’s a significant misconception about Ethereum in believing that it’s a cryptocurrency, like Bitcoin, Ripple, DogeCoin and the like. And while the word is often used in the same breath to mean the same thing, Ether is the cryptocurrency commonly used as monetary exchange on the Ethereum platform.)
Similar to Ethereum, EOS.IO is also a distributed computing environment with its own currency, or token, EOS, but it’s a platform that takes most of the attributes of a physical computer – RAM, CPU, storage and so on – and represents them across a network of participating computers in virtualized form.
EOS.IO is a relative newcomer to the crypto economic world (Bitcoin recently celebrated its ten-year birthday), being released on June 1 this year after the most successful ICO in history. Since, EOS.IO has seized the initiative in the smart contract field, running many times more DApps (decentralized applications) than Ethereum.
So what are the advantages of EOS.IO over Ethereum? And why is it proving so wildly popular?
To begin to answer these questions, we will need to consider some of the problems which bedevil blockchain technologies, not just Ethereum, and how EOS.IO can theoretically solve them.
Firstly is the time taken to validate payments or exchanges (the latter being more relevant in smart contracts, of course). With Bitcoin, for example, any transaction’s validation takes a great deal of computing power, with all participating machines attempting to solve cryptographic puzzles based on a random value and the list of transactions to date (the blockchain). This process is comparatively slow, as every participating node needs to agree on validity.
#Ethereum is the 5th fastest growing open source project in all of #Github. pic.twitter.com/wmH73gcBCz
— Saurabh Gunjal (@SaurabhPGunjal) November 5, 2018
To compare, Visa, the credit card/payments company processes under 2,000 transactions per second, while Bitcoin can approve only 3-4 transactions per second. Ethereum, as it stands at the moment, can handle about 20 transactions a second.
Because EOS.IO uses a mechanism called delegated proof of stake (DPOS) to validate exchanges, it can theoretically process millions of transactions per second. Traditional proof of stake validation is dependent on the participators each locking away a stake of tokens which are used to “bet” on a block to be added to the chain. Rewards are proportional to the stake offered.
DPOS is different, as each block’s producer is chosen through an ongoing approval voting system. Each validation only takes 17 of 21 validators to agree on the genuineness of the transaction. Then, after each block’s production, producers are shuffled using a pseudorandom number, ready to form the next 21 validators.
The kicker for many developers is that as well as no latency to speak of (meaning transactions can be more or less instantaneous), there’s no fee levied by the EOS.IO network to validate a transaction. That means that users of an app can use the blockchain-powered smart contract application for free.
The future of EOS.IO is regarded with some optimism by the blockchain and smart contract community. The network is highly efficient as it can distribute processing of smart contracts among its participants – horizontal scaling, in the vernacular. Holders of the token EOS can use a proportion of the network’s capabilities according to the amount of EOS they hold: a ten percent holding of EOS gives the holder ten percent of the total network computing power.
In fact, participants can “buy RAM” and then let others use it when it’s not in use by the holder: in this way the distributed computing model is also extended to cover computing power (“compute”) and storage. The minds behind EOS and EOS.IO, Block.one, are a talented bunch with ambitious plans. Whether EOS.IO becomes the “world computing platform” that distributed, open-source advocates dream of remains to be seen.