Cryptocurrency EOS - a complete guide for the investor

10 Feb 2018

Cryptocurrency EOS - a complete guide for the investor

 
Last Summer, the whole cryptocurrency community had been actively discussing EOS — an innovative project which had been considered as the main competitor of Ethereum by many people. It was a little bit forgotten in the Autumn, but now EOS is on everyone's lips again. Market cap of the coin is increasing, the price is increasing too but lots of traders are still not sure whether it's worth investing in EOS. That's because of the cryptocurrency's very checkered reputation. What are the advantages of EOS? Is it worth investing in EOS and what risks do the investors have? Let's try to figure it out!
 
What is EOS Cryptocurrency?
The EOS platform was established in Summer of 2017 by the Block.one company and its chief developer Daniel Larimer who'd earlier worked on Bit Shares and Stemit.
The majot idea of the developers is to create a decentralized platform with high throughput, smart contracts function and minimal fee. As a matter of fact, Block.one has decided to create a new version of Ethereum, but faster and cheaper one.
Block.one has decided to perform ICO to attract investors and to distribute about one billion tokens during it. The developers claimed at once that 200 million tokens would be put up as a unified pack on the first 5 days, 700 million would be "stretched" for the whole period of ICO and another 100 million would be frozen on their account.
Crowd funding began on June 26, 2017 and will proceed till June 1, 2018. The developers are sure that the investors will be able to estimate all advantages of EOS over the year.
Until the ICO is over, the platform is functioning in test mode. That's why we still can estimate advantages of EOS only on the basis of the developers' descriptions.
  • While Ethereum is a super computer for start-up of smart contracts, EOS is an operating system with help of which the users will be able to create any decentralized applications.
  • Thanks to parallel processing technology and asynchronous connection, the system is able to process several million transactions per second (Ethereum is able to process only 30).
  • EOS will use a unique DPoS protocol where not all the miners are responsible for confirmation of transactions (like in Bitcoin, for example) but 20 large asset holders within specific block.
If the developers can implement everything they planned, EOS will become a real breakthrough in blockchain world.
 
How to Mine EOS?
Instead of ordinary mining, the developers offer to "mine" the coins becoming participant of ICO. Pay attention that the project uses Ethereum platform and investments can be made only with ETH.
Tenders are performed within separate 23 hours long periods (windows). Tokens are distributed depending on number of participants and sum of investment.
Let's presume that the system distributes 20 EOS within the selected period. User X invested 4 ETH and user Y — 1 ETH. In this case, X will get 16 EOS and Y — 4 EOS.
 
How to Get EOS Via ICO?
To get EOS cryptocurrency via ICO, follow this instruction:
  1. Download Google Chrome and Metamask plugin.
  2. Open Metamask menu, choose "Create new account", think up and confirm your password. Alongside with the account, you automatically get a Metamask wallet.
  3. If you already have an Ethereum Wallet, you may link it with Metamask. Choose "Import account" in the plugin menu and follow the instruction.
  4. Visit ICO official website www.eos.io and press "GET EOS" button.
  5. Click all checkboxes appeared on the screen and move to ICO part.
  6. Choose “EOS TOKEN DISTRIBUTION APP” and click “GENERATE EOS KEY” to get private key for access to the system. Save it in a file on your PC.
  7. Paste the key in "Private Key" field and confirm your action by pressing “I have saved my private key” button.
  8. In Metamask window opened after it, pay the fee for adding your key to the system. The fee is paid in Gas (according to “Gas Limit” и “Gas Price” parameters) and is billed by the system automatically (about 15 dollars). But both these parameters should be changed manually. For instance, if you enter 90224 in the "Gas Limit" field and 10 in "Gas Price" field, the fee will be less than 50 cents.
  9. Find “GET EOS TOKENS” section. Choose a period and an investment sum, then confirm the payment.
  10. If everything is successful, you'll see your investment sum and approximate number of tokens you'll receive after expiration of the period next to chosen period in “EOS TOKEN DISTRIBUTION APP”.
  11. To get tokens, press “CLAIM EOS TOKENS”. The coins will be transferred to your Metamask account or Ethereum Wallet.
If such way is too complex for you, you may just donate ETH to the project address. You can find it on www.eos.io in "GET EOS" section.
Copy the address and paste it into the receptor field if you make payment via Ethereum Wallet. But in this case you won't be able to choose a window for purchase of tokens, and the fee will be counted by the system automatically.
Another way is to buy tokens in cryptocurrency exchange. It's way easier but, apart from ICO, where token price is determined by amount of investments in each period, you'll have to buy coins at price determined by the exchange.
 
Where to Buy EOS Cryptocurrency?
Initially, the developers claimed that the tokens would get to the cryptocurrency exchanges only after the end of ICO. But the plans've changed and EOS appeared in exchanges only in a couple of months after the start of the project.
Bitfinex and Bittrex were the first exchanges to accept it and they still perform 60% and 20% of all EOS exchanges respectively. Then the token appeared on other popular sites: Kraken, HitBTC, Exrates, KuCoin and others.
Almost in every cryptocurrency exchanges, you can buy EOS only for BTC or ETH. Only Bitfinex also sells them for dollars.
 
Where to Store EOS?
There's still no any official EOS wallet. Moreover, noone of crypto wallets still hasn't announced support of the token.
But EOS platform uses ERC-20 standard and it means that, theoretically, the coins can be kept in every ERC-20-compatible wallet:
  • Desktop wallets: Ethereum Wallet, Jaxx, Exodus.
  • Hardware wallets: Ledger Nano S, Trezor.
  • Online wallets: MyEtherWallet.
  • Mobile apps: Jaxx.
 
How and Why Did EOS Price Change?
In June 2017, when the tokens had just appeared in cryptocurrency exchanges, the price of EOS was just one cent. But due to intentional media promotion of the project, the coin's price reached 1 dollar in a month and 5 dollars in 2 months.
Market cap of EOS exceeded 200 million dollars and the cryptocurrency entered top 20 of the world rating.
In September, when most of other cryptocurrencies were growing, the EOS price fell down to 60 cents. The experts link the slump with active growth of EOS closest competitors (Ethereum and NEM most of all) and growing distruct of the developers.
The specialists noticed that all the prospectives of EOS were existing only as text — the developers were praising them on their own website. Moreover, ICO description states that EOS are just internal tokens of future platform and don't have separate value. It means that in case of failure, the investors will stay with a pile of worthless coins.
Nevertheless, the developers were able to keep stimulating the interest to their project. Larimer assured that soon all large business networks (including bank and social ones) would switch to blockchain. But its current condition doesn't allow to process a huge flow of transactions.
However, very scalable EOS will be able to easily process up to several million transactions a second. Moreover, the network's throughput will directly depend on amount of coins accumulated by the holder. The more tokens the investor has purchased, the more opportunities he'll achieve once his application is launched.
Such arguments affected many businessmen willing to implement there projects on the basis of blockchain.
The price of the coin began growing again and is currently equal to 14 dollars. Market cap of EOS has reached 9 billion dollars which led the cryptocurrency the eighth place in the world rating.
But many experts still doubt EOS reliability.
 
EOS Cryptocurrency: Major Risks for Investors
The following major investment risks can be specified:
  • There is still no any existing EOS platform. It's operating in test mode and it's unknown whether it will switch to fully-featured operational mode as the developers promise.
  • EOS has lots of competitors developing in the same direction right now. Tezos, Tauchain, Aeternity and Quantum present themselves as decentralized platforms for fast launch of apps too. If even one of them becomes successful, EOS will have way less chances.
  • All assets collected during ICO will be used by the developers on their own discretion. And it's not mandatory that they will invest this money in EOS.
  • Despite the claims on decentralization, actually, all the control will be concentrated in the hands of large assets holders. They will be those people who'll achieve maximal opportunities and privileges for use of the platform.
  • Larimer is known for his habit to promote the projects, make profits and drop out of the game. That's the way he did with Bit Shares and Stemit: he was promoting them during ICO and then left, after which they fastly backed on water.
And the most important thing: the developers are not responsible for any promises they've given to the investors. That's written on the ICO website. That's why many specialists call EOS a giant bubble created only for cashing in on investors.
 
Advantages of EOS Platform
Is it really that bad due to abovementioned risks? Not really.
The specialists make arguments for success of EOS:
  • Thanks to excellent technological solutions, EOS has all chances to become the main alternative to Ethereum. If the claimed throughput of the network is reached, EOS will leave all its competitors far behind.
  • Market cap of the cryptocurrency is constantly growing, new capital is being actively invested in EOS and sufficient part of it is being spent for promotion of the project. If the developers had wanted just to make profit fastly, they wouldn't have spent such money.
  • The ICO is streched for the whole year although one fifth of the tokens was sold within the first 5 days of crowdfunding. It's obvious that the developers have planned EOS as a grand-scale and long-term project.
  • The price of the cryptocurrency is growing despite all pessimistic forecasts and overall slump of the market. A month ago, a few people believed that EOS price would be equal to at least 5 dollars, meanwhile, the coin cost have reached 14 dollars now.
 
So, Is It Worth Investing in EOS?
Most of the experts share the same opinion that EOS is good for short-term investments.
Buying tokens via ICO, you may sell them in cryptocurrency exchange with profit. For example, if you "catch" a low period, buy EOS for 9 dollars and sell it in exchange for 14 dollars, you can earn 5 dollars for each coin.
The only aspect is that many traders are actively using this scheme and the price of the coin is constantly increasing even during low periods.
But the analysts forecast that the price of EOS will reach 20-30 dollars within the first half of 2018. So it's worth waiting for correction decrease of the price, buying the coins at profitable rate and selling them when the price reaches its peak.
But how to understand if it's time to sell the assets?
The experts say that if the EOS platforms starts operating in fully-featured mode, the price of the tokens will drastically increase. In this case, it's worth holding the coins for at least for a year or two until the frenzy lies down.
The problem is that noone except for the developers knows when the fully-featured platform will start operating and if it will start operating. This will become known only in June when the ICO is over.
But the specialists say that popularity of EOS will keep increasing before this time and it's possible to make profits of rate fluctuations within these 4 months.
If you decide to keep the coins right until the end of the ICO, you should be ready to sell the assets at the very first suspicion on the project failure. Otherwise, you risk to loose your investments.