EOS will hit $1000 by year’s end: I’ll take that bet and gladly wager against it!
After the 2017 Consensus event organized by Coindesk, where the EOS team gallantly unveiled this idea, the anticipation for the full launch of this much-needed technology has been on the rise. The whole crypto space is agog with excitement. This is now looking like the dream of having the ultimate platform where most of the concerns have surfaced ever since blockchain has become a major technological leap in global businesses.
As blockchain continued to evolve and gradually meandering its way into mainstream business environments, it looked like the pertinent issues that brought about the launch of Ethereum undoubtedly the precursor of every other blockchain network offering the ability to create or programming DApps and other decentralized tools such as smart contracts and what have you after Nakamoto’s landmark invention of Bitcoin, are not going away or should I say looked like centralized organizations like VISA would not be rivalled with its whooping 45,000 tps. At the same time, Ethereum’s throughput is nothing but a minnow when compared with VISA’s.
It has been like the blockchain community is engaged in a frantic arms race to lay their hands on anything at all that provides better utility than whatever it is that they are already using. Just like Michal Benoliel rightly puts it,
However, there is currently no brand loyalty in blockchain. So it’s an arms race — whomever can do something better, wins.
Some of the major issues that have continually hovered over the blockchain community, like the proverbial evil bird, are still scalability, security, consensus protocol that promotes true decentralization and user-friendliness in terms of economy. EOS which I like to call an “excellent theoretical conception”, drew from records like the Bitshares and STEEM blockchain. This comes as no surprise as the lead piper calling the tunes is no other person than Dan Larimer, who co-founded these other two companies that have done remarkably well in their blockchain conquest but has since moved on, earning himself the nickname “wandering mind”. Well, I’m not about dwelling on the personality of Larimer, this as I’m pretty sure he has an army of devs strongly standing with him to herald the unveiling of EOS - “goddess of dawn” in Crypto and blockchain.
With EOS set to launch her mainnet on the 2nd of June on its own blockchain by Block. one being just the publisher and nothing more, quite a lot is expected from this coin. It has set in place DPoS (Delegated Proof of Stake) as its consensus protocol. A governing consensus that critiqued the energy-hungry and centralized Bitcoin’s proof of work. In DPoS, people vote for individuals whom they want to run the network. The individuals who get the most votes are called the Witnesses, and the top few are paid for their work. As the network size grows, the competition to perform grows, making it difficult to stay a paid witness. Every witness needs to up their performance and adds more value to the network. Hence, the network benefits for sure. If any witness tries to act in a nefarious way, the people can remove their votes, and the bad actor is fired, thus keeping the network democratized and decentralized. This governing consensus has been able to work on both security of the blockchain while also addressing the energy consumption level in filling each blocks. This is already applicable rhetoric, as seen in the STEEM blockchain.
Stating earlier, one of the primary reasons for creating the EOS is the inability of other blockchain networks already existing to perform transactions at the alarming rate of other centralized organizations’ throughput like the VISA. The horizontal scalability infused into the EOS blockchain as copied from Bitshares (a decentralized exchange where the values of assets are pegged) wonderfully addresses this concern as larger organizations can now launch bigger applications with a major emphasis on behemoths like the Amazons and Microsoft of this world on this blockchain expecting to be able to manage the throughput of 100,000 tps or even far more without any hiccups that are detrimental to their businesses.
But the core of my writing is not to further expound on the EOS blockchain as I’m quite sure there is countless literature covering that in great details but to discuss some bizarre speculations in the price of this coin that has been going on for quite some time now since its ICO was launched. Having raised as much as $4 billion through ICO, the frenzy took on a whole new direction as the mainnet approached. In several forums, the debate has been ongoing on how EOS is the new “ETH killer” and would overrun it in price at a breakneck pace. As a matter of fact, “mindless” speculations are ongoing already on how EOS will easily smash the $1000 price before the end of the year.
Let’s look at it this way, what really drives a coin’s price asides from the classical approach of pump and dump? Supply and Demand, Utility, Market Sentiments and a few other factors. Let’s discuss these divides and not gibber without any substantive point to back some of the jibby jabber price predictions flying around.
Supply and demand
The total supply for the EOS is 1 billion and will not exceed that supply. The value of most alts is influenced by the market cap, which is a function of circulating supply and the price. Currently sitting at 5th position by market capitalization with about 894,000,000 in circulation, the price per EOS is around $13. To hit $1000, it would require roughly 8300% appreciation, giving it alone about $913,000,000,000 in market capitalization while we are still struggling around the $400,000,000 total market capitalization for the whole industry. This is not an impossible feat to achieve. Still, when drilled alongside the forecasts of other renowned experts in this industry optimistically hoping for 2018 to close with a minimum of $1.5 trillion for a total valuation of all crypto assets, this means that EOS with the $1000 price prediction will sit on over 60% of the whole market capitalization dwarfing other alts like Ethereum, Ripple, Litecoin and of course Bitcoin. Is this really possible? Well, that is looking like an impossibility, especially with the persistent bear market being experienced since the beginning of this year. Why wouldn’t a smart dude wager against this price prediction?
What most people who make speculations about the pricing of cryptocurrencies forget to factor into consideration is utility. Seasoned veterans of blockchain space, in general, are not unaware of the gulf between the utility values of digital assets and those tokens’ market values. This is actually one of the very reasons I think this price prediction, for now, is way impractical. EOS is still in its nascent stages when compared with its peers in the blockchain space. It’s not a coin to be held as an investment. It represents a coin classified as a utility token just like ETH its predecessor. Devs are just about starting their campaign of deploying smart contracts and creating dapps on them. Nothing significant has been achieved just yet. I am quite aware of EOSfinex, a decentralized exchange combining the scalable speed of EOS and the vast proficiency of Bitfinex, one of the top crypto assets exchanges in the world. With this happening, it means the major trade pair will be EOS. This will definitely spike EOS price and shift more traders' attention to this coin like we have seen ETH through other DEXs with ETH as the major trade pair. Yes, this will be like a topping on the drink for EOS as a coin, but other tokens are also working on themselves. ETH has been reacting to the major problems it faces as a platform and working hard to maintain its leadership, which is quite a difficult battle for it to scale through, but it still boasts over 90% of the market in smart contracts dApp creation. I expect a drop in its leadership in terms of market position but definitely not with the quantum speed of being dethroned, as many speculators of EOS price say. As the utility for EOS continues to expand, the price should rise correspondingly also not just the “fugazi” price predictions banging here and there.
This has demonstrated to become one of the potent forces influencing the value of coins or tokens in the blockchain space. The global blockchain community sprung up some few years back, just about a decade. Initially inhabited by geeks and programmers who were fascinated by the work of Nakamoto, the de-facto leader of the blockchain revolution. As the industry grew and new grounds were broken and more experiments were carried out in this space, prominence has been achieved. Even the mainstream is scrambling to infuse this tech into their core operations to remain competitive or even secure patents. It has nonetheless received bashings and backlashes from the media and censorship from central governments of nations for what it stands for, which is decentralization known to have become the fiercest nightmares of nations' governments. As there have been phenomenal booms, so are their horrific downturns. Some of these not necessarily emanating from the never-ending standoff between centralization versus decentralization. Some of these downturns cropped up from the intrinsic nature of blockchain. Being a public ledger system accessed and contributed upon by several thousand nodes across the network, the inherent risks of being manipulated by hackers through any loopholes they can find is equally disturbing. Events of this magnitude are replete, from the Mt Gox hack to the DAO hack. Even the most recent Bitgrail and Coincheck hack, not forgetting the most recent Verge hack and all that led to bitter forks in these blockchains, the DAO hack gave rise to ETH ETC while the bitgrail hack resulted in Nano and XRB. What is being pointed out here is that even though decentralization presents us with a whole new horizon of endless opportunities, some inherent risk factors such as these sometimes impede this technology's best intentions. Earlier this week, major China-based internet security firm Qihoo 360 informed Block.One The protocol had a “series of epic vulnerabilities” that made its nodes susceptible to attackers. Developers fixed the bug on the same day, and Block.One CTO, Daniel Larimer, announced a bug bounty on Twitter, offering $10,000 for major finds. And what have we after this announcement? EOS price slumped as much as 11% in just a matter of hours. The prevalence of bugs remains to be seen as this is still young in operations. EOS is still a work in progress, and it is best to keep an objective mind and expect cyclical movement in prices and its development. Another major concern is the possibility of mindless forking of this new blockchain. This is especially a concern at the launch of its mainnet in just a few hours of this write-up.
EOS, at the moment, cannot boast of a repository of codes when compared with ETH. Ethereum’s solidity has constantly been developed upon and quite easy to code upon by devs. This is possible as loads upon loads of codes have been churned out by devs working under the Ethereum platform. Whether it will become de-facto programming is soon to be known in the nearest future. It is worthy of note that many of the dev team behind Bitshares and STEEM migrated with Larimer to EOS quite remarkable and comforting to hear. However, at the moment, it is still the global leader, and devs find it more comfortable experimenting with its code globally acclaimed with integrity. A typical example of this sentiment could be seen in decentralized lending built on the Ethereum blockchain. Even though it has become inconveniencing with its rising gas costs, the richness of the code repository on the Ethereum blockchain still proved to be a major determinant factor over EOS. This is a valid reason and should not be quick to be jettisoned. I’m quite sure this representative example will hold for many others not mentioned here.
Summarily, EOS represents a new dawn in the still-evolving blockchain space which will have just launched to experience growth and the challenges characterising this space. As an investor, rationality should not be thrown out of the window. As much as this coin has bright prospects, mindless price speculations to the tune of even the $1000 mark in just a few months from the end of the year, in my opinion, is sheer optimism resting on straw packed bricks.