Platform Wars: A Fact-Based Comparison of Modern Blockchains

digital-scarcity (28)in #eos • 6 years ago (edited)

Background

In early 2018, it was obvious that Ethereum was the blockchain of choice for decentralized application, or Dapp, developers. There were many platforms in production and being developed, but Ethereum was the only won that had experienced broad acceptance as a public main net. The primary use for Ethereum is fund-raising (issuing ICOs), followed by collectible digital cats known as Cryptokitties.

In just the last few months, significant improvements in blockchain technology present much more scalable and user-friendly options over Ethereum.

Congestion

Ethereum nodes (or miners) are compensated for the work they do by a transaction fee that they receive from processing a transaction. Nodes select which transactions to mine based on the gas price that is being offered by the transaction. Ethereum can perform a maximum of 15 transactions per second. As more transactions join the current workload (mempool), miners get a larger number of transactions to choose from. As a result of this extra demand, the price of transactions rise, and higher prices for transactions may put Ethereum out of reach for high throughput applications.

Transaction fees, number of transactions, and latency are increasing in both raw measurements and volatility, especially in the last 90 days.

GoChain

GoChain is a fork of the Ethereum software (not chain) with performance enhancements. It is 100% compatible with Ethereum smart contracts and tools (e.g. MetaMask). It is reportedly 100x faster and much cheaper although, since it was launched in May, consistent performance data at capacity does not yet exist.

Transaction gas is paid for in GoChain. All existing Solidity smart contracts can be ported to GoChain very easily. I recently tested the migration of a multi-contract project, tokens, and web application in a single day.

GoChain's ease of migration and performance improvements over Ethereum may make it a desirable contender in the platform wars.

EOS

EOS is a new blockchain platform that was developed by block.one (led by Dan Larimer) from the ground up in order to support applications that can compete with large centralized platforms such as Facebook, Twitter, Uber, and AirBNB. It uses a Delegated Proof of Stake consensus model with 21 elected block producers. EOS produces blocks every 500 milliseconds. In production, it has reached over 3,000 transactions per second and processes the more transactions that any other blockchain in production. For comparison, Visa processes 1,667 transactions per second. There is less than 500 ms latency when submitting a transaction to the network.

EOS is currently single-threaded and (like all chains) does not support inter-blockchain communication, or side chains. Block.one says that EOS will multi-threading and side chains by the end of 2018 which will allow EOS to handle over a million transactions per second.

According to Block'tivity, EOS processes far more transactions that other blockchain, and on some days, more than all others combined. Where is this activity coming from? The current transaction volume consists mostly of airdrops, spam messages that send 0.0001 EOS to accounts, and a decentralized Twitter competitor knows as BlockTwitter. Block'tivity also reports that EOS is running at less than 1% of its existing capacity.

Because EOS is meant to compete with large applications with major user adoption, it does not require users to pay transaction fees, purchase EOS, or any other cryptocurrency. Application developers must purchase and stake EOS to get access to platform CPU, network bandwidth, and RAM. EOS allows developers to choose whether the user or the application itself is required to stake EOS on a transaction-by-transaction level. This provides application developers with great flexibility in deciding how to monetize their applications.

Developers can create their own tokens, sell those tokens, and then require users to spend that token in order to access the application. This is a significant user experience improvement. With Ethereum and GoChain, users must acquire native currency in order write transactions to the chain. This can be quite a hurdle for novice cryptocurrency users because it involves creating an account with an exchange, performing KYC procedures, which may take a week, and then securing Ether (or GoCoin) with the user's Metamask browser extension. With EOS, developers can require that users purchase their specific token or no token at all in order to use their application. Some projects onboard new users by accepting a credit card payment to pay for an enrollment fee and first deposit of tokens into the user account. Token flexibility is one of the EOS features that set it apart from other blockchains.

EOS uses account names rather than addresses. Each account name has keys that are used to sign transactions. EOS also supports use of periods and account suffixes in a very similar fashion to web domains. For example, suffixes such as ".steem" or ".nyc" can be created and then the creator can create an sub-accounts that use that suffix. Easy to use account names make EOS very appealing and improve usability; it is much easier and more convenient to remember an account name than a long Ethereum address.

Similar to MetaMask, an application named Scatter may be used to sign transactions via a plugin for Chrome or Firefox. Scatter also comes as a desktop application that will activate anytime a user performs an action that requires identity or authentication across both web and desktop applications. Since there are no transaction fees, there are no fields to enter gas price or gas limit. Also, the user can use a checkbox to whitelist actions so that they are not prompted to approve that action in the future, which improves workflow. There are several other wallets available for Windows, Mac, Linux, iOS and Android.

Consensus and Governance

Blockchains use various algorithms, or protocols, to generate consensus among the nodes that are responsible for building, or mining, the blocks. A fundamental design principle of most blockchains is to achieve decentralization so that trust can exist among trustless parties. If more than half of the mining or block producing power is comprised of one or a small number of colluding nefarious parties, the chain can be manipulated and corrupted (51% attack).

Bitcoin, the first blockchain, uses Proof of Work which is a highly decentralized protocol that allows any computer to join the network and compete to win the reward for mining blocks. More powerful GPUs and higher electricity usage are generally associated with better mining performance.

The intended design for Proof of Work is that computing power is equally distributed across the globe so the mining (hash) power should be equally distributed and decentralized. In practice, due to inexpensive and government subsidized electricity, China has emerged as the defacto leader in mining hash power for both Bitcon and Ethereum. At present, five companies in China account for over 80% of all mining activity for all of the major coins / tokens, including Ethereum.

Most new blockchain technologies do not use Proof of Work. There are newer technologies being leveraged such as Gossip Protocol (HashGraph), Proof of Reputation (GoChain), Proof of Stake (Peercoin, NXT), Proof of Authority, and Delegated Proof of Stake (EOS, Lisk). Another trend in blockchain consensus is to use a fixed number of masternodes, or block producers, to build the chain. Using more modern consensus protocols and a smaller number result in faster block times and more scalable blockchains.

GoChain uses Proof of Reputation consensus protocol. The block producing responsibility is spread across 50 companies that are trusted to value their reputation. Since they are concerned with their reputation for credibility, they can be trusted to honestly contribute to block production. Since reputation is important, GoChain producers are known entities and must comply with identity validation procedures. GoChain is operated by 50 well-known global companies, and as a result of their consensus model, they are able to achieve 1,300 transactions per second (TPS) using the same virtual machine as Ethereum.

EOS uses Delegated Proof of Stake, a liquid, representative democracy with token holder suffrage. In this model, block producers are granted authority to produce blocks by EOS token holders. There are 21 block producers that are chosen psuedo-randomly to produce a given block. The votes are re-counted and block producers re-assigned every 20 seconds. The block producers agree to a constitution that covers matter such as anti-corruption, transparency, and so forth.

If 15 of the 21 block producers agree to freeze or reverse an account or transaction, they can do so. In the first weeks of production, some EOS accounts were attempting to hack other accounts. The block producers froze these accounts, but did not reverse any transactions. This action came under intense scrutiny in the blockchain community. Since then, they have not reversed or frozen any accounts or transactions. There is a new constitution being circulated and will be voted on by token holders soon. EOS also supports Ricardian contracts, which are human-readable, text explanations of what each method of a smart contract is intended to do. If needed and appropriate, in the case of a dispute, block producers can review the Ricardian contracts to determine if the software operated as it was intended. Ricardian contracts are not required.

As a democracy, block producers are directly rewarded in tokens based on the votes that they receive from token holders. As a result, the block producers are highly incentivized to achieve and maintain popularity by creating value for the token holder and user community. They invest in development tools, wallets, community outreach, advisory services, and educational programs.

Working in Blockchain is a generational opportunity to be a part of the rethinking of the Internet. Bitcoin, Ethereum, and now EOS, have each been pioneers of their time. The platform wars will continue play out in the years ahead until the technology becomes commoditized, much like we think of HTTP and HTML today.

Max is the founder of Digital Scarcity (http://digitalscarcity.io), a global blockchain development organization focused on helping clients reach their goals with the EOS platform. He can be reached on Telegram at @gravitt12 or on email at gravitt at protonmail dot com.