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Your guide to trading EOS

Capital.com's guide to trading EOS (EOS): everything you need to know on how to trade EOS
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Why is EOS important to traders?

EOS is the cryptocurrency that features on the EOS.IO public chain: a blockchain-based, decentralised system that allows the development, hosting and execution of commercial-scale decentralised applications, dApps, on its platform. Owned by block.one, EOS was launched by Dan Larimer. It is in the top 5 biggest cryptocurrencies, in terms of market capitalisation. What is interesting about EOS, is that its use is basically that it is needed to set up a server for the EOS.IO decentralised system, whereas bitcoin, for instance, was designed to be solely a digital asset. Due to this use for the coin, EOS is comparable to Ethereum, and is it’s main competitor (another cryptocurrency that’s use is to runs dApps on its platform). For this reason, people within the crypto community refer to EOS as a ‘utility token’. A utility token is a coin, in which owning it, gives its holders the access to services provided by the project. With the case of EOS, the coin gives access to the decentralised operating system. The value of a lot of cryptocurrencies is linked to the projects behind them, even if the project does not use the native coin by default.

EOS info

EOS trading hours

You can trade EOS CFDs on Capital.com 24/7.

How to trade EOS CFDs?

An individual has two options when trading in the cryptocurrency market. Firstly, they can buy actual cryptocurrency on exchanges, such as buying EOS on an exchange like Binance, so they own the EOS themselves. This is considered a long-term investment, as the individual is waiting for the price to rise significantly, so they can sell their crypto coins on an exchange. Alternatively, they can trade a contract for difference (CFD) on a particular cryptocurrency, and speculate on the price difference.  A CFD is a financial instrument, which is a contract, typically between a broker and an investor, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade. You can either hold a long position (speculating that the price will rise) or a short position (speculating that the price will fall). This is considered a short-term investment as CFDs are used within shorter timeframes. For instance, to trade EOS CFDs, you can speculate on the EOS/USD pairing.

There are pivotal differences between buying a cryptocurrency and trading a CFD in a crypto market. When buying cryptocurrency, it is stored in a wallet, but when trading CFDs the product is stored in your account, which is regulated by a financial authority. You are more liquid when you purchase CFDs because you are not tied to the asset, you have merely purchased the underlying contract. As well as this CFDs are a more established and regulated financial product.

What is EOS? What is cryptocurrency?

EOS is a utility token that provides access to the decentralised operating system, EOS.IO. Cryptocurrencies can be split into either: utility tokens; providing access to the services provided by a particular project, security tokens; something representing an underlying asset, or a payment token. A cryptocurrency is a digital asset conceived for use as a medium of exchange, which uses cryptography to secure transactions, control the supply of additional units, and corroborate transfers. In short, cryptocurrency is a decentralised electronic currency. Cryptocurrency is stored in a ‘wallet’, which can take various forms. For instance, EOS coins can be stored in an online wallet, or alternatively in an offline electronic wallet, and it can even be stored physically in hardware.

Why trade EOS CFDs with Capital.com

Advanced AI technology at its core: a Facebook-like newsfeed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative SmartFeed offers a range of materials to put him back on the right track. The neural network analyses in-app behaviour and recommends videos, articles, news to polish your investment strategy.

Trading on margin: providing trading on margin (up to 1:2 for cryptocurrencies), Capital.com gives you access to the cryptocurrency market with the help of CFDs.

Trading the difference: when trading an EOS CFD, you don’t buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the EOS price. CFD trading is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives.

All-round trading analysis: the browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.

Focus on safety: Captal.com puts a special emphasis on safety. Licensed by CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.

History of EOS

EOS chart

The EOS.IO platform was developed by the firm block.one and released as open-source software on June 2018. Block.one supported the EOS.IO blockchain with over $1 billion in funding from the token sale. Ultimately, block.one raised over $4 billion to support the blockchain during the Initial Coin Offering (ICO). An ICO is a method of crowdfunding projects in the cryptocurrency community.

FAQ

Before buying EOS, you will need a place to store it. This is what a wallet is for, and it consists of two elements: a private key and a public address. A wallet requires a private key, specific to the individual, that enables access to the EOS address stored in the wallet, which is also the public key. The wallet is what enables EOS, or any cryptocurrency, to be a secure medium of exchange. Essentially, people can send EOS to certain wallets using the public key, which only the individual can access with their private key. Some individuals choose to keep their coins in their wallet provided by their cryptocurrency exchange, due to the fact that a lot of exchanges have mobile apps that allow people to easily buy, sell and spend cryptocurrencies.

Cryptocurrency exchanges or online wallets are far from immune to the dangers of cybertheft. The infamous case of the Mt Gox bitcoin exchange highlights this. Historically, Mt Gox was the largest global exchange for bitcoin, until it declared bankruptcy in 2014 after its security had been compromised. Mt Gox had 850,000 bitcoins, valued at $450 million in February 2014, before their exchange was emptied by hackers. It is believed that the private keys of Mt Gox’s digital wallet were stolen from as earlier as 2011. These risks are avoided when trading EOS CFDs because you do not need a wallet.

A ‘bubble’, in market terminology, is where the price of an asset far exceeds its intrinsic value. For instance, the dot-com bubble that occurred between 1995 and 2001, is a prime example, where information technology industry firms saw their stocks rise, merely because of the market sentiment around that particular industry, irrespective of their profits or chances of succeeding. This market then crashed in March 2000.

The problem here is that it is hard to determine the value of cryptocurrency to begin with. Although a lot of investors are holding cryptocurrencies as if they were equities, they are not. Yet they do not particularly act like currencies either, which makes comparisons to currency valuations difficult.  However, with any new technology, caution is advised. It could well be the case that the valuations of bitcoin or ripple are not overvalued, and that the bubble, if there is one, is represented by the various new cryptocurrencies that are being driven by market sentiment. Arguably, this is comparable to the dot-com instance, where stocks like Amazon were not overvalued, but others like Pets.com, which went from IPO to liquidation in 268 days, clearly were. So, it seems that only time will tell whether the market is overheating, but in either case, there are options to trade using CFDs to take both long and short positions.

From late 2017 to early 2018, there was a surge in the price of bitcoin (reaching $20,000 per bitcoin), followed shortly behind by other cryptocurrencies. The market then crashed between January and February 2018, and bitcoin free fell, dropping 65% in value. Consequently, most other cryptocurrencies crashed as well. So there clearly was a bubble in the crypto market. The question that this begs is whether there still is one. The value in most cryptocurrencies is derived from their potential; how they could be used to advance society in the future. Without institutional acceptance however, the potential value, will remain merely potential, but whether this implies that cryptocurrencies are overvalued is another question.

A utility token is one which provides access to goods and services offered by a project. During an Initial Coin Offering (ICO), utility tokens provide access to future goods and services, and are used as a means of generating funding. Utility tokens can also be used as a type of discount or premium access to the goods & services of the project. EOS is a utility token that provides both bandwidth and storage on the EOS.IO blockchain.