Tezos (XTZ), a decentralized blockchain powered by smart contracts and one that describes itself as a “self-amending” network that can upgrade itself without a hard fork, was founded by former Google X and Waymo engineer Arthur Breitman and his wife Kathleen Breitman, who is a former employee of Bridgewater Associates and R3. Tezos was built to avoid the pitfalls of Bitcoin and Ethereum through adaptability and community-focused innovation.
This article will guide you through Tezos’s history, what it is, how it works, how it is revolutionizing the DeFi space, the XTZ token, and its use cases. If you have decided to invest in Tezos, this article also provides the step-by-step procedure for buying XTZ tokens.
What Is Tezos (XTZ)?
Tezos is an open-source blockchain, similar to Ethereum, NEO, and QTUM, designed to build and run smart contracts and decentralized applications (dApps) that are censorship-free. But what makes Tezos stand out from these platforms is that it is a self-amending cryptographic ledger that can expand as per the needs of the industry without having to hard fork into two different blockchains. The protocol is governed by its stakeholders. The ecosystem does not involve any mining as it uses a Proof-of-Stake (PoS) consensus mechanism.
History Of Tezos (XTZ)
Tezos was created by Arthur and Kathleen Breitman, a French couple, in 2014. Arthur was a former engineer at Google X and Waymo and went on to work at Morgan Stanley as a quantitative analyst, while Kathleen was an employee at the hedge fund Bridgewater Associates and R3, a software company. The couple reportedly had their first encounter at an Anarcho-Capitalist meetup in New York.
It was when Arthur was working at Morgan Stanley that he published a white paper outlining the concept of Tezos. In July 2017, Tezos Foundation, the Switzerland-based company headed by Swiss entrepreneur Johann Gevers, organized an Initial Coin Offering (ICO) for Tezos with the Breitmans, which became one of the most successful crypto ICOs to date. By January 2021, XTZ became the seventh-largest cryptocurrency by market cap.
Unfortunately, soon after the ICO was completed, Johann, being a member of the board, quickly shut the Breitmans away from Tezos’ assets. Since then, a fight to regain control began between the Breitmans and Gevers, attempting to dethrone Johann Gevers and dealing with no less than 4 class action cases. The control of the source code of the project was retained by the Breitmans through a Delvare-based company, Dynamic Ledger Solutions, but without the control of the ICO assets, this approach did them only little good.
After months of fighting to remove Gevers from the board of members, Johann added a new board member to help him be in power. Unfortunately for him, that move was short-lived as the entire foundation board resigned, including Gevers, in February 2018.
Finally, with the doors open for the Breitmans after all the initial hurdles, Tezos grew to become one of the most cemented, reputable, and respectable blockchains in the industry. Over time, it has achieved impressive technological milestones and is one of the most popular cryptocurrencies for those who are seeking to invest and stake to become a validator and earn an income.
How Does Tezos (XTZ) Function?
The Tezos blockchain offers many features that are commonly provided to cryptocurrencies. It enables developers to use its software to run custom smart contracts and design new decentralized applications (dApps) that are meant to replicate real-world products and services. Yet, its voting features required a different design. To be specific, the Tezos blockchain can be broken into the following layers:
- Shell: This layer is responsible for interpreting transactions and administrative operations on the Tezos network. it consists of blockchain elements that enable the nodes to transmit the chain data to new nodes and the versioned state of the ledger that abstracts the fetching and replicating of new chain data to the validator.
- Protocol: The protocol layer encompasses the self-amending properties of Tezos, which is possible without affecting the network and consensus layers beneath it, as Tezos aims to upgrade its blockchain without triggering a hard fork.
- RPC Layer: A part of the node infrastructure that allows third-party applications to interact with the node is called the RPC layer. It establishes the connection between the user and the Tezos blockchain.
- Modular Architecture: As the core functions of Tezos are abstracted from one another, an on-chain voting procedure can amend the economic protocol of the blockchain. The on-chain operations can change by switching between different protocol layers without affecting the operations beneath them.
All network activity and governance are decentralized, and the Tezos Foundation disowns any involvement in its operation. It supports the development of Tezos infrastructure and distributes grants and other funding to foster the adoption of the network.
$XTZ Tokenomics
$XTZ token, the native token of the Tezos blockchain, often referred to as “Tez“ or “Tezzies,” is designed to support and reward the operation and security of the Tezos ecosystem. Some of the key use cases of $XTZ are:
- Staking (Baking): $XTZ token holders can “stake” their $XTZ by participating in the network as “bakers”, as the blockchain uses a Liquid Proof-of-Stake (LPoS) consensus mechanism. Bakers are responsible for the creation of new blocks and securing the network. They receive staking rewards in the form of newly minted $XTZ tokens for their services.
- Delegation: XTZ holders can delegate their assets to other bakers, who stake the tokens on their behalf and earn rewards without running a Tezos node themselves.
- Inflation Funding: The ecosystem mints new $XTZ tokens as baking rewards, which causes inflation. However, the inflation is evenly distributed, as all stakeholders can participate in staking, aligning the incentives of token holders and network validators.
- On-chain Governance: $XTZ holders can participate in the voting on proposed protocol upgrades, and the amount of the $XTZ tokens they hold is proportional to the weight of their vote.
- Transaction Fees: $XTZ tokens are used as the payment method for transaction fees from bakers that come from the block rewards. However, the transaction fees on Tezos are comparatively low compared to networks like Ethereum due to its efficient consensus mechanism.
The tokenomics Tezos helps in the active participation in the network’s security and governance while also supporting the growth of an ecosystem for dApps.
Where And How To Purchase Tezos (XTZ)?
Here are some of the popular exchanges from where you can buy $XTZ
- Binance
- OKX
- KuCoin
- Bybit
- Kraken
Here is the step-by-step guide to buying $XTZ from exchange platforms if you planning to invest in it:
- Choose the exchange platform: Choose the exchange platform from where you wish to buy $XTZ and create a new account or sign in to an existing account and complete the required verification process.
- Select the token: Search for “Tezos” or “XTZ” and select your preferred trading pair.
- Enter the purchase amount: Once you have selected Tezos, decide how many tokens you wish to purchase through the exchange and enter the amount.
- Proceed with the purchase: Verify your purchase details before confirming the transaction.
- Tokens will be deposited in your wallet: Once the order is processed, the exchange will deposit the $XTZ tokens in your wallet.
Conclusion
Tezos (XTZ) is an open-source blockchain that is built to facilitate user participation in decentralized finance (DeFi), decentralized applications (dApps), and NFT projects. Tezos blockchain consists of layers such as Shell, Protocol layer, RPC Layer, and Modular Architecture layer, each with its own special functions.
The native token, $XTZ, enables holders to stake, delegate, and use it as gas fees within the ecosystem. The token can be purchased from popular exchange platforms like Binance, KuCoin, Krake, Bybit, etc.
It is crucial to do the necessary diligence before investing in Tezos (XTZ) or other cryptocurrencies. Seek professional help from experienced market analysts and take feedback from financial advisors.