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Battle of the Blockchains: EOS or Ethereum?

Written by Alexandra Perry
Posted April 29, 2018

In the 1990s, a major war was in full swing.

You didn't hear about it?

That’s probably because this particular war was waged behind our computer screens. And it wasn't a war for land or power; it was a war for the consumer, who at the start of the 1990s was just starting to brave the digital realm.

The two companies fighting were Netscape and Microsoft. The weapons were internet browsers Internet Explorer and Netscape Navigator.

Both companies put up a good fight, leveling an array of tricks to enchant new internet users. But in the end, Internet Explorer won the skirmish, laying a foundation that would allow Microsoft to ascend to tech glory. Netscape, meanwhile, slowly fell to pieces.

This story sums up how the technology industry works.

Innovative winners generate profits, while losers bleed portfolios dry.

That's why it's critical for investors to isolate winners in new industries early on. If you had isolated Microsoft as a winner in the 1990s, you could have nabbed the stock for under $10 and made a 718% gain.

That's some crazy growth, unlike anything most investors experience.

And today it's happening again in the blockchain space.

Blockchain offers investors opportunities not witnessed since the rise of the internet. That said, it's hard to isolate winning companies, since many of these companies are still in the development stage.

That's why we wanted to take today's Wealth Daily to address questions about one rising blockchain company: EOS.

Investors want to know how EOS stacks up against rival Ethereum. Like an internet browser, these two assets could provide a critical foundation to the developing digital economy.

They are multipurpose, and in that they have power. They are also very similar, which means there will be war.

The Basics of the EOS Network

When you're curious about a digital currency, one of the best places to start learning is the company's website. 

EOS's website is one of the better ones out there, providing investors with some very clear information right off the bat.

For starters, the EOS platform is billed as a decentralized, open-source software (like Ethereum). The EOS platform was designed to run blockchain-based applications (DApps) and execute smart contracts. Outside of those basics, EOS is also supposed to be able to do the following:

  1. The EOS Platform will, in theory, be capable of supporting massive transaction volume on its network.
  2. The EOS Platform will be able to process payments differently, separating authentication from validation.
  3. The EOS Platform will be capable of helping developers, both on the industrial and small scale, develop decentralized applications.

All of this sets EOS up to be quite a powerhouse in the blockchain space. It could even live up to its nickname, "the Ethereum killer."

After all, if the EOS network manages to bypass the scaling issues that have impacted nearly every major digital currency, Bitcoin and Ethereum included, then it will have done something truly novel.

That said, there are no promises, because EOS is still in development. We will get more into that in a minute.

Before we do, we want to answer the big question: What does EOS have that Ethereum lacks? After all, there has to be a reason the technology has branded itself the "Ethereum killer."

The truth may surprise you.

Is EOS Really Different Than Ethereum? Yes and No

As I mentioned above, EOS prides itself on the fact that its platform was built to scale more effectively than many of today's modern blockchains. Today's single-thread blockchain platforms tend to suffer under the weight of large fees and limited computational capacity.

Beyond those complications, modern blockchains are hard to work with. Ethereum is an incredible technology, but it's not user-friendly. In the future, this may change. There are even some plans to initiate this change. But for now, that is the reality.

That means if EOS can do all the team says it can, it may have an easier time being adopted by the masses.

Smart contracts are of interest to many institutions, and developers around the globe crave an easy platform that allows them to develop decentralized applications.

And that brings us to the crux of the issue: EOS doesn't have an active blockchain platform.

When you invest in Ethereum, you're investing in a platform that is already being actively used around the globe. Ethereum is the base for hundreds of ERC20 tokens, including OmiseGo, VeChain, Storj, and Golem.

That means even if the EOS network goes live, it may not come without complications. And this is something for investors to keep in mind as they assess the two tokens.

So fundamentally, EOS is different, but without a functional network, it's hard to present the whole picture.

Which brings us to the final segment of this article. What are you actually buying when you buy the EOS token?

So What Are You Buying When You Buy EOS?

The EOS digital token's price almost hit an all-time high this week, and, as always, this has investors asking questions.

As I said above, the EOS token does not have a deployed blockchain to operate on. This means whatever you're buying is not tied to the EOS network.

Instead, what you're buying when you buy the EOS token is a security token. There is no promise that this token will make the swap over to the EOS blockchain when it comes online.

Investors should keep this in mind when they think about buying EOS. When you buy ether, you buy a token that is already part of a network. When you buy a bitcoin, you buy a token that can already be exchanged between individuals. With EOS, what you're buying may or may not tie to the company in the future.

This is one of the massive gray areas in the world of digital currency.

That said, investors interested in the digital currency should be aware that they are not buying a utility token like Ether but a security token. If you're uncertain about the difference between the two, make sure to check out our page "Security and Utility Tokens: What Did I Just Buy?" on Token Authority, our free digital currency e-letter.

For now, while some may disagree with me, the EOS token is currently as "security" as it gets.

And the team is upfront with this, stating:

The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.

But this doesn't mean it doesn't have promise in the future.

At the end of the day, all digital currency investments are speculative. Whether EOS or Ethereum, there is still a great degree of risk.

If you would like to receive our digital currency news updates and learn more about digital currency, make sure to check out our free “digital gold” e-book.

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Alexandra Perry

follow basic@AlexandraPerryC on Twitter

Alexandra Perry is a contributing analyst for Wealth Daily and Energy and Capital. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.

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