Why I'm Not Buying EOS Yet
EOS is the latest brainchild of Steem creator Dan Larimer (@dan). It will be a smart contract platform that is essentially an Operating System aimed towards easier development of applications with a much higher transaction speed than competitors.
I've seen numerous steem blogs written by people advocating buying EOS. I suspect most of them are simply pandering for upvotes because of the steem connection, but some may think buying it now is a profitable trade. I believe they are mistaken for a few reasons.
Inflation
There are currently 248M EOS tokens in existence. Every day for the next 11+ months, 2M new coins will be distributed until a total supply of 1 Billion tokens exists. This means that the supply will more than 4x in less than a year.
No Product
EOS is currently under construction. An EOS 1.0 product is planned to be available by next Spring or Summer, but because of the Planning Fallacy I like to assume worst case scenarios and work under the assumption there will be no product for over a year.
EOS is not comparable to Steem
I saw the point made recently that Steem also underwent rapid inflation and the value has risen from its early days. However, there are a few key distinctions here:
- Holders of Steem Power were receiving interest to offset the high inflation rate.
- Steem had a working product and by owning Steem tokens, you could receive rewards via curation and upvotes. Owning Steem is an investment in yourself.
My plan for buying EOS
I believe in the abilities of @dan, @iang, @arhag and the other EOS developers who have also worked on steem. However, with the rapid inflation, no product, and no rewards for holding tokens early, I cannot advocate or think about speculating on it this early. There is simply no reason for each token to retain value with respect to other cryptocurrencies that have less inflation and working products. One last point is Ethereum, the current industry leader in the smart contract platform space, has big plans in their roadmap that may be implemented before EOS has a working product, such as Metropolis, parallel processing of transactions, swapping virtual machines, and possibly even Proof of Stake.
I imagine there are probably some people taking advantage of arbitrage opportunities via buying in the sale and selling on exchanges for possibly higher prices, but since I cannot do so due to US citizen restrictions, and believe the price of tokens are more than likely to fall with respect to other cryptos, I cannot buy yet.
My basic plan is to buy EOS when there are 750M tokens in existence, or roughly 8 months from now. This should be well before a product is released so higher demand will hopefully come after I buy, most of the inflation will have already occurred, and there may be bigger announcements nearer to the release of EOS 1.0. I do think that the price of EOS now will rise with respect to the US dollar over the next 2 years, so I can't call it a horrible buy to put more of your net worth into cryptocurrency, but I simply do not think its price will stay competitive with other cryptos over the next 8 months due to inflation and lack of a product.
There are a few ways this could play out:
- if I'm right, I get to buy tokens at a much cheaper price.
- if I'm wrong, the price probably stays stable because there are a lot of people waiting for a possible drop and I won't miss much value.
- if I'm very wrong...well, congrats to the current investors =)
I just hope I don't mistime it and buy before it skyrockets.
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I must say I tend to agree however I think this is already taken up in the current price. There is no real inflation since everybody knows there are 1 billion tokens.
I think a lot of people are waiting for the drop. In my experience when this is a common sentiment it will not happen because your reasoning is correct but it is already in the price
Good point, could be priced in some already, and many are waiting, but some are still buying with no consideration of it. Either way, I'd lean towards it dropping before it rises.
I hope you are wrong but won't be surprised :-) I already bought for the amount I was planning to invest.
On the other hand a valuation of 1.5 billion for a start up without product is just crazy. No doubt about that
Yup, just too high of a valuation for being this far away from a product in a competitive space. If I'm right, I can buy them cheaper, if I'm wrong then the price probably stays stable and I didn't miss out on much value, and if I'm very wrong then congrats to the current investors =)
To be honest I have this market cap feeling with several cryptos. If i think more about it all of them apart from Bitcoin. Not a lot is happening right now althougj they have the valuation of a blue chip company.
Fantastic post, hits most of the major ouch points. - followed
It is probably a bad idea to get into this whole project until they start showing some product.
Agree with you...I am earmarking 100 days to see where it stays...I am expecting it to reach about $1.
Once the ICO ends (and last 50 days) the price will go bonkers, as long as, they stick to the 'timelines' they promised!
I had talked about EOS and why we should wait on Day 3 when the price was $6 and I called that it will hit $1 which it hit close last week, 200 days mark will be the litmus test!
@bitdollar @cryptokeepr @krisosa (replying to all of you here instead of individually because it would be a similar response to all)
It's a tricky balance of trying to wait out inflation but also beat potential announcements and speculative buys from others. But regardless of where any of us decide to enter, I think waiting is the right choice. I don't know exactly how far it will fall, but the .5-$1 per token guesses seem pretty accurate to me.
I enjoyed your post. I am just reading up on EOS right now. Long term, I think the project has huge potential and should be in everybody's portfolio. You make a lot of good points on when you buy and I agree on most on them.
Interesting take on EOS. I've started acquiring small bits here and there but am waiting for a lower entry as I've discussed it with more knowledgeable folks who also think it'll drop more, perhaps down t less than $0.50. My average is around 1.85. But I only have about 10% of the EOS I intend to accumulate over the next year. It's pure speculation at this point like you said.
I also enjoy technical analysis, trading, and investing but my full time job is as an engineer. I'll check out your blog from time to time as I like reading thoughts from like-minded people.
I've followed you and upvoted your post.
Good to see some contrarian thinking based upon some solid logic.
Kudos.
... and I'm following you. Looking forward to future posts.
Great breakdown. I believe EOS will be huge and want to position myself nicely but will be on the fence until they are more established after about a year.
Keep me updated with news on EOS. Love the post.
I doubted whether to get in at round 0 but decided that it was best to spread bets. So far, doing a little in round 0 proved very welcome for the concept of 'spreading the bet'. Price is only reluctantly coming down; reaching $1 and lower could take a while and that is assuming the EOS team not making waves with intermediate announcements. Waiting until round 101 to get in first may proof risky of an intermediate run up in price before we get there.
Choices, choices.
I think buying in round 0 proved so profitable because of the US restriction: there was immediate demand for it on exchanges so the price rose rapidly. As for when to buy now, it's a tricky balance between waiting a while to balance out the inflation and timing it before intermediate announcements and product rollout. I lean later though, and if I miss out, then ¯_(ツ)_/¯