Since Bitcoin’s launch in 2009, a variety of altcoins followed its lead to revolutionise monetary transactions. The crypto sphere is teeming with more than 4,000 digital coins in circulation that you can invest in including Tezos cryptocurrency. So, what does this digital coin have in store for crypto investors like you?
Tezos is a blockchain network that’s linked to its native token XTZ, commonly referred to as Tez or Tezzie. The network is energy-efficient because unlike other cryptocurrencies in the market, it relies on a proof-of-stake model. This means it limits the energy consumption of the blockchain.
The network was designed in 2014 by Arthur Breitman, an engineer at a technology development company called Waymo LLC. Inspired by Satoshi Nakamoto’s anonymity, he released both the Tezos position paper and white paper under the pseudonym LM Goodman.
With the help of his wife Kathleen Breitman and French tech firm OCamlPro, they were able to develop the software. By 2017, Tezos Foundation, the non-profit funding Tezos blockchain, was able to raise US$232 million making it one of the biggest initial coin offerings (ICO) in the market at the time.
What sets Tezos cryptocurrency apart
Tezos is different from other cryptocurrencies in the market. For one, the network isn’t based entirely on mining the native coin XTZ but centres its services around the proof-of-stake consensus algorithm.
The network is a decentralised ledger that allows users to have optimal control over how they use the blockchain. Similar to Cardano, Tezos is capable of running complex smart contracts as well as decentralised applications (dApps) which are programs built on top of the blockchain.
Some cryptocurrencies experienced forks during their lifetime. This means that a blockchain diverges into two separate paths when a block is mined. Bitcoin’s blockchain split led to the creation of Bitcoin Cash (BCH) and Ethereum’s similar fate led to Ethereum Classic (ECH) both of which tried to upgrade the blockchain.
Tezos’ self-amendment allows the blockchain to update without having to hard fork the network. Moreover, these upgrades will also ensure that the network will run smoothly in the future and adapt to the changing demands of the crypto market.
The Tezos network has 7 approved proposals for the upgrade namely Athens, Babylon, Carthage, Delphi, Edo, Florence and Granada respectively. Recently, the blockchain went through the Florence update that increased the maximum operation size to 32 kilobytes and removed the test chain from future voting processes.
All stakeholders of the Tezos network have a say in upgrades and amendments on the blockchain. They participate in an election cycle that provides a formal and systematic voting procedure about a certain amendment. The users reach an agreement on what upgrades will be implemented on the network.
Combining self-amendment and on-chain governance of the Tezos network allows the blockchain to have necessary updates that can help adapt to the needs of the users. This will also help the network in the future as the crypto sphere evolves and changes.
Smart contracts and formal verification
The Tezos platform allows users to create and build smart contracts as well as dApps without being shut down or censored by third parties. Through the network’s formal verification, the programs created on the blockchain will run smoothly. This avoids costly bugs on the code as well as a tighter security measure on the programs.
Unlike most cryptocurrencies on the market including Bitcoin, Tezos runs on a proof-of-stake consensus algorithm. This differs from proof-of-work because of the verification process.
Instead of miners competing with each other on mining the block first, the Tezos network allows users to become stakeholders and participate in the consensus.
These stakeholders have a chance to be selected as node validators in the blockchain. They’ll be responsible for checking the accuracy of the transactions and avoid double-spending.
How Tezos works
Baking Tezos blocks
Instead of the usual mining process, the Tezos network utilises baking on the blockchain. It’s similar to the mining process wherein a baker signs and publishes blocks to create and validate transactions. What makes it different is the stakeholders or bakers that the network allows to participate in with the proof-of-stake consensus protocol.
Bakers are a crucial part of maintaining the blockchain and are rewarded by the Tezos protocol for their contributions to maintaining the security and stability of the network.
Additionally, dishonest behaviour among bakers will be penalised by the protocol itself. A baker can lose their stake in the blockchain when proven to be dishonest in validating transactions.
Before a user can become a baker, they have to stake a minimum of 8,000 XTZ. Considering the current price of a Tezzie coin in the market, that will be around US$24,000. This can be too expensive for some users that want to be part of the baking process.
Tezos proposes an alternative option for users called delegating. This allows Tezos holders to delegate or lend their coins to other bakers for a higher chance of being chosen in the baking process.
Moreover, the income the baker makes from being a validator is shared with the delegator. To make sure that the baker can’t control or misappropriate the shared funds, the protocol ensures that ownership is retained by the Tezzie holder.
Bakers and delegators communicate through a chatbox hosted in Slack. You can request to join the chat when you visit the Tezos website.
Purchasing and storing Tezzie coins
Many crypto exchanges like Coinbase, eToro and Binance have Tezzie coins on their platforms. You can purchase these coins there when you create an account. Choose an exchange that will suit your investment or purchasing needs.
You can also store these Tezzie coins in hardware and software wallets including:
- Galleon Wallet
Tezos cryptocurrency: The future of altcoins
The biggest draw of Tezos cryptocurrency is its sustainability and blockchain upgrade promises. Similar to Cardano, the network’s blockchain technology aims to solve the scalability problems posed by its crypto predecessors including Bitcoin and Ethereum.
It also optimises the blockchain by allowing users to create smart contracts and dApps. Moreover, users have full control over how they program these features through the Tezos network. If these features are what you’re looking for in a cryptocurrency blockchain, Tezos is the right choice for you!