What is Tezos?
What is Tezos and how is it challenging Ethereum for the title as the number-one blockchain for decentralised apps (dApps)? Find out in our complete guide.
What is Tezos?
Tezos is a fully decentralised, open-source blockchain that powers decentralised applications (dApps) and seeks to “address key barriers facing blockchain adoption to date”. What does Tezos list as these key barriers? Smart contract safety, upgradability, and open participation. On the latter barrier, Tezos aims to give all holders of its XTZ native coins a say in the network’s future direction. Meanwhile the modular nature of Tezos’ blockchain architecture makes it easier to upgrade features without sacrificing the so-called “community consensus”.
Who created Tezos?
Tezos was originally founded by husband and wife, Arthur and Kathleen Breitman. Although the vision for Tezos was originally Arthur’s, Kathleen came on board to help develop the project from 2014, alongside a core of developers. The Breitmans boast many years of experience in financial services and fintech. Arthur, a computer scientist and mathematician, had worked for the likes of Goldman Sachs and Morgan Stanley, while Kathleen too had worked in senior positions for Bridgewater Associates and R3 respectively.
Arthur Breitman had long been fascinated by the meteoric rise of Bitcoin as the world’s original cryptocurrency. However, he was also struck by its network’s rigidity, which resulted in hard forks like Bitcoin Cash occurring. The Breitmans set out to develop a new blockchain protocol, called Tezos, which would incorporate an “on-chain governance” mechanism, requiring all protocol amendments to be voted on by Tezos (XTZ) coin holders.
The Tezos Foundation was eventually formed and in 2017, it launched one of the most successful initial coin offerings (ICOs) in the cryptocurrency industry to date. An eye-popping $232 million was generated in the space of a fortnight, with investors permitted to invest using Bitcoin (BTC) or Ethereum (ETH).
Shortly after the close of its hugely successful ICO, the Tezos Foundation was hit with back-to-back lawsuits. Furthermore, the project’s founders, Arthur and Kathleen Breitman, fell out with the President of the Tezos Foundation, Johann Gevers. Mr Gevers was criticised for failing to release the funds from the ICO to enable the Breitmanns to accelerate the project. Gevers eventually left the Foundation by mutual consent, allowing the ecosystem to progress at pace following its beta launch in June 2018.
How does Tezos work?
At the heart of the Tezos ecosystem is its on-chain governance, which enables all stakeholders to have a say in the governance of the Tezos protocol. If a developer proposes a change to enhance the Tezos blockchain in any way, all holders of XTZ coins are eligible to vote on the proposal. If the vote is approved, the change is deployed on its test platform and voted on again before its launch onto the Tezos main net.
The main benefit of on-chain governance is that it embraces innovation. Developers can design and suggest new ideas to improve the Tezos protocol and users of the ecosystem can take part in a democratic vote on its future.
Another unique feature of the Tezos ecosystem is its smart contracts. The Tezos blockchain is like Ethereum in that its developers can create and execute smart contracts, as well as dApps via the Tezos protocol. The protocol also uses its own native smart contract language to improve the security and reliability of its code. The Michelson language is the brainchild of Tezos’ in-house developers to oversee a process known as ‘formal verification’.
Formal verification involves mathematical algorithms that verify smart contracts and mitigate the risk of vulnerabilities and bugs in the code that executes them. Smart contracts on the Tezos ecosystem are increasingly being used for interactions and deals involving real-world value and assets.
There are three protocols that form the bedrock of the Tezos ecosystem:
Network Protocol The Network Protocol oversees the integrity of the network, aiding user connectivity, downloading the state of the blockchain and communicating new validated blocks on the network.
Transaction Protocol The Transaction Protocol oversees the validity of all transactions on the Tezos blockchain. This protocol maintains an up-to-the-second record of all blockchain transactions, including peer-to-peer interactions and activities involving dApps on the Tezos blockchain.
Consensus Protocol The Consensus Protocol helps the ecosystem to reach consensus on any proposed upgrades or alterations to the Tezos protocol, as voted on by XTZ stakeholders.
How is Tezos (XTZ) created?
As Tezos adopts a Liquid Proof of Stake (LPoS) protocol, all available XTZ coins have already been mined and are in circulation. The maximum circulating supply of XTZ coins is a shade over 766 million. The Tezos protocol currently releases 80 new XTZ coins per block every 60 seconds.
The overall value of XTZ coins is based on the success of its network and the organisations that use Tezos to tokenise their assets. The primary role of XTZ is to power and operate the Tezos network, with stakeholders given voting rights on the future of the platform.
Can you mine Tezos (XTZ)?
It’s not possible to mine for XTZ coins because Tezos uses a LPoS protocol to verify transactions on its blockchain. Instead, you can only purchase XTZ tokens if you wish to become a stakeholder in the ecosystem.
Individuals with at least 8-10,000 XTZ coins can become full nodes in the Tezos ecosystem. Nodes commit to staking their XTZ tokens to help power the Tezos ecosystem. This process is known as ‘baking’. In return for baking your XTZ tokens, you can receive annual interest worth around 6% on your XTZ coins – significantly more than most high-street savings accounts at present. Those that don’t have enough XTZ coins to be full nodes in their own right can also delegate their coins to other nodes and receive similar rewards.
Tezos price: How much is XTZ worth?
The value of XTZ coins has been on something of a steady upward trajectory over the last couple of years. Upon its launch, the value XTZ fell from $4.42 in June 2018 to lows of $0.42 by December 2018. Since then, the trendline has been largely positive.
During the COVID-19 pandemic, there was significant volatility in the price of Tezos. Around the time of the UK’s first nationwide lockdown, one XTZ was worth $1.67 and it soared to $4.19 by August 2020, before falling again to $1.80 by November 2020.
2021 has proven to be the ‘breakout’ year for Tezos however. It has been one-way traffic for the price of XTZ, reaching new all-time highs of $7.63 in April 2021. The value of XTZ survived the lawsuits taken against the Tezos project and has since gone from strength to strength, underpinned by its values of on-chain governance and innovation.
What is the price of Tezos (XTZ) today? Check out our Tezos currency page to get real-time price charts of XTZ’s price movements across hourly, daily, weekly monthly, yearly and all-time periods. You can use our graphs to compare Tezos’ meteoric rise in 2021 with other leading altcoins too.
What is a Tezos (XTZ) wallet?
There are two types of wallets for cryptocurrencies like XTZ – cold and hot. Cold wallets, also known as cold storage, enable cryptocurrency owners to store their crypto assets ‘offline’ by housing their access keys and codes on USB stick-style devices. So long as you look after your cold wallet device and don’t misplace it, your keys and codes should be impenetrable and inaccessible to the likes of cyber-criminals and fraudsters. The most popular cold wallet solutions for housing XTZ and other altcoins include the Ledger Nano and the Trezor Model T.
‘Hot’ cryptocurrency wallets are those stored online or via desktop or mobile devices. Although these tend to be more accessible and user-friendly, they are connected to the internet 24/7 and are therefore more vulnerable to hacks and data thefts. Fraudsters that can gain access to the public and private keys of your wallet can transfer your crypto assets without you knowing.
How to buy Tezos (XTZ)
Thinking of buying some XTZ coins, known colloquially in the crypto space as “Tezzies”? You’ll be pleased to know that Tezos is one of the most rapidly embraced coins among cryptocurrency exchanges. The most reputable exchanges in the sector, such as Coinbase, Binance and Kraken, all accept transactions for XTZ.
Once you have chosen your preferred crypto exchange that supports Tezos, you’ll need to see which cryptocurrency pairs it offers. On rare occasions, it might be possible to use fiat currencies like USD or GBP to buy XTZ outright. However, the majority of XTZ transactions are crypto-crypto pairs. Your wallet will need enough Bitcoin, Ethereum, Litecoin or whichever crypto pair you prefer to buy the equivalent amount of XTZ.
Note: When trading a cryptocurrency for XTZ on an exchange, make sure that XTZ is listed first in your chosen trading pair e.g. XTZ/BTC, XTZ/ETH or XTZ/USD for fiat-crypto transactions.
How to sell Tezos (XTZ)
The simplest way to sell XTZ coins is with the same cryptocurrency exchange you used to buy them. You can sell Tezos using the same crypto-crypto or crypto-fiat pairs listed on your chosen exchange. Just remember, when selling your XTZ on an exchange, ensure XTZ is listed second in your chosen trading pair e.g. BTC/XTZ, ETH/XTZ or USD/XTZ.
Reasons to be excited by Tezos
Formal governance Unlike Bitcoin and Ethereum which don’t have systems of formal governance, Tezos embraces democracy within its ecosystem. In blockchain protocols without such formal governance, new proposals and recommendations from developers are reviewed by a small core of gatekeepers rather than the entire community. Tezos co-founder, Kathleen Breitman, describes this as an “off-chain methodology” that drives “contentious hard forks” like Bitcoin Cash (BCH).
Flexibility to adopt new features inspired by other blockchain protocols Tezos is regularly launching new upgrades to its protocol, bringing with them a string of new capabilities. The fifth and latest upgrade, ‘Edo’, incorporates a new smart contracts feature enabling multi-signature contracts, whilst accelerating the process of creating secure smart contracts. This is part of the Sapling protocol that has been embraced by Tezos, which initially proved successful with Zerocoin and has more recently been adopted by ZCash. It proves that Tezos’ self-amending blockchain has the agility to keep pace with almost any innovation in the crypto space.
A crypto-based project with unlimited potential Tezos is a blockchain protocol with the ability to adapt and evolve its core protocol. New features are being added all the time, improving the usability, privacy and security of stakeholders. Tezos’ founders believe that innovation can coexist with security as the “default”.