The Cryptocurrency Critics Called Useless Has Booked Almost 2000% Gains
When EOS started its ICO in June 2017, critics were quick to label it a “useless” token. The campaign of calumny on EOS’ uselessness was founded mainly around the fact that the EOS ICO set out to make a mark as the longest running ICO – spanning a space of one year across three phases.
Even respectable media outlets such as Wall Street Journal joined the rabble-rousing crowd vilifying EOS. The Journal derogatorily refers to Block.one, the founding company behind EOS as “a software startup that doesn’t plan to sell any software.” However, while critics are busy vilifying EOS, the token has succeeded in rewarding investors with almost 2000% gains as it gradually moves towards the completion of its ICO.
EOS’ uselessness was mostly sensational headlines
When critics raise the dust about the uselessness of EOS, they often refer to a disclaimer on its ICO FAQ that,
“the EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.”
However, anybody that has interacted with cryptocurrencies for some time knows that such disclaimers are standard issue. Disclaimers are very important in an uncertain regulatory environment to protect the company from distractive lawsuits that could derail its purpose. The disclaimers also help to satisfy regulatory requirement that EOS is not selling securities illegally.
Lastly, the disclaimer is functional since EOS tokens won’t be available in any form until after the ICO in June. In fact, Brendan Blumer, CEO of Block.one notes that “we felt an approximately year-long token distribution was the best method to ensure people receive fair market value for EOS Tokens”.
Hence, people raising the dust about how EOS is useless are either myopic or simply mischievous with an intent to discredit the EOS project prematurely and unjustly.
Here’s where the true value of EOS lies
The EOS token fundamentally a utility token and not a security token; hence, the token gives you access to the EOS platform and network but not an ownership stake in EOS. Given EOS’ plan to use a delegated proof-of-stake consensus protocol, the amount of EOS token that you own directly determines the amount of processing power that will be accessible to you on the EOS network. If you own 5% of the EOS tokens in circulation; you’ll be eligible to use 5% of EOS network CPU and storage capacity among others.
However, other than institutional investors and high-profile backers; it is doubtful that individual developers will own enough tokens to control a sizeable amount of processing power needed to create a DApp on the blockchain. Hence, most developers will either need to buy or rent tokens before they can have enough processing power to build their applications.
If the EOS platform grows to displace Ethereum as expected, there will most likely be a massive arrival of developers who will need EOS tokens to power their DApps. However, since new EOS tokens won’t be mined; the demand for EOS tokens will outplace the available supply; hence, the value of the tokens will rise.
Secondly, people who buy EOS during the ICO can also earn income on their EOS portfolio without necessarily selling their tokens. As the market for smart contracts and DApps continue to expand, some developers might need short-term access to the EOS platform. Such developers might then be willing to rent EOS tokens for a fee in order to muster the necessary Proof-of-Stake to execute on the network.