Cryptocurrency Investor Gives “13 Reasons Why” EOS Is a Disaster

Esteemed blockchain investor James Spediacci took to Twitter on October 9th, 2018, and discussed numerous reasons why the cryptocurrency EOS is a “disaster.”

EOS has gotten a lot of attention and hype lately due to possibilities of Coinbase listing its token. The network is the world’s fifth largest with regards to market capitalization and boasts of the highest grossing ICO of all time – raising over $4 billion in its coin sale.

However, according to Spediacci, the cryptocurrency isn’t all that it’s meant to be, even with some calling it the “Ethereum killer.” While there are 13 reasons, they can be grouped into several common themes.

Concerns With The ICO

Tweets ten and eleven focus on this specifically, with reason ten criticizing how the actual funds were allocated. The ICO was uncapped, meaning it could have raised as much money as it wanted to.

10/ EOS had an uncapped ICO that raised $4B. The $4B raised went straight to a Cayman-based for-profit company called Blockone as profit, which may do whatever they want with it. 25% of the $4B EOS raised is going to be used for VC investing.

— James Spediacci (@JamesSpediacci) October 9, 2018

This is of concern since, despite popular belief, you can raise too much money.

An excess of abundance can make it tempting to not only siphon money for personal reasons but also prevents operations from operating as efficiently as possible.

For example, 25 percent of the funds will be used for VC investing, which is entirely irrelevant to the direct success of EOS.

Spediacci claims that in tweet 11, $20,000,000 was raised daily for a year thanks to arbitrage trading. Traders would participate in the ICO and sell tokens on the exchange the very next day, with bots that calculated how much ETH should be inserted in the ICO to be profitable. 

He also drew attention to EOS pushing its costs onto developers, charging them huge amounts for meager tasks. 

12A/ EOS pushes costs onto developers.
It costs $10 in staked EOS to onboard a new end user on to any EOS Dapp. If your Dapp gets 1M users, that costs you $10M. This costs $0 on ETH. This is a massive issue that EOS has not publicly addressed it at all.

— James Spediacci (@JamesSpediacci) October 9, 2018

Criticisms Regarding EOS itself

While there were a couple of reasons that talked about ICO, most of the reasons are targeted at various aspects of the cryptocurrency itself.

For example, thanks to the no transaction fee model EOS uses Spediacci talks about in reasons how the network activity can easily be faked. This could be used to dupe people or potential investors into thinking there is an active DApp ecosystem when really volume has been artificially inflated. Also, instead of a transaction fee, a 5 percent yearly inflation has been implemented with 21 individuals collecting .5 percent and another 100 collecting .5 percent.

Other topics in the Twitter thread discuss how the EOS constitution was discarded due to being “socially unscalable”, the network pushes costs onto developers, users don’t receive rewards for staking unlike every other PoS coin, and how EOS could be subpoenaed or otherwise shut down by governments making it not permissionless, immutable or censorship-resistant.

6/ An EOS BP is just a corporate-owned server. It can be shut down with a subpoena or by governments. EOS is not permissionless, immutable, or censorship-resistant.

— James Spediacci (@JamesSpediacci) October 9, 2018

While the entire cryptocurrency market is experiencing a sell-off currently, making now an attractive time to enter the market, these reasons may make users think twice before buying into EOS.