A Healthy Pluralism in Crypto: Bitcoin, EOS, And IOTA

(image by Erbs55)

Since the publication of the Bitcoin whitepaper in 2008 crypto has afforded us a new perspective onto the fields of money, finance, investments, and computer technology. Now after ten years of crypto the community is experimenting with all of its aspects to see if they can be improved. It is through these experiments that we start to understand the nature of various different cryptos.

I do understand why some people become maximalists, i.e. strict fans of one crypto network only. However, I think without experiments we won't ever know which attributes are essential for which application. Therefore I am interested in many cryptos albeit for different reasons. My portfolio currently consists of Bitcoin, IOTA, and EOS. To me these three cryptos occupy spaces that are so distant from one another that they barely compete with one another.

Bitcoin

The book The Bitcoin Standard by Saifedean Ammous has had a profound impact on how I see Bitcoin. I highly recommend this book to anyone who plans to invest significant amounts of money into the crypto space.

My current state of ignorance makes me believe that Bitcoin is a true currency, ideally suited as a store of value and as a reserve currency. As Saifedean Ammous beautifully explained in the above book, only the people who hold their wealth in the hardest currency will be able to keep it over time. Bitcoin serves this purpose very well.

I have also gained a new perspective with respect to how I see Bitcoin's electricity consumption. I initially compared mining to other consensus algorithms that use less electricity like delegated proof of stake (DPOS). Now I compare the expense (some call it waste) of electricity for Bitcoin mining to the expense (some call it waste) of misguided investments made attractive by governments inflating their currency and pumping artificially cheap money into their economy. Businesses, buildings, and entire industries built on the foundation of delusionally cheap money will stop being profitable when the credit bubble bursts turning the investments into waste.

EOS

EOS is an important real-life social and financial experiment in the crypto space. For me, EOS is primarily a global computing platform. The fact that it is also a currency is a secondary requirement for its operation. So I see my EOS holding similar to an investment in a high-tech stock.

EOS achives exceptional throughput and almost instant finality by dedicating the entire computing power to operating the network rather than mining. For this to work EOS designed an incentive to block producers through inflation (block rewards) uses a voting process to balance the power of the block producers with that of token holders.

I see the potential of EOS in enabling apps that reduce both the cost of operation and the dependency on centralized data hubs like Amazon, Google, or Facebook. To me, EOS seems to run just fine on a technical level and the experimental aspect is in the governance and the allocation of the newly created tokens.

IOTA

IOTA has chosen a radically different design as its distributed ledger. They are on a path to a fully decentralized and permission-less ledger that operates without transaction fees. The IOTA tangle, in theory, can operate as many transactions as the network protocol permits. It is ideal for transactions that don't need immediate finality (the tangle offers eventual consensus). IOTA, in contract to EOS, seems to have a straightforward governance model with the experimental part being its technology and perhaps the unclear incentive of people to keep running full nodes without compensation.