How will EOS impact BitShares?
The cryptosphere is waiting with anticipation, excitement and, for some, anxiety as EOS approaches its main net launch on June 3, 2018. An estimated 110,000 people check the EOS Countdown monthly, and discussions are heating up across various forums as everyone tries to figure out what is going to happen. All that attention is directly reflected in its market activity as EOS, boosted by an unusual year-long ICO, has reached a market capitalisation of $10.4bn - well above the more established Litecoin (LTC: $6.4bn) or Cardano (ADA: $4.7bn).
A lot of the hype is centred on EOS being labelled as the ‘Ethereum Killer’. That has led some to speculate ‘EOS’ stands for ‘Ethereum on Steroids’ or 'Ethereum Operating System' which it very well could be as the project founders have intentionally left the meaning of the name undefined. That reputation is mostly attributed to the performance figures of the EOS project which could potentially outperform Ethereum should it fail to scale in time to meet the demands of its growing decentralised applications (dApps) ecosystem.
According to EOS believers, Ethereum simply has too many constraints around scalability, latency and cost for any enterprise-grade blockchain application to become mainstream. However, the Raiden Network is expected to significantly reduce these constraints and Plasma, according to the associated whitepaper, could boost the performance of Ethereum to support potentially billions of transactions per second. Ethereum isn’t backing down without a fight.
But EOS’ rise has brought into question the future of BitShares and Steemit for those who have a financial and/or emotional investment in the two blockchains. There’s a lot of uncertainty around the impact EOS might have on the BitShares blockchain, and many worry it might not have a place in the expanding EOS ecosystem – potentially making it obsolete.
Separating fact from fiction is becoming increasingly difficult as speculators eagerly spread the latest unverified rumours. But cutting through the hype allows us to make a better assessment of how EOS might affect BitShares.
Why would EOS impact BitShares?
The uncertainty surrounding the Bitshares blockchain as EOS rises is mostly rooted in the overlap of Product, Potential and People.
On their website, EOS defines itself as the most powerful infrastructure for decentralised applications. It is a software that greatly facilitates the development, hosting, and execution of commercial-scale dApps on its platform. It is powered by the Graphene ecosystem, created by father-son team Stan and Dan Larimer, which also powers other blockchain projects including BitShares, Steemit, OpenLedger, Muse, Peerplays and Bitspark's cash to crypto network and Sparkdex.
Essentially, EOS allows businesses and individuals to create decentralised blockchain-based applications in a way similar to web-based applications, like providing secure access and authentication, permissioning, data hosting, usage management, and communication between dApps and the Internet.
That also includes the ability to build a decentralised exchange (DEX) which could compete with BitShares, like when Bitfinex announced their plans for EOSFinex in February 2018. Although we haven’t heard much about that recently, the same could be considered for BitShares where its DEX would be updated to run on EOS.
As the size of the dApps ecosystem increases every day, it often suffers from varying problems constraining the network including slow speeds, limited computing power and high transaction costs. EOS attempts to address these problems by offering more scalability, flexibility, and usability through its unique mechanism.
According to the block.one corporate video, EOS is the platform to get ideas working in a live environment. The platform is designed to close the gap between what’s possible in the blockchain industry and what current applications are capable of now. Dan Larimer goes on to say the platform supports millions of transactions per second with sub-second latencies at much lower costs. A stark contrast with the 100 to 200 million dollars it would take just to host the likes associated with the Steemit ecosystem on a public live blockchain like Ethereum, as block.one CEO Brendan Blumer says in the video.
It’s exactly those types of comparisons that have many people in the BitShares and Steemit communities concerned. Many fearfully speculate what might happen as EOS comes out and everyone jumps on that blockchain. Will that make the Bitshares and Steemit blockchains obsolete? Before we can address that, it might help to better understand the people behind these projects.
EOS was launched by Dan Larimer and is currently owned by the block.one organisation. Dan Larimer understands the importance of decentralisation, a critical component of his two previous projects: BitShares is a decentralised exchange; Steemit is a decentralised blog and social media network. In an interview with Ivan on Tech, Dan explains how each project taught him valuable lessons both in finding solutions to technology challenges as well as how to increase broader user adoption. With EOS, he continues the advancement of decentralisation at a much larger scale with an entire operating system.
Both BitShares and Steemit were handed over to capable leaders in a healthy and fully-functioning state. The two each have their own engaged community and history. They each continue to further expand and develop their ecosystem. New businesses are increasingly switching over to the BitShares network which has the ability to handle 100k transactions per second, a drastic improvement from bottleneck issues associated with other blockchains like bitcoin. Steemit is further maturing as an enabler of cryptocurrency reward systems within content applications as it is rolling out the Smart Media Tokens (SMTs) protocol.
While EOS is his next big thing, the way it is built should enable Dan to carry out all of his future projects right from the EOS platform itself. Or as he put it, “eat his own dog food.”
The Most Likely Outcome: Grand Unification
Despite all the rumours, there is no evidence that EOS will replace BitShares or Steemit as EOS' core function is a main chain for Dapps, not a blog or financial stack. Based only on direct interviews with Stan or Dan Larimer, it seems a lot more likely that what they have in mind is a mutually beneficial future for the 3 blockchains where they each make the other stronger in a symbiotic relationship. The chains will complement each other, but still operate independently.
During an interview with Future Tech Podcast in February 2018, Stan Larimer explained the topic and how it might look going into the future. He said that currently the blockchain industry is rather fragmented, to the point where interoperability is practically non-existent. Bitcoin, Ethereum and BitShares are all different ecosystems which have little to do with each other – apart from being similarly affected by the same investor sentiment towards cryptocurrencies.
The Larimers see EOS as the catalyst to radically change this, in what Stan termed “the Grand Unification”. Under this unification, the chains will complement and support each other, and EOS would function as a middle chain supporting multiple chains linked together. Through the middle chain, several critical updates can be made to the BitShares technology, without upsetting the foundational design and values of BitShares itself. It would be more about interfacing BitShares with EOS in a way that makes them “better together than apart…but increasing the value of both.”
Stan himself already alluded to this in October 2017 on Reddit when he said:
“When EOS is ready, BitShares will upgrade to its technology, just like it went to BTS 2.0 in 2015 to adopt graphene technology. BTS 3.0 will be 100% owned by BTS 2.0 owners and the switchover will happen in 3 seconds. By that time, most exchanges will have BitShares as a back end, because those with non-transparent practices will have been shut down.”
And he reinforced that message during an interview with How To Token in April 2018, where he said:
“EOS is a great enabler and we have a team of people looking at how BitShares can benefit from it. If nothing else, BitShares will gain from the new excitement that EOS is bringing to the industry.”
BitShares in the Grand Unification?
BitShares is supported by a solid community, and many businesses have recently moved to its blockchain. Bitspark itself switched over to the BitShares blockchain in 2017 to integrate services with the decentralised exchange and to create local currency stablecoins for each market where we have Cash Points networks. These decisions aren’t made lightly and require thought, time and money.
Of course, there will be spillage. Just as some of the BitShares community spilled into Steemit, some will spill into EOS this time. This shouldn’t be viewed as competition, or as EOS replacing BitShares, after all, there is no blockchain as powerful as BitShares in its application for finance. While it’s easy to see it as such, we must remember that EOS is a different beast altogether: EOS is presented as the first step towards real interoperability in the blockchain world.
It was not designed to replace BitShares but to serve as the foundation to make it, and any other decentralised network or application, stronger and ready for mainstream adoption.