EOS vs Amazon’s AWS | A New Way of Hosting

EOS can’t be considered to be a blockchain as it lacks certain criteria like cryptographic proof of validity of state changes, and a byzantine fault tolerant consensus algorithm.

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A recent report showed that EOS can’t be considered to be a blockchain as it lacks certain criteria like cryptographic proof of validity of state changes, and a byzantine fault tolerant consensus algorithm. This might come as a surprise because the protocol was marketed as the Ethereum killer in the first place and now doesn’t seem to make any efforts towards becoming a complete censorship resistant smart contract platform like the others.
We want to offer a different viewpoint on the project that we believe makes it much easier to see the value in the solution that EOS provides instead of focussing on what it doesn’t. The mastermind behind EOS going by the name of Dan Larimer is known for creating the Graphene framework that laid the groundwork for projects such as BitShares and Steem. Both implement a peer to peer network that is tailored towards supporting a decentralized economy of economic agents that are aligned towards a common goal trough financial incentives built in to the protocol.
In short, BitShares is a peer to peer network that implements banking services, comparable to SWIFT or credit card networks like VISA, where a transparent currency exchange allows to convert any fiat currency into any other currency right at the moment a value transferring transaction is performed. The transfer and exchange functionality is provided by the network, while the interfaces have to be implemented by external parties which have an interest to provide the tools to make the system usable at e.g. a point of sale.
Steem is a blogging platform that distributes money from advertisers to creators. The platform itself is paying for its own hosting trough inflation, but apart from that it implements a zero margin business model.
In this line of thinking I assume that EOS should be regarded as a general purpose hosting platform like Heroku. Not everyone can provide hardware for running applications on EOS. It’s not a single entity like Heroku either. It’s an exclusive circle of politically legitimated entities that market their resources to application developers using the mechanics of the EOS Protocol. That doesn’t have to bother the developers who simply upload a service that is executed by the nodes and paid for by inflation.
To prevent malicious usage or waste of resources, the developers will have to reserve a share of the network capacity by staking EOS tokens. Instead of spamming the network, the developer gets incentivized to grow the value of the network and his stake by adding useful services. The developer doesn’t need to own the EOS token and they don’t spend in the process. They just need to convince someone with a lot of EOS to support their project by staking on their behalf.
The end user of the service will not see any difference, while the operator saves operational costs. Instead of being faced with the question why a blockchain is particularly useful for a certain project, we now have a good argument for every project to consider blockchain instead of traditional hosting. In theory it will be possible to support the cost structure of a freemium business model at the infrastructure layer, by offering features that are provided by the EOS network for free and charge for premium features that incur hosting or other costs by the nature of their implementation.
Freemium Business Model
freemium business model 800x349 - EOS vs Amazon’s AWS | A New Way of Hosting
The only downside is that signing up users comes with a cost in the form of network fees to create wallets. However, the service developer usually faces user acquisition costs anyways and should therefore be able to factor the costs for account creation into the marketing budget. This also gives an additional incentive to integrate new services with existing services as the accounts can be reused. Batteries for simple applications are included, but the EOS Platform is not yet a turn key solution for every aspect. As time goes on, more features like storage for user uploads will be integrated to the free tier of the EOS network. It will be the task of block producers to fill in the blanks.
If you think about the early days of Twitter you might remember that only text was stored in tweets and everything else was provided by external services that hosted images or mini applications e.g. to create polls. These external services reused the Twitter accounts as login. Different developers designed interfaces like smartphone apps or IoT sensors for Twitter’s API. The result was a huge ecosystem of tools that Twitter successfully destroyed through restricting access to their API down the road. Alternatives appeared that tried to fund the core functionality through subscriptions, but didn’t survive due to lacking support from users.
With EOS, the core functionality of a service like this could be both free of charge and open for everyone to extend. Developers can rest assured that their return on investment in services around the protocol will not be at the mercy of management decisions of the API provider. While the API developer will still be able to manage and change the rules, the fundamental difference lies in the incentives as his/her return on investments comes from a growing ecosystem that results in the value appreciation of his stake.
The scope of this is broad, as in essence every web based product out there is a social network. It consists of a user profile, a messaging component and a user interface that provides means for content creation and content discovery. This basic principle describes everything along the lines of Amazon, the New York Times, and Tinder.
While the capacity of the EOS network is growing, the resources that can be utilized with a constant amount of stake will grow as well. According to Moore’s Law it can be assumed that the available capacity will roughly double every 18 months. Therefore, developers can reduce the amount of EOS that is staked for resources or use their principal to support more services. This gives venture capital funds a natural way to exercise their business by providing additional value to the projects they incubate.
The beauty of crypto networks is that they pay for their own bootstrapping. This is one of the best reasons why a startup would choose to build on a blockchain. In the end every business has to make money by selling product(s)/service(s) to users, but bootstrapping a startup in this way can greatly influence the probability of success. In foresight this may lead to a shift from AWS size hosting centres to run virtual containers for every startup separately, to data centres of the same size that host a single EOS node as a shared runtime. It’s really just a shift of the payment model which allows to save costs through optimal utilization of resources and competition among hosting providers for the cheapest infrastructure to match the task at hand.

The information provided is not to be construed as financial advice in any shape or form. You are strongly advised to conduct your own research before investing. As an investor, you are solely responsible for your actions. I cannot be held liable for any losses you may make. This information is simply my view and opinion on the subject.

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