This article is a response to an article in the Wall Street journal article published on December 19 (https://www.wsj.com/articles/chasing-the-next-bitcoin-investors-shell-out-700-million-for-coins-with-no-purpose-1513602000).

Dear Editors of the Wall Street Journal,

An article written by Paul Vigna and Peter Rudegeair (WSJ, Dec 19th­), argues that the EOS token “has no purpose”, and that its success is an example of the ICO bubble. This claim is based on a literal interpretation of language in the token purchase agreement, which is intended to protect investors who may not fully understand the value proposition of EOS. However, the authors never provide evidence that this claim is true in any meaningful sense. Investors who have poured billions of dollars into the platform obviously think otherwise for a reason. So, what is this reason? The article itself begs this question, yet the authors fail to answer it, save for generally blaming “the hype.” It is true that the ICO market is in a bubble, and that many of the "alt-coins" are suspicious or outright fraudulent. It is part of my job as a data scientist at Consensys to identify and predict these bad actors. This intimate knowledge allows me to say this: despite its large number of powerful and vocal opponents, and admittedly "scary" ICO design, EOS is not peddling fish.

Vigna and Rudegeaire’s article went so far as to say that “The EOS tokens have no actual relationship to the software.” This is factually incorrect. There is a clear mechanism in place that connects the software to the tokens called “the snapshot,” which dictates that EOS tokens will translate to a share of any platform launched with EOS.io software. After having reached out to the authors of the article to discuss this point, I should clarify that it is indeed accurate to say there is no legal connection; the snapshot is not a legal mechanism but rather a piece of code. But this is exactly the core of my present argument: having no legal guarantee of value and having no value are vastly different things. When pressed on why this statement was not properly qualified as being purely legal, the authors declined to comment further.

The authors also stated that “[Block.one] won’t build or develop the platform itself, leaving that task for unrelated third parties. Whether any groups would do that is unclear.” But the EOS.io software platform is exactly what Block.one is building, developing, and testing. It is the relatively simple task of deploying this platform as a live blockchain that is left to third parties. Given the size of interest in this project, it is all but guaranteed that such a blockchain will be launched.

Let’s call the most popular deployment of the EOS.io software the “Widget” blockchain, launched by Widget, Inc. The Widget blockchain will have its own token (“WID”) representing a share of its network capacity. Legally speaking, this token will be completely separate from Block.one and the EOS token. Unlike the EOS token, the allocation of these coins will not be executed directly by Block.one, but rather by Widget Inc, using EOS.io’s software. Still, contrary to the authors’ assertion, the WID token and the EOS token will be related: as long as the Widget blockchain uses the allocation suggested by the EOS.io software, the value of the EOS token is based in part on the future value of the WID token.

Seeing no legal guarantee that Widget, Inc will actually use the EOS.io software verbatim and respect the allocation of tokens from the EOS ICO, Vigna and Rudegeair stop their analysis. As I will explain below, there are still other, extralegal ways of assuring this positive outcome for ICO investors, if you're willing to look deeper. The WSJ's superficial analysis demonstrates a fundamental misunderstanding of the cryptocurrency movement. The world that visionaries like Dan Larimer, Vitalek Buterin, Satoshi Nakamoto, and others are building is one in which value is derived not from legal guarantees and trust in corporations, but rather from market forces and self-governing communities. Dan Larimer does not want you to trust him; his job is simply to design a system where the incentives are aligned correctly among the various parties, and then allow the value of the system to emerge organically.

This misunderstanding is further revealed when the authors quote Dan Hoskinson: “[Dan Larimer] has never finished a project”. This is also inaccurate: Steemit, Dan Larimer’s creation, continues to evolve and thrive in his absence, as he originally intended. The fact that Dan Larimer no longer works with them directly is not a sign of abandonment, but rather a testament to the robustness of the platform he has created, which can continue to operate without his oversight.

When asked to comment on this quote via Twitter, Hoskinson evaded my question with another: “Has Steemit overtaken Facebook and Reddit?” This is surely a much higher bar than merely "completing" the project. Hoskinson never directly confirmed the validity of his quoted statement. This evasiveness begs the question pf whether Hoskinson has a bone to pick with Dan Larimer. And the answer is emphatically yes. Incredibly, the authors failed to qualify that Hoskinson is the current CEO of IOHK, considered the main competitor to EOS. This was a major journalistic oversight.

Finally, let's address the proverbial elephant: can we assume that Widget Inc, the most popular EOS.io software-based blockchain, won’t simply reject the suggested allocation, flying in the face of ICO investors? The answer is most likely yes. But don't take my word for it: such a “dishonest” blockchain called Xenon has already been implemented using EOS.io technology. Xenon attempts to decouple the EOS.io technology from the EOS ICO by instead allocating shares of the Xenon network (symbol: XNN) to large Ether and Bitcoin holders. This was a clear attempt from a small but vocal subset of the crypto community to expose what they (along with Vigna and Rudegeaire) thought was a fatal flaw in the EOS ICO: that it is based on open-sourced software. However, over the past five months, XNN token has not increased in value, while the EOS token has doubled many times over. Rather than demonstrating a weakness in the EOS ICO’s design, they proved that a legal guarantee that the EOS coins will have value is essentially irrelevant. The market has decisively chosen to support the ICO investors, making the connection between the EOS tokens and the eventual EOS blockchain a self-fulfilling prophecy.

Just how much value the EOS tokens have is certainly up for debate. For one, it is not clear how much demand there will be for the network, or what its capacity will be. But the argument of Vigna and Rudegeaire -- that the token may have no value whatsoever -- is based on an overly simplistic and reactionary analysis that ignores several important factors.