Eos: blockchain and cryptocurrency

Nowadays there are numerous blockchains that are used to run thousands of applications designed for these environments, essentially seeking security, decentralization and scalability. Let's talk about a blockchain that has been created apart from the others and has a very interesting structure: EOS.

 Source: unlock-bc-com

What are EOSIO an EOS?

EOS is a special type of blockchain that works under the EOSIO protocol specially designed for fast, free and secure apps. EOS is also the name of the cryptocurrency that works under the blockchain of the same name. The company that has developed it, Block.one is a leader in providing high performance blockchain solutions. 

When its currency and blockchain was launched in June 2017, its ICO lasted almost a year becoming the longest ICO of all, to ensure that everyone could have EOS, and had a record in collecting around $1 billion, so that at the end of this period 70% of the total supply of this cryptocurrency could be put into circulation.

EOSIO is a free and open source protocol that is easy to use for both users and developers. It is highly scalable and provides a secure environment for applications designed under it and offers transactions at zero cost.

It is extremely easy for developers to design apps, thanks to its "WebAssembly" technology that uses a very popular programming system such as C++.

The protocol offers distinct security features. For example: permissions private keys. These are keys that can only perform certain actions like posting a message, but can’t perform more sensitive ones like sending tokens. That means if you lose your phone or your permissioned private key, your crypto stays safe.

EOS is not the only blockchain under EOSIO

EOS is the most popular EOSIO blockchain but it’s not the only one. Developers are rapidly building new blockchains with EOSIO to serve a variety of communities.

What gives EOSIO blockchains their high performance?: an innovative consensus model called Delegated proof-of-stake (DPoS)

What is delegated proof of Stake?

Delegated proof of stake is the EOSIO’s consensus model. What’s a consensus model? And how does it work?

In the world of blockchain, consensus is how all the computers that run the network reach agreement. If Computer A thinks that an user has 6 tokens, computer B thinks that he has 4 tokens, and Comp C thinks that he has 12 tokens, then they don’t have consensus. This makes imposible for the network to function because no one agrees about who owns what. So consensus is very important. It allows all the computers in the network to be in complete agreement without the need for a central decision maker. Achieving consensus, however, comes at a cost - it can make blockchains slow because decisions must be made collectively., Bitcoin, for example, uses a consensus model called Proof of Work (PoW) in which computers race to solve a mathematical problem - a process known as mining. The first computer to solve the problem shares the solution, which includes a list of validated transactions, with all the other computers on the network. The transactions are then added to the Bitcoin Blockchain, the network builds consensus, and every computer races to find the next proof of work. This consensus model is very effective but can also be slow and energy inefficient.

EOSIO approaches consensus differently. It uses a different model called Delegated Proof of Stake (DPoS). With Delegated Proof of Stake, computers don’t compete over computational power. Instead, the network’s users vote for the computers who they think are best qualified to run the network. This consensus model is designed to be faster and more energy efficient than PoW. On EOSIO, the computers that run the network are called block producers. Many block producers are full-time professional teams running enterprise-.scale hardware. On EOS specifically, the 21 block producers that get the most votes are delegated to run the network.

Each block producer takes a turn validating transactions and producing blocks, which are then checked by the other 20 block producers. The block producers are then rewarded with EOS tokens for running the network properly. All of this happens very quickly. EOSIO produces a block every half second; by comparison, on Bitcoin, a block is produced every 10 minutes. If a block producer fails to verify transactions properly - for example, because it goes offline or isn’t providing enough computing power to run the network, the network’s users can simply withdraw their votes for that block producer will immediately take its place. Today there are hundrends of active block producer candidates on the EOS network. While only 21 actively provide consensus, EOS tokens are awarded to all block producers who receive a significant number of votes as a reward for providing computing power to the network.

The EOS token, is therefore an integral part of the voting and reward process on the EOS Network.

 Source: blockchain.oodles.io

What is the EOS token?

EOS is a cryptocurrency running on the EOS blockchain. It has four distinctive features.

  • EOS transactions are fast. Transactions are confirmed in only half a second and finalized in under two minutes.
  • It’s free to transfer. Many other blockchain charge a fee for every transaction. This fee can range from less than a penny to several dollars during times of peak traffic. EOS, on the other hand, is always free to transfer. There is no mining fee. Free transfers make EOS especially appealing for microtransactions of a few cents or less. For example, buying an in-game iten for 1 cent in an EOS based game will cost just that: 1 cent. On other blockchains, it might cost 1 cent for the item and 5 more cents for the transaction fee. Free transfers also mean that simple actions on EOS such as liking a comment or changing an username - don’t require a transaction fee, helping to remove friction for users.
  • EOS tokens play an important role in governing the EOS blockchain. Only people who hold EOS can vote for the block producers who run the network.
  • Finally, EOS is the only token on the EOS network that can be used to obtain the resources that developers need to run applications. We will explain how resources work on EOS and the other EOSIO blockchains in the next lesson.

CPU, NET and RAM: as resources on EOSIO.

For example if an user that created an application wants to deploy it on EOS, one of the blockchain of the protocol EOSIO. What does he/she need to get it running?

On other blockchains, the user might deploy his/her app by paying an one-time mining fee. Then, when their users interact with the app, they would have to pay a mining fee as well. For every single transaction, those fees add up fast. And they are collected by the miners, not by the user. EOS and other EOSIO blockchain approach things differently.

On EOSIO blockchains, developers don’t have to pay to upload or update applications. And users don’t have to pay to use them. Instead, both users and developers leverage EOSIO’s 3 network resources to cover the network costs.

  • First Resource: CPU is processing power. It’s measured in microseconds. If the user’s app has a lot of complex transactions, he will need more CPU.
  • Second Resource: NET is network bandwidth. It’s measured in bytes. If the user’s app handles a large number of transactions, he will need more NET. CPU and NET are obtained by staking EOS tokens or whatever token is designated for staking on other EOSIO chains. Staking is the process of locking up crypto for a period of time.

    EOSIO rewards people who stake their tokens by giving them access to network resources. There is no cost to stake apart from owning the token itself. And the more tokens the user stakes the more resources he gets. On EOS, regular users might only need to stake a fraction of 1 EOSS to get all the CPA and NET they need. Users who need more bandwidth and resources - like gamers who make lots of transactions might stake several EOS. And a developer might need to stake hundreds of EOS to cover all the processing power and network bandwidth his app needs. If he ever needs more, he can stake more EOS to get it. Or he can unstick his EOS if his resources needs decline.
  • The third EOSIO resource is RAM: RAM is measured in kilobytes and represents data storage. The more on-chain storage developers need, the more RAM they need to acquire. Unlike CPU and NET, RAM is not obtained by staking. Instead, it’s purchased through a market managed by EOSIO’s core system software. If you are a new EOS user, you will get all this CPU, NET and RAM you need when you set up a new wallet.

Figures of EOS token in the Crypto Market

                                                  Source: CoinMarketCap

It is a cryptocurrency that has reached the 11th position in the CoinMarketcap ranking with a capitalization of 2,830 billions of dollars and a current supply very close to its total supply. Since it was launched in June 2017, it has reached a price of $22.89 in April 2018 and a minimum value of $0.48 in October 2017. It is surprising that it has a FCAS score of 923 out of 1000, very close to the one obtained by ETH, highlighting the high qualification of its technical team, its ecosystem and technology and its token economy.

                                  Source: CoinMarketCap and Flipside Crypto

EOS is an innovative and secure blockchain with greater efficiency than others both because of its technology and because of its DPoS consensus, the cryptocurrency of the same name is transacted at zero cost and serves as a reward token for the block producers of its blockchain

In summary, EOS has already become one of the 10 most important cryptocurrencies due to the great work that the technical team has done and the cryptocurrency and its blockchain have a great potential to become one of the most prominent projects for the future because it has many more advantages comparing the Etherium blockchain with free and faster transactions and greater scalability.