Not all cryptocurrencies are made equal and with a single purpose in mind. While others are made with the sole intention of performing as digital cash, there are others that serve a more exclusive purpose relative to a system.
Cryptocurrencies are more than coins you can exchange for a product or service. They can also serve as a medium of exchange within open-source blockchain networks. EOS is one of the coins with this intrinsic purpose.
Used within the EOS.IO system, the EOS coin allows its users to perform actions on the network. These include building decentralized applications and voting on the network’s delegated proof-of-stake model.
In this article, we’ll look at EOS under the microscope to understand how it works and what makes it one of the leading blockchain technologies today.
What is EOS
EOS.IO is a blockchain platform where developers can build decentralized applications (dApps). It’s similar to its most popular counterpart, Ethereum but improves on the aspects where the network lacks. It promises zero transaction fees and high scalability that can complete a million transactions per second.
As a decentralized operating system, EOS.IO provides developers with the necessary tools and services used in building dapps such as cloud storage, user authentication and server hosting.
The EOS coin
Within the EOS.IO network runs EOS, its native utility coin. To use the network’s services, users need to hold EOS coins first. The more coins you have, the more you can access and utilize the network’s resources. The amount of coins you hold is proportional to the bandwidth and storage you can utilize as well as the stake you have at the network.
Defining characteristics of EOS
EOS is designed to be more scalable and flexible than Ethereum, making it more accessible to novice developers in the industry and easier to use in building decentralized applications. It prides itself on completing a million transactions per second compared to VISA’s 1.7k and Bitcoin’s 7 transactions per second.
Delegated proof-of-stake model
To solve the long-term problem of scalability, EOS came up with a solution called delegated proof-of-stake or DPOs. In traditional proof-of-stake systems, the number of coins you hold and/or the period of time you continue to hold them determine your value as a block producer. The more coins you hold for a long period of time, the higher your chances are at being chosen as a block producer.
On the other hand, in the EOS delegated proof-of-stake framework, the block producers are chosen through votation. Anyone who holds EOS tokens can vote on who they think should be a block producer.
After every voting round, 21 blocks are made by the top 21 block producers who won the votation. This system ensures a democratic way of choosing who gets to be incentivized in exchange for verifying transactions and adding blocks to the blockchain. And more importantly, it cuts down the time needed in order to process transactions. The EOS’ delegated proof-of-stake framework is what makes its scalability so impressive.
Less decentralized than others
However, some people have issues with EOS’s block confirming process and they question the decentralized nature of the network. Since there are only 21 computer nodes responsible for verifying and creating new blocks, not all members of the network get to participate in the incentivized program like in the Bitcoin blockchain.
In the Bitcoin network, there are thousands of nodes that need to reach a consensus before they can verify a transaction and add a new block to the blockchain. This slows down the entire process and makes it less scalable than others but through this, the control over the system is completely decentralized and spread throughout the whole network.
In EOS, the thousands of computer nodes are reduced to only 21. These 21 computers need to reach a consensus before a transaction is confirmed. Compared to the thousands in the Bitcoin network, the 21 computers are able to reach a consensus at a faster rate which makes it more scalable and less vulnerable to price changes.
Some think this process undermines the decentralized purpose of blockchain technology but when examined at a closer look, all members of the network participate in the DPOs framework through voting. This democratic process ensures that there is no monopoly of incentives and that block producers can be replaced anytime.
5% yearly inflation
To fund transactions and reward block users, the EOS has a 5% yearly inflation rate. One percent of this is given to block producers as an incentive while the remaining 4% are saved to fund future proposals for the improvement of the network.
Buying EOS: Where and how
EOS is currently the 13th largest cryptocurrency in the world today in terms of market capitalization. More and more people are investing and trading using this coin and if you’re one of them, here’s how you can get started.
1. Buy a wallet
First, you need to have a crypto wallet that can hold EOS coins. Online wallets are free but less secure. For maximum security, a hardware wallet such as Ledger Nano X is recommended.
2. Create an EOS account
Once you have a wallet, you’ll need to create an EOS account so you can move your coins on your own. You can do this on third-party applications since you’ll need an existing EOS account to create a new one. You can try Exodus, Ledger or zEOS in creating your new EOS account.
3. Find out what your EOS address is
When your wallet and account is settled, it’s time to find out what your EOS address is so you know where to send your purchased coins. An EOS address contains a long string of characters beginning with 0x. You can find your EOS address in your crypto wallet.
4. Find an exchange platform
Most crypto exchange sites offer EOS in their platforms. Choose your preferred merchant and place your buy order to purchase EOS coins. Coinbase and Binance are some of the most popular and trusted sites today.
5. Transfer your EOS coins to your wallet
Once you’ve purchased your EOS coins on an exchange site, you’ll need to store them in your wallet for safekeeping. Exchange sites are known to be vulnerable to cyber attacks so remember to always transfer your coins to your own wallet after completing a transaction.
EOS cryptocurrency: The future of blockchain platforms
New technology will always spring up to challenge the faulty status quo. EOS is one of those that compete with current systems to provide better solutions. For developers of decentralized applications, EOS.IO is definitely one of the most popular platforms to use. With impressive scalability and zero transaction fees, it’s obvious how advantageous EOS is to the crypto community.
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