We have covered EOSIO in the last chapter, defining it as a blockchain protocol/platform, an ecosystem and even as an operating system. We even made the distinction between EOS the blockchain and EOS the token. EOS is the blockchain utilizing the EOSIO blockchain protocol. The EOS blockchain is also commonly referred to as the EOS Mainnet. But EOS is also the name of the token that fuels the EOS blockchain and its ecosystem. It is the means of exchange and a form of payment on the blockchain. As an EOS token holder you have access to many great benefits, some of which we’ll uncover in this chapter. If you missed Chapter 2: Defining EOSIO (link), then I suggest you go back and read it because you’ll need to know that to understand this chapter.
Read it? Great! Let’s dive straight into it then.
Although EOS is cryptographic in nature it’s not officially a cryptocurrency. For regulatory reasons EOS is a utility token. It is not an investment nor should its holders expect to make a profit from its sale. It serves as a vehicle for enabling transactions and interactions on the EOS Mainnet. Any gains in its value are a result of public demand against its limited supply. There’s currently a total supply of 1 Billion EOS tokens (slightly more) and because they get bought up over time they become a scarce resource.
Smart contracts that run on the EOS blockchain are mostly programmed to recognize only EOS tokens. Therefore, transactions on the EOS Mainnet are powered by the EOS token. Having EOS in your account affords you access to more resources if you plan to use the network more frequently. This ensures that you can continue engaging with your favorite dApp for hours on end, like when playing a game for instance. As an EOS holder you also have the privilege of participating in its governance. More on EOS Governance in the next chapter.
As mentioned in the previous Chapter; one of the best advantages of EOS is that transactions on its network are free. Likewise, developers don’t pay fees to build/deploy their dApps on the network, all they have to do is hold EOS tokens to gain access to its resources. They could then use the same tokens to cover resource costs for some of their users that can’t afford to buy EOS tokens. Again, the more EOSIO continues to develop, the more resources users will gain for holding less tokens.
The EOS account
Having an EOS account grants you access to the EOS blockchain. It is your means of interacting with other users and applications on the blockchain. With it you can send crypto assets, messages, or partake in the voting process.
One of the unique characteristics EOS has compared to other blockchains like Bitcoin and Ethereum is its use of human-readable account names. This makes EOS accounts easier to remember and transact with. For instance, if Mary wants to send some EOS to John, she can simply enter John’s EOS account name (johnsmith123) and send away. No more 35 characters of messy letters and numbers such as 1BoatSLRHtKNngkdXEeobR76b53LETtpyT. These long random account names (if you can call them that) are stressful to use and require triple checks before sending to ensure they’re entered correctly. EOS even has custom name suffixes, for example, john.x or mary.eos. When you think about it this is actually one of the first times in history that you truly own a name. Do you really own or have control of your own name, or does your government?
This is one of many examples highlighting just how far ahead of its competitors the EOS blockchain is. In a future that is heavily digitized, an EOS account becomes an asset on its own. You have complete control of it and no one in the world can access or make changes to it without your consent.
More information about custom EOS names can be found here – https://www.eosnameservice.io/
A form of payment
If the EOS blockchain is a car, then the EOS token is the fuel. It drives the entire ecosystem as its users use it as a form of exchange and payment among one another. EOS can be exchanged for goods and services on the blockchain, but also exchanged for other tokens. Decentralized applications (DApps) tend to have their own in-app token. These tokens are treated as credits in a game or as an in-app currency for gambling dApps etc. Thus many of these dApps will accept EOS as the form of payment in exchange for their tokens.
Another use of EOS tokens, which is often undervalued, is with airdrops. An airdrop is a type of distribution model that new projects employ to give out tokens to their dApp. These airdrops are usually just given freely to EOS token holders. It’s an effective method to market their new dApp but also to ensure a fair and wide token distribution. As an EOS token holder you could end up with hundreds of these tokens, which might later be of value and can be sold! As it is there’s many people who work within the EOSIO ecosystem and take their salaries in EOS tokens. This displays their long term faith in EOS as a valuable asset worthy of holding onto for the future.
Allowing for communication
This might be surprising to many, but EOS also enables for communication on the blockchain. We mentioned earlier that one of its utilities is to carry out transactions on EOSIO. Transacting is a form of interaction i.e. communication. When you interact with a smart contract you’re communicating your intentions. For example, ‘you stake 5 EOS into the EOSIO smart contract to receive CPU’, the smart contract understands that language and provides CPU resources worth 5 EOS. This is communication between you (user) and the smart contract (blockchain).
User to user communication works in a similar way. When you send a text to someone it goes via a smart contract that makes sense of it before sending it directly to the intended recipient. You can also send anyone on the EOS blockchain a text message for fractions of a penny! The process is exactly the same as when you send them a token, except you can add a memo/message to personalize the transaction. This method is rarely used for personal messages because this information is public. However, it’s very effective in gaining attention of someone you’ve met on the blockchain (like in a game) but don’t have their contacts.
Unit of value
Most EOS token holders hold its blockchain in high regard. They recognize the benefits of EOSIO and those of holding its token for the long term. When taking into account that EOSIO is a high performance blockchain with plans to further scale to accommodate a massive adoption. And also the fact that it’s token supply is limited. It makes for a scenario of wide speculation. Users expect the EOS token to significantly increase in value over the coming years. When the global public finally adopts blockchain technology, EOSIO is likely to be their first choice for dApp deployment, solely because of its superior performance. Thus users will be drawn to this blockchain in order to access some of the coolest dApps the blockchain space has to offer.
Unit of measurement
In an ecosystem as valuable as EOSIO, users and dApps alike need some kind of reference for valuing their digital assets. It would be backwards to use fiat currencies as a point of reference, so EOS is the obvious choice. All EOSIO tokens that are tradeable on exchanges are measured relative to the value of EOS and are interchangeable/tradeable with EOS.
However, its biggest metric is whether it is progressing i.e. becoming more valuable or less valuable. This metric is measured against the US dollar. The US dollar is a world reserve currency that many world nations are familiar with. Thus, it makes sense that all cryptocurrencies/tokens measure their value in US dollars. The speculative value for EOS is currently worth more than the dollar due to its scarce nature when compared to the dollar. To put things into perspective, EOS’ total supply is currently 1/7 (14%) of the world population. And that will continue to decline considering the population growth rate of 1.08%.
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