How do these two leading cryptocurrencies compare with one another?
2018 has been a big year for EOS, seeing it climb into the list of the top five cryptocurrencies by market capitalisation. Even after this achievement, however, the popular platform for decentralised applications (dapps) is still nowhere near as recognised or revered as bitcoin (BTC), the largest digital currency in the world.
If you’re thinking of buying EOS or bitcoin, you might be wondering what the difference is between these two currencies and how they compare to one another. To help you find out, we’ve put together this comprehensive guide.
Bitcoin vs EOS: The breakdown
Where to buy bitcoin and EOS
Did you know?
Bitcoin and EOS: A brief history
The origins of bitcoin can be traced back to 2008, which was when someone operating under the alias Satoshi Nakamoto released a paper outlining their vision for peer-to-peer electronic cash. Bitcoin was launched in January 2009, offering a digital currency free of centralised control, and as history shows has since become a powerhouse of the crypto world.
Meanwhile, EOS has been around for a much shorter timeframe. When Ethereum launched in 2015, it opened the eyes of many to the potential use cases of smart contracts and decentralised applications.
EOS, which was introduced to the world in 2017, aims to improve on Ethereum and create the world’s most powerful infrastructure for dapps. Built by private company block.one and led by Dan Larimer, the crypto visionary who has also played a key role in the development of other blockchain projects like BitShares and Steem, EOS launched its mainnet in June 2018.
Prices: Bitcoin vs EOS
How bitcoin works vs how EOS works
The world’s first cryptocurrency, bitcoin is digital cash that only exists electronically. It features a peer-to-peer network which BTC holders can use to transfer coins, and there’s no central issuing body or authority that controls the amount of bitcoin in circulation.
All bitcoin transactions are tracked on a giant public ledger known as a blockchain. Bitcoin’s blockchain is made up of separate blocks of information, arranged chronologically, and once a block is added it can’t be removed or altered in any way.
But if there’s no central bank in charge of bitcoin, how is the network organised? Bitcoin’s blockchain is maintained by a distributed network of miners, whose job is to verify and record these transactions on the public ledger and ensure the security of the network. These miners use computing power to compete to solve complex cryptographic problems – the first miner to find the solution gets to add the relevant block to the blockchain, and is rewarded for its efforts with BTC.
The term EOS is often used to refer both to the EOS blockchain platform and its native EOS coin. The EOS platform is designed to offer an ecosystem where developers can build and deploy their own dapps.
The aim is to provide developers with the underlying network and all the tools they need to build commercial-grade apps. The network itself uses a delegated proof-of-stake (DPoS) consensus mechanism, explained in more detail below, and is designed to enable the platform to process up to one million transactions per second.
And by implementing parallel execution and asynchronous communication, EOS’s developers claim that it will one day be able to support thousands of commercial-scale dapps.
EOS coins are the native currency of the EOS platform. If you want to build an app using the EOS software, you’ll need to have EOS coins.
Differences between bitcoin and EOS
1. Purpose and use
The main difference between bitcoin and EOS, and it’s a crucial one, is what they’re designed to do. Bitcoin is a digital currency designed to allow peer-to-peer transactions without the need for an intermediary. As well as being used in transactions to pay for goods and services, it’s also shown its strengths as a store of value.
However, EOS coins are designed for use within the EOS ecosystem. Developers need them to generate tokens for the applications they launch on the EOS platform, while EOS holders will also be able to vote on whether or not an app should be accepted on the EOS network.
2. Consensus mechanism
Bitcoin relies on a proof of work algorithm to achieve network consensus. This sees miners compete against each other to verify transactions, solving complicated mathematical problems to earn a block reward in BTC.
Proof of work is a common system adopted by many other cryptocurrencies, but it does lead to some major problems. One of those is the fact that mining is extremely energy-intensive, another is that the development of expensive and sophisticated mining hardware has seen mining become centralised among a handful of large mining pools and companies.
EOS uses a system known as delegated proof of stake. Using a continuous approval voting system, EOS coin holders are able to vote for 21 block producers. These block producers verify transactions and secure the network, and they’re rewarded for their efforts.
New blocks are produced every 0.5 seconds and the system is designed to make it easier to upgrade the network and to also increase scalability. However, the early stages of the voting process have been beset by problems.
3. Total supply
Unlike traditional fiat currency, where governments and central banks dictate the printing of new currency, bitcoin’s total supply is written into its code. The maximum limit is 21 million coins, with approximately 17.1 million BTC (or approximately 81% of the total supply) circulating at time of writing (June 2018).
It’s also worth pointing out that bitcoin is divisible down to one-millionth of a BTC (or 0.00000001 BTC), so you can transact in much smaller amounts than just a single coin.
EOS tokens were offered as part of a unique token distribution event that began in June 2017 and ran for 341 days. The maximum supply of EOS is much larger than bitcoin and is set at 1 billion, with approximately 896 million tokens circulating at time of writing. 10% of the coin supply was not included in the public sale and were instead reserved for block.one, the company that built the EOS software.
Pros and cons of bitcoin and EOS
Bitcoin vs EOS: The bottom line
There’s no such thing as a “winner” in a head-to-head comparison of bitcoin and EOS, for the simple fact that they both serve very different purposes. Each coin has its place, but pitting them against one another is like arguing who’d win a fight between a lion and a great white shark – the victor is determined by where the battle is held.
If you’re looking for a payment currency that acts as a store of value, bitcoin is better. If you want access to the EOS ecosystem to create and deploy dapps, you’ll obviously need EOS coins.
And if you’re looking to buy crypto to hold for the long-term, both are worth considering.
Disclosure: At the time of writing, the author holds ADA, ICX, IOTA and XLM.