Is EOS a Value Investment in Cryptocurrency?
I think EOS (EOS) could be a value investment in cryptocurrency because of its versatility, scalability and low price.
For instance, EOS had a Coin Price of $2.82, a Market Capitalization of $2.635 billion, and a 24-Hour Market Volume of $1.615 billion on 27 September 2019. In contrast, Ethereum (ETH) had a Coin Price of $216.82, a Market Capitalization of $18.110 billion, and a 24-Hour Market Volume of $7.491 billion on the same day.
Meanwhile, Mr. Market’s favorite Bitcoin (BTC) had a Market Capitalization of $145.458 billion, a Coin Price of $8,098.63, and a 24 Hour Market Volume of $16.268 billion on the same day.
Yet, CoinMarketCap ranked EOS the 7th most valuable cryptocurrency on 27 September 2019. In fact, EOS was less valuable than the questionable currencies Litecoin (LTC) and Bitcoin Cash (BCH). For instance, Bitcoin Cash, the fifth most valuable cryptocurrency, had a Coin Price of $219.03 on 27 September 2019.
Is EOS a Better Blockchain?
Strangely, EOS is the better cryptocurrency from a practical standpoint. Interestingly, EOS blockchain is more scalable than either Ethereum or Bitcoin.
Scalable means that EOS-based platforms can process many more transactions faster. Hence, EOS could have a partial solution to the blockchain scalability problem.
Notably, the EOS Network Monitor estimates EOS was processing between 64 and 87 transactions per second (TPS) on 27 September 2019. Furthermore, EOS the EOS Network Monitor claims EOS has processed up to 3,996 transactions per second.
In contrast, Blockchain.com estimates Bitcoin’s (BTC) blockchain could only process 3.862 transactiona per second on 19 September 2019. Consequently, Hacker Noon’s Taygun estimates it can take an hour to process a Bitcoin transaction.
Meanwhile, the cryptocurrency blogosphere consensus is that the Ethereum blockchain can process 15 to 25 TPS. Additionally, Taygun claims it could take six minutes to process an Ethereum (ETH) transfer.
Theoretically, an EOS blockchain could process up to 3,996 transactions a second. However, a Bitcoin platform could crash if it tries to process five transactions. Meanwhile, an Ethereum based gaming platform could crash if tries to serve over 25 customers.
Moreover, a gamer could wait an hour to pay his subscription on a Bitcoin based gaming platform. My guess is most gamers do not want to wait an hour to play.
Hence, I do not think it will be possible for either Ethereum or Bitcoin to serve as payment solutions for a mass market. Therefore, I think it could be impossible for Ethereum or Bitcoin to be worth big money.
Why Does Mr. Market Hate EOS?
Yet, CoinMarketCap reports Mr. Market named EOS the 7th most valuable cryptocurrency, Bitcoin the most valuable cryptocurrency, and Ethereum the number two altcoin on 27 September 2019. Thus, Mr. Market loves Bitcoin and Ethereum and hates EOS, why?
First, familiarity. Bitcoin is the oldest cryptocurrency, it’s been around for over 10 years since August 2009. Meanwhile, Ethereum has been around for four years since July 2015. Hence speculators are familiar with those coins. EOS only appeared on 1 June 2018.
Investors and speculators are human beings and they like things they are familiar with. For example, the person who drives a junky old car he can repair himself, instead of buying a safer and more reliable new vehicle.
In addition, many people prefer paper checks to electronic funds transfer (EFT). Yet paper checks are less secure than EFT; anybody can steal paper checks and learn your account and route numbers. A paper check also creates a serious risk of overdrafts. However, many people are familiar with paper checks so they keep writing them, even though faster, safer, cheaper, and sometimes free alternatives are readily available.
Second, fear. Bitcoin is popular because they designed it to be decentralized and out of the control of large financial institutions. Notably, many individuals buy Bitcoins because they distrust the financial system and think Bitcoin is a safer alternative.
Why Cryptocurrency Geeks Hate EOS
Bitcoin is more secure, but the security comes at a price. All the cryptography and security measures built into Bitcoin’s blockchain makes it clunky, awkward, and slow.
Third, ideology and sentiment. Many Bitcoin, and some Ethereum, fans are libertarians or anarchists who distrust all large institutions including banks and government. These people like Bitcoin and Ethereum because they have nobody in control and no institutions involved.
EOS, like Ripple (XRP) is centralized, and has an authority (block.one) that is in control. In addition, EOS has a strong appeal to commercial developers and users in China.
Critics, like me, will say centralization and authority are far better defenses against hacking and theft than encryption and decentralization. A strong centralized authority can plug security holes fast and strike back against the bad guys. In Bitcoin, nobody’s in charge, so the bad guys can run wild once they crack your security.
EOS is not Sexy
Fourth, EOS lacks the romance, mystery, and excitement of Bitcoin. I think part of Bitcoin’s appeal is the secrecy and illicit nature of the altcoin. The mystery of Bitcoin’s mythical creator Satoshi Nakamoto and the reputation for illicit use attract many risk takers to Bitcoin.
In contrast, we know who built EOS and how to find them. Block.one built EOS and posts pictures of its team on line. For the record, block.one’s CEOs are Brendan Blumer and Michael Alexander. If you want, you can follow both guys on Twitter and LinkedIn.
I think EOS’s lack of mystery and romance will repel many cryptocurrency Geeks. Like Ethereum, EOS looks too much like a grown-up technology to some geeks.
EOS however appears utilitarian and unsexy when you can compare it to Bitcoin. Hence, EOS lacks appeal to speculators likely to play the cryptocurrency markets.
Thus EOS looks like a classic unsexy value investment while Bitcoin and Ethereum look like flashy Silicon Valley stocks. Both instruments can make money but the value investment is cheaper and comes with a wider margin of safety.
Will Real People Use EOS (EOS)?
Finally, there are some EOS applications that could attract a mass audience up and running now.
In particular, the gambling site EOSPlay is so successful hackers stole 30,000 EOS ($115,177 USD in my estimation) from it on 14 September, CrypoSlate alleges. I think this hack shows there are large volume EOS out there, which demonstrates people are using EOS. That is impressive for a cryptocurrency which is a little over a year old.
Another EOS app that could make money is EOSREX a decentralized exchange that also operates as a lending site. Interestingly, EOSREX offers its own EOS-based cryptocurrency EOSREX (REX). Moreover, EOSREX lets speculators form pools and lend EOS from them.
Thus, there is a market for EOS (EOS). However, only time will tell if this centralized cryptocurrency can profit in a decentralized blockchain world.