EOS is a case study in how the “best” technology doesn’t always win. When compared to Ethereum on several metrics, EOS is far superior, it has processed up to 3,000 transactions per second compared to Ethereum’s 15. It already utilizes a more eco-friendly delegated proof-of-stake consensus mechanism.
Block.One, the originators of the EOSIO software, raised over $4 billion in the largest initial coin offering ever. At one point the market cap of EOS was over $17.7 billion–EOS had a lot going for it.
Of course there are other factors and market participants in a free market ultimately determine what technology is the “best” based on what factors (or perceived factors) they most highly value.
The creators of EOSIO, the software that powers EOS, Dan Larimer, Chief Technology Officer at Block.One and Block.One in general managed to alienate the cryptocurrency community. EOS was put forth as an Ethereum killer or “Ethereum On Steroids”. This likely ticked off a lot of whales who were heavily invested in Ethereum. There were also some decisions made that led people to think EOS is not very decentralized.
EOS had a chance to supplant Ethereum, but seems to have blown it. Now the Ethereum community is planning several major upgrades to the network in the form of Ethereum 2.0 (also known as eth2, also known as Serenity). The main changes includes transitioning to a more energy efficient proof-of-stake consensus mechanism and side-chains that are purported to increase the transaction per second capacity of the network to upwards of 100,000.
If this can be pulled off, Ethereum 2.0 would in my opinion be well positioned to capitalize on superior technology and lead the distributed financial sector forward.
I also think it is possible for Ethereum to overtake Bitcoin. One of the reasons I was initially drawn to Ethereum back in 2015 is that it has non-monetary use whereas Bitcoin does not. However, because of its technological limitations, I didn’t see Ethereum in widespread use. Ethereum 2.0 could change that.
Transactions Per Second
EOS is currently superior to Ethereum in terms of transaction throughput. EOS has processed as many as 4,000 transactions per second (TPS) and can theoretically handle more. Ethereum meanwhile, putters along at 15 TPS. Ethereum 2.0, using side chains in a process called sharding, could increase the throughput to 100,000 transactions per second, or roughly 4 times that of Visa.
Market Capitalization
As of writing this article, EOS has a market cap around $1.2 billion. It is rarely mentioned in “Ethereum Alternative” articles. While EOS was once a top 10 cryptocurrency by market cap, it has fallen down to 29. Ethereum in contrast has long been the number 2 cryptocurrency second only to Bitcoin. Ethereum accounts for just under 20% of the total cryptocurrency market (compared to ~46% for Bitcoin. Ethereum has a total market capitalization of $355.7 billion.
Consensus Mechanism
Distributed cryptocurrencies need a consensus mechanism so that the various nodes can agree on the current state of the system. Ethereum 2.0 is in the process of moving to proof-of-stake. EOS was designed from the beginning with a delegated proof-of-stake (DPOS) consensus mechanism. The difference being that with eth2, anyone with enough Eth can be one of the validators eligible for random selection to add blocks whereas in DPOS, one must be elected to one of 21 block producers.
Decentralization
One of the appeals to cryptocurrencies is they are not controlled by a small group of actors with oligarchical power. With validators numbering in the thousands and assigned pseudorandomly, Ethereum 2.0 does seem to be much more decentralized than is EOS.
Developer Community
Technologies like Ethereum and EOS allow for distributed apps or dAPPS. In order to have apps you need developers to create and maintain them. According to this report, EOS is losing developers, while other dAPP platforms like Ethereum and Polkadot are gaining developers. So EOS developer community is getting smaller.
Name Recognition
No cryptocurrency can complete with Bitcoin for name recognition, but Ethereum is strongly in second place. Big names in the financial world will mention Ethereum whereas projects like EOS are relegated to those inside the cryptocurrency community.
Summing it All Up
As I wrote above, when EOS came onto the scene Block.One had a lot of money and EOS had a lot of momentum. But poor decisions and perception has blown the chance. Now, developers are dropping and the price going no-where. EOS’s technological advantages don’t seem to matter. Plus once eth2 is released, those advantages won’t exist.
In order to for eth2 to launch a lot of things have to go right. However, there are a lot of folks working to make sure it does. If there are delays or issues, those could result in selloffs that will represent buying opportunities.
I want to give credit to Bitfinex. They paid back all their IOUs by redeeming 100% of all BFX tokens.
These BFX tokens were issued as a placeholder for Bitfinex account holders who received a haircut of 36% when 119,756 BTC was stolen from Bitfinex on 2 August 2016.
Back in January I sold my remaining BFX tokens for .55 USD per token. If I had held onto them today I would have gotten 1 USD per token.
With the benefit of hindsight that was not the best call.
However, it’s pointless to evaluate a decision based on information that wasn’t available at the time. I don’t think I could have known that Bitfinex was going to aggressively redeem the IOUs at such an accelerated pace.
With that in mind I made the best decision I could with the information available to me at the time.
The following is reposted from Goldcore with permission from Goldcore Founder and Executive Director Mark O’Byrne.
“GoldCore are one of the leading gold brokers in the world, serving clients in the U.S. and over 45 countries internationally.”
I receive no compensation for reposting this article. I thought it was valuable and want to share it with my readers.
– John
Fed Raised Rates 0.25% – Rising Rates Positive For Gold
By Mark O’Byrne – 15 December 2016 – From the Goldcore Blog, reposted with permission
The Federal Reserve increased interest rates by 0.25% as expected yesterday leading to gold falling to lows last seen in February 2016 and the dollar rising to its highest level against the euro in 14 years.
Gold actually settled higher at $1,163.70 for the day yesterday. However gold futures slid to $1,156.70 an ounce in electronic trading on the rate decision at 1400 EST and soon gold was pushed down 1.3% to 10 month lows after the decision in less liquid after hour markets.
Yellen announced a 0.25% increase in the benchmark rate to 0.50-0.75% as the Fed raised interest rates for the first time in a year.
The Fed signalled more rate hikes in 2017 as expected and once again attempted to appear hawkish and suggested they would increase interest rates three times in 2017.
It is important to remember that they promised three rate hikes for 2016 this time last year. Only one rate hike materialised – yesterday’s rate hike. It is prudent to focus on what the Fed does rather than what it says.
The Fed has been promising higher interest rates most years since 2008 and yet there have only been two interest rate rises since 2008. Yesterday’s rate rise was only the second rate rise since the 2008 financial crisis. The Fed frequently adopts a hawkish tone which consistently fools many market participants who buy into it.
Similar price weakness and poor sentiment happened at the end of last year when gold had an intermediate bottom on the last day of 2015, December 31 at $1,062.25 per ounce (LBMA AM Fix). This was prior to very strong gains in January 2016 and in the first half of 2016.
Gold prices in January, February 2016 (LBMA.org.uk)
Sentiment today is very similar to that seen at the end of last year. Part of the bearishness was because the Fed promised 3 rate rises in 2016. They managed just one – yesterday’s rate rise.
As the great orator, ex-President George W Bush once attempted to say:
“Fool me once, shame on you; fool me twice, shame on me…”
From a long term investor, pension owner and physical buyers perspective, it is prudent to ignore the noise and focus on the fact that the Fed’s monetary policies, along with most central banks in the world, remains extremely accommodating.
The market perception and narrative is that a rise in rates, even by a marginal 75 basis points will be negative for gold in 2017. This may be true in the short term as perception, even misguided perception, can drive markets in the short term.
However, rising interest rates per se are not negative for gold. What is negative is positive real interest rates and yields above the rate of inflation. This is unlikely to be seen any time soon.
The data and the historical record shows that rising interest rates are actually positive for gold. The most recent example we have of rising interest rates is when the Fed increased interest rates in the 2003 to 2006 period (see table above and research note here). As can be seen in the table above, in June 2003, the Fed funds rate was at 1% and by June 2006, it had been increased to over 5.5%.
Even if the Fed increases rates, interest rates remain close to zero not just in the U.S but in most major economies. Thus, there is no opportunity cost to owning the non yielding gold. Indeed there remains significant counterparty and systemic risk in keeping one’s savings in a bank and government bonds look like a bubble that is being supported by money printing and debt monetisation.
This period of ultra-loose monetary policies needs to come to end as soon as possible as debt levels are surging globally creating the real risk of a new debt crisis in 2017.
Gold is looking shaky in the short term and the technicals and momentum is on the side of the bears. This could push gold lower into year end, back to test support at $1,100/oz.
Today, after a near 50% correction in recent years, gold again has significant potential for substantial capital gains in 2017 and during the Trump Presidency.
For investors looking to diversify and hedge the significant risks facing us in 2017, gold is again at a very attractive entry point.
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.AcceptRejectRead More
Cookie Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
