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ICO Analysis: EOS

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EOS.IO software by block.one wants to “Decentralize Everything”. Mr. Larimer has already put two notable blockchain systems live: BitShares and Steem. Both of these systems remain online and recently benefited from increased interest in the crypto-asset space in general. To this date, EOS has raised $200 million in revenue from token sales.

Brock Pierce, co-founder of block.one, told Reuters that EOS is designed to be a foundation for blockchain business applications. Attendees heard a lot about EOS at last month’s Consensus conference put on by Coin Desk. Block.one claims its platform has eliminated transaction fees and can process millions of transactions per second.

The startup, which recently started selling the EOS token to create a decentralized distribution of tokens to be used with the EOS.IO software has introduced the concept of automating business processes, monitoring assets, and creating multiple applications based on prior technology introduced by Mr. Larimer, who is the inventor of the “Proof of Stake” and the “Decentralized Autonomous Corporations” concepts.

According to its website,

(…) block.one provides end-to-end solutions to bring businesses onto the blockchain from strategic planning to product deployment.

The Team

Block.one CEO, Brendan Blumer, has been involved in the blockchain industry since 2014. Mr. Blumer’s businesses include virtual currency trading in MMORPGs in the US, okay.com in Hong Kong and 1Group in India.

Partner Brock Pierce has raised $200 million for companies he founded, according to his biography. A former child actor, the well-connected Pierce founded Internet Gaming Entertainment in 2001 and ZAM two years later.

Many of Pierce’s companies operate in the virtual currency space. Active in the Bitcoin blockchain ecosystem for nearly a decade already, and a former Director of the Bitcoin Foundation and founder and managing partner of fintech focused venture capital firm Blockchain Capital, Mr. Pierce mentors startup accelerators.

Pierce serves as a founder, board member or advisor at several bitcoin companies: GoCoin, Tether, ZenBox, Blade Financial, Expresscoin, Noble Markets, BitGo and ChangeTip.

Partner Ian Grigg is a financial cryptographer working on cryptographic ledger platforms for over 20 years. He is known for naming the Ricardian Contract, “a method to identify and describe issues of financial instruments as contracts”.

Mr. Grigg’s focuses have revolved around digital contracting. Ricardian Contracts “express all the salient details of an issuance as an unforgeable contract, unforgeably linked into every action within a payment system.”

The Ricardian white paper contract goes on: “By translating the institution of the contract into the digital domain, we build upon centuries’ and even millennia’s worth of experience in documenting, sharing and disputing the meaning of agreements between parties.”

The Ricardian Contract allows clarity in legal and customer support questions. “The user benefits from lower overall costs, and better presentation of information, within a more consistent framework.” Mr. Grigg’s work on triple-entry accounting incorporates Signed Receipt and standard, double entry bookkeeping.

Mr. Larimer is known for his work with BitShares and Steemit. He is credited with inventing delegated proof-of-stake and the concept of decentralized autonomous organizations. (modified by Ethereum)

BitShares’ market-pegged asset platform was described as a hedge against cryptocurrencies by placing fungible fiat derivatives backed by cryptocurrency on a blockchain. Larimer left the project due to lack of funding. In 2016 he joined Steemit, where he created a social content platform based on blockchain.

Larimer says BitShares’ innovation lays in its vertical scalability, which allows transactions to be processed up to as many as 100,000 per second. Mr. Blumer cites horizontal scalability, parallel execution of smart contracts and the simultaneous processing of transactions as EOS strengths. Block.one likely represents the most professional outfit with which Larimer has worked.

The Platform

The software is called ‘EOS.IO’. There is then the ‘EOS Token’ and the ‘EOS Platform’. EOS’ “asynchronous proof-of-stake blockchain” platform is designed to enable applications as user-friendly as centralized alternatives. Making use of delegated proof-of-stake (DPoS) consensus protocol, EOS describes its project as a republic wherein community members of the community delegate verifying transactions to elected block producers.”

Transaction as Proof of Stake (TaPoS) will be implemented on EOS.io software to require that each transaction includes the hash of a recent block header. This hash serves two purposes:

  1. prevents a replay of a transaction on forks that do not include the referenced block; and
  2. signals the network that a particular user and their stake are on a specific fork.

According to the EOS white paper: “Over time all users end up directly confirming the blockchain which makes it difficult to forge counterfeit chains as the counterfeit would not be able to migrate transactions from the legitimate chain.”

The EOS.io software ensures there are no gaps in its transaction history by assigning a sequence number to every message delivered to every account via “proof of completeness.”

The project’s white paper, available on GitHub, notes: “A user can use these sequence numbers to prove that all messages intended for a particular account have been processed and that they were processed in order.”

Integration

EOS, like many proposed distributed ledger platforms, intends to integrate various blockchain platforms. The startup intends on doing this by ensuring clients that they do not need to process all transactions.

After all, an exchange only cares about transfers in and out of the exchange and nothing more,” reads the white paper. “It would also be ideal if the exchange chain could utilize lightweight merkle proofs of deposit rather than having to trust its own block producers entirely. At the very least a chain’s block producers would like to maintain the smallest possible overhead when synchronizing with another blockchain.

In implementing Merkle Proofs for Light Client Validation (LCV), EOS hopes to enable “the generation of relatively light-weight proof of existence that can be validated by anyone tracking a relatively light-weight data set.”

The EOS white paper describes solving latency problems by breaking blocks into “cycles” divided into different threads and transactions containing messages for delivery. “This structure can be visualized as a tree where alternating layers are processed sequentially and in parallel,” according to the white paper.

It concludes:

The EOS.IO software is designed from experience with proven concepts and best practices, and represents fundamental advancements in blockchain technology. The software is part of a holistic blueprint for a globally scalable blockchain society in which decentralised applications can be easily deployed and governed.

“Every single account operates like its own chain, and supports interoperation between all other accounts without locking, so determinism is preserved,” according to Mr. Larimer.

Mr. Larimer calls EOS an “incremental improvement” over his previous projects, describing it as a “general case” of BitShares and Steemit. EOS could support applications like Bitshares and Steem, but it’d be up to those teams.

Our Rating

Now, whether or not EOS will offer infinite scalability and free transactions has yet to be seen – after all, there isn’t much code to go on. As for the latter claim, a basic foundation of pop-economics is that there is no free lunch. The question for EOS, then, and any blockchain project, is whether or not what it offers outflanks its predecessors and contemporaries.

Thanks to its experienced team, and its track record of success, as well as in-production use cases for the technology itself, we give EOS a 6.75 out of 10.

Investment Details

EOS digital token distribution opened up Monday, June 26. EOS’ token distribution follows a participation model that will transpire over the course of one year, “creating the fairest token distribution project on Ethereum to date,” according to the company. Pierce told Reuters that

The goal of the EOS token sale is to make it truly democratize and provide equal access to everyone (…)

Mr. Blumer said: “To ensure inclusivity, EOS

To ensure inclusivity, EOS are not sold for a fixed price, but sold at a price determined by market demand; this mimics mining, but does not offer unfair advantages to large purchasers.

The EOS token sale, which is set to take place over the span of nearly one-year on the Ethereum blockchain, will see 1 billion tokens allocated. 20 percent of the EOS tokens will be sold during the first days, with 70 percent split evenly into 350 consecutive 23-hour periods of 2 million EOS tokens per, beginning July 1. The 10 percent leftover, reserved for block.one, cannot be traded or transferred on the Ethereum network. According to Blumer, EOS will be priced on market demand.

The crowdsale has appeared in New York Times, Reuters and VICE and other noteworthy outlets, as well as hosted info sessions, sponsored events, given out free merch, and advertised on Time Squares jumbotron. Like so many blockchain-based token sales, EOS today is little more than a concept, a white paper, and new code.

Critics levy criticism at Larimer for having left his prior projects, but the developer was free to leave the projects on his whim. He has said publicly that building up the platforms to be self-sustaining was his goal on both platforms before handing over responsibilities. Faces of developers, even on the bitcoin blockchain, often change.

Criticism of DPoS paints it as a winner-take-all arrangement which results in ‘whales’ who can control the system. Some compare it to proof-of-work in bitcoin, where holders of more currency may act as an ‘elite’ in the system.

Bitcoin and Ethereum can be thought of as Delegated Proof of Work where miners elect mining pools, Mr. Larimer told Hacked.com. Less than a dozen mining pools control the vast majority of block production, but Delegated Proof of Stake ensures there are over 20 producers “mining pools” elected by the stake (“hash power”). Like proof-of-work anyone can produce blocks occasionally by voting for themselves. Steem has over 50 unique individuals who produce blocks every single day, more than Bitcoin or Ethereum.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 2 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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6 Comments

6 Comments

  1. godtrader

    July 5, 2017 at 5:48 pm

    Thanks, that was an interesting read. I managed to make some profit selling my first windows ICO tokens at $4.29. Its interesting where the price of EOS token will go in next days/weeks. Looks like its just speculative demand.

    • Justin OConnell

      July 7, 2017 at 5:26 pm

      Speculative demand will fuel many ICOs. There seems to be a misconception that tokens should have an inherent value. In my opinion, public blockchains themselves are where inherent value and utility can be found. Token sales are often a vote of confidence in the wherewithal of a specific project. In the case of EOS, it evokes confidence thanks to Mr. Larimer’s experience and the capital behind the project.

  2. choikech

    July 6, 2017 at 1:29 am

    EOS anaylsis published too late. The heat is already gone.

    • Justin OConnell

      July 7, 2017 at 5:27 pm

      It is likely that, at least, a finished platform will come of this considering Mr. Larimer’s coding experience. I would be surprised, in this case, if nothing came of this.

  3. AsTi

    July 6, 2017 at 8:17 am

    EOS ICO SCAM and you know it. 170 million to build the Bitshares fork? Really? Where this invested money? Definitely on the exchanges.

    BTW, almost every second post is ‘to late’ or has info like this.

    • Justin OConnell

      July 7, 2017 at 5:28 pm

      It’s likely, due to Mr. Larimer’s experience, a project will come of this. Further, the company’s partners are well-connected.

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Altcoins

Bitcoin Cash Price Analysis: Bullish Pennant Pattern Confirmed

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  • Bitcoin Cash price remains very much elevated, as the bulls continue to run north.
  • BCH/USD price action has formed a bullish pennant pattern formation, subject to a breakout higher.

BCH/USD: Recent Price Behavior

The Bitcoin Cash price has been a notable out-performer over the past few sessions, with the BCH/USD pair rallying as much as 23% since 17th February. In doing so, it reached its highest levels in over six weeks. The aggressive move north came after a prolonged period of range-bound trading via the daily chart view.

Between 8th – 17th February, BCH/USD was moving within an extremely narrowing range-block formation. This represented a lack of commitment from both camps after being confined within a range low of $117 to a high around $125. On 18th February, the bulls managed to force a breach and daily closure above the confines of the mentioned range.

Coinbase Adds Bitcoin Cash Support to Wallet App

Coinbase, a U.S.-based cryptocurrency exchange and wallet service provider, announced it has added support of BCH to its Coinbase Wallet.

“The new Wallet update with Bitcoin Cash support will roll out to all users on iOS and Android over the next few weeks,” the company said in an official blog post.

The app will facilitate support for both CashAddr and legacy addresses. Private keys will be encrypted on the mobile device by the Coinbase mobile wallet. Last week Coinbase announced the following: “users can now back up an encrypted version of your Coinbase Wallet’s private keys to your personal cloud storage accounts, using either Google Drive or iCloud This new feature provides a safeguard for users, helping them avoid losing their funds if they lose their device or misplace their private keys.”

Technical Review – BCH/USD

BCH/USD 4-hour chart.

At the time of writing, the BCH/USD price is still holding at elevated levels, with gains in the session amounting to 2.5%. Over the last two sessions, between 19-20th February, the price action has somewhat moved within a range. The detailed price behavior has seen a bullish pennant pattern formation, which is subject to a further potential move north.

Near-term resistance is eyed at $145.50, where the upper acting trend line of the pennant is tracking. Should the bulls manage to break this down, then expect a fresh wave of selling pressure to kick in. To the upside, eyes will then be on supply observed up within the $160-$165 price range.

In terms of near-term support, the lower acting trend line of the pennant which is tracking at $140 is the next major target; a breach could then expose critical daily support at $137. Lastly, if neither safety nets protect the price from falling, then there runs the risk of a full reversal of the recent gains.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 125 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: Coins Test Swing Highs Litecoin Runs Into Resistance

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The major cryptocurrencies continue to trade with a bullish bias after establishing a new short-term uptrend this week. The top coins are all holding on to the bulk of their recent gains, even as most of them entered consolidation patterns on the heels of the strong rally in the segment. With still only Ripple lagging the broader market notably, the immediate outlook remains positive, despite the still bearish long-term picture.

LTC/USD, 4-Hour Chart Analysis

Today, the initially leading Litecoin shined again, pushing past the $50 level and hitting the long-term resistance zone near $51. As LTC is overbought due to its recent lofty gains, the coin is now only on a neutral short-term signal in our trend model, since the bearish long-term setup continues to warrant caution for bulls here.

That said, the rising short-term trend is intact, and should the coin clear the overbought momentum readings, traders could enter small, speculative positions using strict risk management rules. Support levels are now found near $47, $44, and $38, while the next major resistance zone is ahead near the $56 price level.

BTC/USD, 4-Hour Chart Analysis

Bitcoin entered a consolidation pattern today, as we expected, after touching the longer-term zone resistance zone between $4000 and $4050. The momentum indicators hint on further consolidation, and in light of hostile long-term setup, traders should wait for the overbought readings to be cleared before entering new short-term positions.

Below the initial level $3850 support, further levels are found near $3600 and just above $3450, while the next resistance zone above $4050 is ahead near $4450. The short-term uptrend is intact in BTC, and our trend model remains on a short-term buy signal.

Ethereum Tries to Form Swing Low while Ripple Fights Trendline

ETH/USD, 4-Hour Chart Analysis

Ethereum entered a shallow correction after hitting the resistance zone near $145, but the price action and the volume patterns continue to support the bullish short-term case. The $160 price level remains a viable target for bulls but the momentum indicators continue to show overbought readings. The short-term uptrend is intact and our trend model is still on a short-term buy signal as well. Support levels are found near $130 and $112 while above $160 resistance is ahead near $180.

EOS/USD, 4-Hour Chart Analysis

Only a few of the major altcoins managed to follow Litecoin to a new swing high today, but EOS slightly extended its rally, despite being severely overbought from a short-term perspective. While the new high is a positive sign for the coming period, EOS remains only neutral in our trend model, and traders should wait for the oversold readings to be cleared before entering new positions.

XRP/USDT, 4-Hour Chart Analysis

While the leadership of the rally is still healthy, Ripple continues to lag the leaders, still fighting with the declining trendline that stopped the recent rally attempt in the coin. XRP is holding up above the $0.32 level, but it’s stuck below the recent swing high, and traders should still focus on the relatively stronger coins despite the short-term buy signal in our trend model.

From a long-term perspective, technicals remain negative, and a move towards the $0.28 and $0.26 levels remains likely. Further support zones are found near $0.32 and $0.30, while short-term targets are still ahead near $0.3550, and $$0.3750.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 468 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Bitcoin Update: Reversal Right on Track

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On our February 13, 2019 update, we argued that Bitcoin’s (BTC/USD) bottom is likely in. While many crypto participants were heavily bearish about Bitcoin’s prospects, the market broke out of a continuation pattern and climbed over the $4,000 mark yesterday on Bitfinex. This left some in disbelief, which is exactly the reaction that we were expecting.

Nevertheless, many still hold on to their bearish stance. After all, it could also be argued that last week’s rally was nothing but a dead-cat bounce. They will probably laugh out loud if we say that Bitcoin’s reversal is underway. They can laugh all they want but recent events tell us that the reversal is right on track.

Multiple Resistances Breached

The price action on February 18 caught many market participants by surprise. That’s because it’s been a long time since Bitcoin followed through with a strong rally after a bullish move. Since February 2018, every bull rally was met by a stronger bear selloff. This resulted to four lower highs and eventually, the breakdown from $6,000.

Bitcoin lower highs from Feb 2018

With this trend, it seems logical that Bitcoin would once again post another lower high and continue its downward spiral. However, for the first time in a long while, Bitcoin defied bearish expectations. It rallied to $4,021 on Bitfinex on February 18 and breached multiple resistances in the process.

One major resistance that was taken out used to be the diagonal support that kept the market above $6,000. When Bitcoin breached this diagonal support, it acted as a heavy resistance. The February 18 rally enabled bulls to reclaim this support.

Diagonal support turned resistance and then turned support

On top of the diagonal resistance, Bitcoin also managed to go above our range midpoint as well as the 100-day moving average.

Bitcoin trading above range midpoint

It’s not just the price that enjoys multiple bullish breakouts. The daily RSI managed to print two breakouts in the last couple of months. The first one involves the breach of the diagonal resistance on December 18, 2018. At that time, Bitcoin flipped this resistance into support and relied on it to take out RSI resistance of 56. The move above 56 triggered the inverse head and shoulders breakout on the daily RSI. This tells us that momentum has swung to the side of the bulls.

RSI breakouts

Without these layers of resistances in terms of price and technical indicators, the bulls’ chances of winning the fight to reverse the market’s trend has significantly increased.

Toughest Resistance Ahead

While these technical developments can be really exciting, it is important to not give in to our emotions. Bitcoin’s biggest challenge is on the horizon.

Bitcoin is approaching our range high of $4,300. This resistance is unique because bears enjoy three layers of protection. The first one is the horizontal resistance, the second is the long-term diagonal resistance, and the last is the 200-day moving average.

Bitcoin resistances

Bulls need to generate tremendous momentum and volume to go above $4,300. A move above this level solidifies Bitcoin’s road to reversal.

Bottom Line

Even after the February 18 rally, many still hold firm to their bearish stance. However, a closer analysis of Bitcoin reveals that last week’s rally enabled bulls to take out multiple resistances. The breach of these resistances increases the chance of bulls to finally reverse the trend.

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.9 stars on average, based on 330 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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