What is Tezos (XTZ)?
Tezos (XTZ) describes itself as a “self-amending crypto-ledger” and is a novel proof of stake (POS) cryptocurrency that offers advancements on both bitcoin and Ethereum protocols. Focused on security and simplicity in mind, Tezos is programmed in OCaml, a computer language that is dedicated to speed, unambiguous syntax, and semantics, which helps to assure programs developed on top of it are accurate and not prone to hacking events. It makes use of Turing complete smart contracts to assure that advanced transactions are conducted securely and efficiently.
History of Tezos
Tezos was co-founded by Kathleen and Arthur Breitman in 2017. The Breitmans retain ownership of the Tezos code through a Delaware-based company named Dynamic Ledger Solutions. The Tezos ICO ran from July 1st – July 13th, 2017 and collected a total of 65,681 bitcoins and 361,122 ethers, raising a total of $232 million, making it one of the most successful ICOs of all time.
On June 30th, 2018, Tezos launched its main platform for beta testing, announcing that the final version of the network would be ready for launch later in the year. Starting as an Ethereum-based token, Tezos tokens are currently being redeemed and transferred over to its main platform, where an initial ten billion tokens were created.
How Tezos Works
Although Tezos uses a Proof of Stake algorithm to implement cryptographic security, its most advanced feature is that it allows for self-amendment, meaning that its software protocol can suggest changes contributing to its performance enhancement. These changes are only implemented after being voted upon by members (“stakeholders”) of the network. It features a block time of about one minute and rewards those staking coins in their wallet with additional coins, the amount proportional to that being staked by the wallet. The initial coin generation rate will be roughly equivalent to an interest rate of 33% per year.
Like Ethereum, Tezos uses smart contracts to execute advanced transaction functionalities; namely the creation of in-platform tokens and language associated with programs built on the platform’s API. Unlike Ethereum, Tezos imposes a hard cap on the length of time for which a smart contract can be executed in order to reduce burden placed upon its blockchain and the miners. The Tezos API is tailored to host banking and finance specific DApps with an extra emphasis on security and reduction of chance of programming error.
Why Would I Want to Buy Tezos?
In an attempt to build a new type of blockchain that carries with it the best of bitcoin, Ethereum and Proof of Stake architecture, Tezos offers the following advancements in cryptocurrency:
- On-Chain Governance: the Tezos protocol offers a formal process through which stakeholders can efficiently govern the protocol and implement future innovations.
- Security: the Tezos blockchain was designed to facilitate formal verification, which helps secure smart contracts and avoid buggy code.
- Novel Proof of Stake Mechanism: Tezos’ unique proof-of-stake consensus algorithm gives every stakeholder the opportunity to participate in the validation of transactions on the network and be rewarded by the protocol for doing so.