CWC Newsletter #17 (March 9, 2020)
By Taylor Ryker, Analyst
Parallels Between Netscape and EOSIO
A couple weeks ago, Brian Armstrong, the CEO of Coinbase, had the opportunity to conduct a fireside chat with Ben Horowitz, former Vice President at Netscape, to discuss the historical parallels between the early internet protocols and cryptocurrencies.
While reading Armstrong's take-aways from the discussion with Horowitz, I began to see the potential of EOSIO in laying the foundation of the cryptocurrency space. Armstrong pointed to four key points: (1) Scalability, (2) Privacy, (3) Decentralized Identity, and (4) Developer Tools. Below, I discuss how EOSIO resolves or effectively approaches Armstrong's four points, which will be in quotations.
"1. Scalability- we need blockchains that can get to at least thousands of TPS to get mainstream adoption of crypto (similar to broadband internet being a big unlock on the web)."
Scalability is one of the biggest hurdles in the cryptocurrency space since the release of Bitcoin (BTC) in 2009. Bitcoin's myriad attempts to scale its protocol has been met with contentious divisions that saw Bitcoin fork into other Bitcoin clones, such as Bitcoin Cash (BCH), Bitcoin SV (BSV), and others. Developers within the Ethereum community have tried in vain since 2015 to scale the protocol and hope to succeed in 2022.
Currently Bitcoin can process about 5 transactions per second and Ethereum can process about 20 transactions per second. Bitcoin's current scaling solution is called Lightning Network and Ethereum's scaling solution is a combination of what Ethereum developers call Sharding, Casper, and zk Rollup.
However, there have been flaws and shortcomings for the Lightning Network and many delays in Ethereum's scaling implementation. Developers have also pointed out the weaknesses of Ethereum's Casper.
To remedy the scalability obstacle in cryptocurrency, the EOS mainnet was launched in May 2018 with the ability to process thousands of transactions per second. As of March 6, 2020, the EOS mainnet processed 64 million operations in the past 24 hours, the most of any blockchain in the world by a long shot. In comparison, Bitcoin and Ethereum processed 494,837 and 674,653 operations, respectively.
In addition, Block.one, the creators of the EOSIO source code, have also released scalability upgrades over the past year called EOSIO 2.0 and EOS Virtual Machine. These upgrades have demonstrated that commercial enterprise applications are able to be supported by EOS.
To aid in scalability, EOSIO developers from LiquidApps have released a suite of developer tools called the DAPP Network. The DAPP Network allows the connection between EOSIO and other blockchains such as Ethereum and Bitcoin. Developers using the DAPP Network are able to effectively scale their decentralized applications at a cost effective rate.
In early February 2020, Block.one created a $200,000 challenge to build an Etheruem Solidity smart contract within an EOSIO smart contract. Syed Jafri was able to show that he could run Ethereum smart contracts within EOSIO and could process almost 1000 transactions per seconds. This is just the latest development in how EOSIO could possibly be Ethereum's scaling solution and at large, cryptocurrencies' scaling solution.
"2. Privacy- perhaps a contrarian view, but I think we'll need privacy coins, just like we needed HTTPS as the default on the web, for many use cases in crypto long term. Everyone deserves access to financial services, and financial privacy."
Within the EOSIO ecosystem, developers have valued privacy of data and users through their creation of a privacy coin (pEOS) and decentralized applications such as Sense.Chat.
pEOS, launched in 2019, directly speaks to Armstrong's observation that "everyone deserves access to financial services and financial privacy" by offering a private cryptocurrency on top of the EOS mainnet. Leveraging the technology of the popular privacy coin Monero, pEOS users are able to have Monero style anonymity and untraceability on an EOS based token.
Sense.chat is an EOS messenger that allows users to send messages and cryptocurrency in a private and secure manner. Crystal Rose Pierce, CEO of the company that built Sense.chat, created the messenger on the EOSIO blockchain "for encryption, users have an unparalleled level of control over their privacy."
The development of privacy within decentralized applications on EOSIO is only growing but the need to work with regulators is an important factor that should not be ignored. Current regulations are a choke-point in the further support of privacy in EOSIO and the wider cryptocurrency space.
"3. Decentralized Identity- when you open a "dapp" inside a wallet, it should automatically know who you are, and how to push a payment request to you, this was a big driver of growth for WeChat apps for instance (no signup or adding a payment method). Decentralized identity will also enable users to have reputation scores (similar to FICO or credit scores today), and attestation or claims around KYC, which I think will unlock a bunch of use cases."
Block.one's Voice is attempting to solve decentralized identity through the creation of an EOSIO-built social media platform. Currently in beta and released to a closed-community for feedback, Voice is poised to provide a better social media experience through authentic identity to deter fake accounts and incentivized user adoption by paying for their data. Time will only tell if Voice ultimately reaches their goal of providing an effective decentralized identity to the masses.
"4. Developer Tools- just making it super simple for developers to build apps, publish them, and get distribution. The apps need to "just work" for users, so there will need to be a bigger focus on UX (standardization on the decentralized identity piece above will help with this). The underlying scripting language of each blockchain, is a big part to get right on the developer tool side as well. HTML/CSS took off in a big way because of how *simple* it was. Made it accessible to get started as an amateur, vs say a low level or complex binary protocol."
Although EOSIO is written and coded in a low level binary protocol called C++, it is important to note that this level of complexity is important in building the foundation of the EOSIO ecosystem. The reason EOSIO uses C++ is due to the fact that "while these other languages [JavaScript, etc.] may appear simpler, their performance will likely impact the scale of application you can build. We expect that C++ will be the best language for developing high-performance and secure smart contracts."
Even when other developers from other blockchains like Ethereum created their own coding language, Solidity, to make it more accessible for developers to create smart contracts, there are some pitfalls and shortcomings.
Dexaran, a prolific coder of Ethereum and EOSIO smart contracts, highlighted four flaws in creating new coding languages: (1) development for the sake of development, (2) waste of development resources, (3) majority security flaws, and (4) disrespectful attitude towards developers.
Rather than reinvent the wheel, Block.one intentionally used C++ as its coding language of the EOSIO source code. C++ has a history spanning three decades of upgrades and robust libraries.
To make developer's lives easier to work with EOSIO source code, Block.one has released in the past year numerous developer tools to help support the creation of smart contracts and decentralized applications (Dapp) on EOS and its sisterchains.
This past Spring 2020, Block.one launched an EOSIO developer portal, issued their own testnet for developers to configure their Dapp in a controlled environment before releasing it to the public, a web based development tool for building EOSIO application, and simplified smart contracts for businesses.
Block.one even launched a developer-friendly tutorial on creating smart contracts on EOSIO through an online game called Elemental Battles. For EOSIO beginners, Elemental Battles is a free, eight-lesson online tutorial that allows developers of JavaScript and C++ to build their own fully-functioning game on EOSIO.
These creative and accessible ways of onboarding developers points to Block.one's priority to create an environment geared towards developers.
Block.one has also poured hundreds of millions of dollars into the EOSIO developer space by hosting hackathons and funding EOSIO blockchain start-ups through EOS venture funds over the past two years since EOS was launched in 2018. Block.one has partnered with other Venture Capital Funds such as Galaxy Digital, FinLab AG, and SVK Crypto, to name a few.
With the track record of Block.one's developer tool releases and developer funding in the past year, I am confident that more developers from other blockchains like Ethereum will begin to migrate to the EOSIO ecosystem.
"In conclusion: I think it's still very much up in the air which blockchain will help get crypto from ~50M users to 5B. The chain that manages to ship some of these scalability, privacy, decentralized identity, and developer tool solutions will have a big leg up."
From my research on Block.one and EOSIO, I see a potential path for the global adoption of the EOSIO source code and its ecosystem beyond the confines of the cryptocurrency space. With the financial backing of Block.one and its venture capital partners, scalability solutions, privacy developments, and decentralized identity, EOSIO may just be as influential and dominant as Netscape was in the 1990s. Hopefully, EOSIO does not meet the untimely demise of Netscape in the 2000s.
Disclaimer: KJ Kingsley is not a financial advisor and holds the digital tokens or cryptocurrencies represented in the content above. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this post constitutes a solicitation, recommendation, endorsement, or offer by myself to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of any of the author’s employers.