The ultimate beginner's guide to trading EOS
Why Should You Buy EOS?
Using a blockchain approach, EOS is mined by its producers using the computing resources of the holders of the cryptocurrency. The smart contract platform that the developers put together for EOS means that they have been able to all but eliminate multiple transaction fees as well as to conduct huge numbers of transactions per second. This means that it is a very dynamic cryptocurrency from the point of view of those who wish to buy in and out of the various cryptocurrency markets rapidly.
Among the chief attractions of EOS in many owners’ eyes is the fact that it uses a Delegated Proof of Stake,
DPOS consensus mechanism. Because of this, blocks are added to the blockchain in groups. Specifically, they get added via an assortment of 21 block producers. The group is elected by EOS token holders to have the ability to vote. Crucially, their voting power is directly proportional to the amount of tokens each has in his or her possession.
Another reason that many people are interested in the potential of EOS is that it was designed to become the most powerful infrastructure for dApp
investors. It is perhaps for this reason that it was valued so highly after its first year of trading. The market capitalisation of the cryptocurrency went on to reach a peak of $16.9 billion at the end of April 2018 before, subsequently declining. However, this decline should be seen in the context of similar ones that came about for other, very well-known cryptocurrencies, such as Bitcoin
Since that time, trading in EOS has been much more stable, certainly by the standards of some of the more volatile cryptocurrencies on the market. It has remained in the top five or six cryptocurrencies and it is second only to Ethereum when judged according to its dApp adoption.
The Pros and Cons of Buying EOS
- Design: The design of EOS includes inbuilt functionalities that make it easy for developers to work with. This means that updates and improvements are inevitable.
- Transaction Speed: The speed of the EOS network is one of its main appeals. Due to its processing technology, transaction validation speed is thought to be in the millions per second.
- Voting System: The tokenised governance model means that anyone who has an EOS token can be eligible to take part in the vote that determines how the chain’s governance works. In short, the more tokens you hold, the more stake you have.
- Marketing: Finally, it was the stunning early success of EOS fundraising that makes it such an eye-catching prospect. Before EOS even launched in 2018, it had raised over $4 billion through an ICO (Initial Coin Offering) which gave investors tokens commensurate to the investment.
- Decentralisation: With just 21 block producers, you could not really claim that it is completely decentralised in the way that other blockchain currencies are. Compared to Ethereum, for example, it is hardly decentralised at all.
- Competitors: EOS also has several similar competing cryptocurrencies which – although they are not necessarily offering exactly the same thing as EOS – could be seen as a long-term threat. Apart from the aforementioned Ethereum, there are cryptocurrencies like Golem (GNT), Elastos (ELA) and NEO (NEO) to consider.
What are the Best Payment Methods for Buying EOS?
There are a number of trading platforms where you can purchase EOS from as little as £50. Nearly all of these will allow you to make a transfer in USD, GBP or other fiat currencies. These are likely to be among the most popular given the relatively low transfer charges that will apply. Conventional banking system payments are accepted by some of the trading platforms that offer EOS. As such, your main options are:
- Buying EOS with PayPal: The go-to payment method for many who want to buy EOS, transactions are further complicated by the need to buy in an alternative currency (i.e. Bitcoin). It is relatively easy, however, to then transfer the currency to EOS via an online exchange.
- Buying EOS with Cash: The most risky option, you would need to find an absolutely trustworthy seller and be willing to risk a loss if they’re not personally known to you. Established platforms, however, offer the opportunity to assess profiles and reviews before making your decision.
- Buying EOS with a Credit card: There may be restrictions imposed on credit card purchases and additional fees applied. It is always advisable to research your options fully before buying EOS with a credit card.
Buying EOS in Your Country
There are plenty of places English speaking investors can find to make an investment in EOS. Both exchanges and broker platforms are available to you for all of your EOS purchasing needs.
Besides the language, it is important to consider the rules and regulations of your country on cryptocurrency. While most states in the US and Europe have legalised digital currencies, they are still banned in several countries. Some of the countries with total ban on Bitcoin and altcoins include Morocco, Egypt, China and Columbia, among others.
Is There a Difference Between Buying and Trading EOS?
Because you cannot mine EOS of your own accord – you have to wait for the 21 block producers to announce new releases – many people purchase it for a longer-term investment. When you buy EOS, it is possible to sell it again at the current trading price but there are associated fees to pay when doing so. As such, waiting for the price to rise significantly is what most buyers of this cryptocurrency are interested in.
However, if you are looking to trade on the micro-trends that are associated with cryptocurrencies, then you can certainly find broker trading sites which will allow you to make multiple transactions in EOS, perhaps buying more and selling it again within just a few minutes, depending on the current market conditions. Most of these will allow you to only trade on the price of the coin, rather than owning the asset itself.
What Are the Fees Involved in Buying EOS?
When you buy EOS using a fiat currency, there may be multiple charges from your bank, the exchange/broker and from the blockchain network itself to consider. We’ve listed some of the core fee types that you’re likely to run into when buying EOS;
- Transaction fees: Literally the fees you are charged per transaction. This may be fixed or flexible, depending on the volume of the purchase and the exchange or broker you use.
- Deposit fees: This is a percentage of the total amount deducted as a processing fee when you first deposit money into an exchange or brokerage.
- Withdrawal fees: If you want to withdraw your EOS, you can expect to be charged for the privilege. These fees are mainly prevalent in the world of exchanges.
- Spreads and commissions: A spread is the difference between the buying price and the selling price that a trading platform uses to make their money. It’s essentially their own version of the transaction fee baked into every trade. Commissions are a rare fee, but are normally for bespoke brokerages to put a percentage amount on top of the price of EOS – paying them for servicing you as a client.
Broker Fees Vs Exchange Fees
Overall, most brokers and trading platforms don’t have limits on what you can purchase. This sort of flexibility comes at a slightly higher cost than that of an exchange, however, an exchange usually has demanding restrictions placed on you for a considerable amount of time.
If you’re looking to purchase a lot of EOS, then a broker or trading platform will be able to facilitate this – otherwise it could be months and months before you get the level of EOS you want through an exchange.