Tezos Cryptocurrency (XTZ) Overview

Satoshi Nakamoto’s ideas have inspired many, and in January 2022 the popular resource Coinmarketcap registered 12600 projects. Creative and ambitious blockchain engineers aim to surpass the patriarch of digital currencies, Bitcoin, by creating the perfect peer-to-peer network. Competition is fierce and eventually 80% of them will go bankrupt and leave the market, while the winners will become an integral part of the global financial system.

One of the ecosystems claiming to be a leader in the crypto industry is Tezos coin, a virtual coin that is not mined but “baked”. In this review, we will detail the features of Tezos (XTZ) cryptocurrency, an altcoin with a controversial and scandalous past.

What is Tezos (XTZ)?

Today, Tezos is a cryptocurrency that removes key barriers to blockchain adoption by the global community, its features:

Smart contract security. Institutional-level smart contracts are written in Michelson’s oriented programming language, which guarantees complete transaction security.
Long-term upgradeability. Tezos’ modular architecture and formal update mechanism allow the network to seamlessly offer and implement new technological innovations as they arise. These aspects, combined with Tezos’ factoring mechanism, allow protocols to address the problem of branching out without sacrificing community consensus.
Open participation. In the Tezos blockchain ecosystem, all stakeholders can participate in upgrading the network by evaluating, proposing or approving amendments. Unlike Proof-of-Work and other Proof-of-Stake networks, stakeholders can participate in protecting the network by “baking” new blocks or delegating their rights to other “bakers” while avoiding coin inflation.
So say the developers on the project’s official website, https://tezos.com. Let’s take a look at how Tezos coin differs from other popular cryptocurrencies, but first let’s take a short excursion into the history of its creation.

History of Tezos (XTZ) and development team

The spouses Arthur and Kathleen Breitman began preparations for the launch of the crypto network back in 2011. But they managed to form a full-fledged development team only 3 years later. After that, work on the project began to boil over, the technical basis was created, legal documentation and WhitePaper were prepared. Finally in May 2017 Tezos ICO was to be held, but just three days before the token sale was delayed. The ICO campaign took place in July 2017 and managed to raise $230 million. But the final product did not go public until the end of the year, causing panic among investors and a spate of lawsuits.

The beta version of the Tezos cryptocurrency platform, which appeared on 1 July 2018, did not save the situation. The coin was sold en masse to recoup investments, causing a collapse in the exchange rate. The developers did not set a sales limit for the tokens and during the Tezos ICO, most of them ended up in the hands of users.
The Tezos Blockchain Network (XTZ) team includes founders Arthur and Kathleen Breitman Kom and several programmers. Prominent figures such as major venture capitalist Tim Draper and Zcash CEO Zooco Wilcox have taken on advisory roles. The popularity of these individuals contributed to the success of the second round of initial coin sales in 2017. Tezos T2 Foundation president Ryan Jespersen. was formerly a regular contributor he went to great lengths to ensure the project did not collapse.

How Tezos (XTZ) works

Tezos is a blockchain network for running decentralized applications and executing smart contracts. Access to the software code of the system is open and every user can participate in upgrading the system.

Tezos’ multi-stage architecture allows the network to be upgraded without hard-forking. The system is divided into three modules:

Network module;
Transaction module;
Consensus module.

The blockchain ecosystem code is written in the Ocaml computer language, which enables independent protocol updates, each of the layers.

Differences between Tezos and Bitcoin and Ethereum

The XTZ cryptocurrency differs from the popular BTC and ETH coins in the following ways.

Consensus algorithm. Bitcoin blocks are generated on ASICs, the security of the network depends entirely on the miners. The etherium network is planning to end its coin mining on computational hardware and switch to PoS mining, but its concept differs from the baking used in the Tezos network by a high entry threshold.
Hard forks. Tezos blockchain completely solves the “hard forks” problem. Changes in any layer are adapted into the system and do not require branching the chain. In traditional ecosystems, such as Ethereum or Bitcoin, making significant changes is impossible. It would already be a different coin, detached from the underlying chain. Bitcoin Cash and Ethereum Classic are examples of this.
Smart contracts. The Tezos smart contract environment uses the Michelson programming language. Which enables mathematical verification operations to verify the software code.
Low commissions. Tezos implemented a Delphi upgrade last winter, which reduced the gas requirements for smart contracts by 75%. Faster transaction processing speeds coupled with low fees could force a certain percentage of Ethereum users and developers to switch to Tezos. The longer Ethereum remains congested, and the longer fees remain high, the more people will use other networks. This is why ETH developers are rushing to switch to PoS.
The formal verification process is used in banking, and in aerospace developments. BMW, Audi, Porsche and several other major car manufacturers have decided to use Tezos to verify the authenticity of embedded car software.

Tezos (XTZ) mining

The XTZ cryptocurrency is not earned by miners, but by bakers. The Liquid Proof-of-Stake (LPoS) consensus algorithm allows every coin owner to participate in baking, as the Tezos network calls the process of processing transactions and generating new blocks. To do so, a full node must be installed on a PC and an application must be submitted on the project’s official website. Bakers are rewarded with XTZ coins, and there are sanctions up to forfeiting their deposits if they try to cheat the system.

The LPoS mechanism is much like the Delegated Proof-of-Stake (DPoS) mechanism used by popular blockchain ecosystems such as TRON and EOS. But in the Tezos network, the validator for blockchain generation is randomly selected and 32 other nodes in the network validate the block. In Tezos, though, as in any PoS network, the chances of being selected depend on the amount on deposit. Everyone who wants to participate in baking, which is the name of the block creation process in this project, must have 8000 XTZ, which is 1 roll. The more rolls, the more chances that you will be chosen. The PoS and PoW systems are very similar in this respect. A large pool is more likely to find blocks than a single miner, likewise a validator, with a large amount in his wallet, will be more likely to get the right to form a new block.

But the validator may also be fined for bad work. Tezos has a system of guaranteed deposits. Those who sign a block have to freeze 512 coins and those who confirm it each 64 coins. The baker gets 40 XTZ and the verifiers get 1.25 XTZ each. It is only possible to get the guarantee deposit back after 5 cycles (about 14 days), provided that subsequent groups of validators confirm that the block is created correctly. A participant in the process who detects an attempt at malicious activity is rewarded with half of the confiscated deposit, the rest of the coins are burned.

How and where to buy Tezos cryptocurrency (XTZ)?

Tezos coin exchange is supported by 75 cryptocurrency exchanges, including well-known platforms such as:

Binance;
Bitfinex;
Coinbase Pro;
Kraken;
Huobi Global.

The main trading pairs XTZ/BTC, XTZ/USD, XTZ/EUR, XTZ/USDT are available on the Binance cryptocurrency exchange. Binance is an exemplary example of what real cryptocurrency exchanges should be like. It requires full identity verification and additional security to operate.

To see the full list of exchanges, and the current Tezos exchange rate, visit: https://www.coingecko.com/

Available wallets for Tezos (XTZ)

There is no official Tezos wallet app, all wallets are released by third-party developers. XTZ cryptocurrency is supported by:

  • Trust Wallet;
  • Ledger;
  • Trezor;
  • Galleon Wallet;
  • Tezbox;
  • Kukai;
  • Tezos CLI.

Large amounts of Tezos coin are best stored in Ledger or Trezor hardware safes. Only storage on Ledger entitles XTZ token holders to participate in backing.

Advantages and disadvantages of Tezos (XTZ)

Let’s first note the advantages of the ecosystem:

Self-regulating blockchain;
No hardforces;
High level of security.

Now let’s list the disadvantages:

Disagreements within the team;
Potential for inflation due to unlimited token issuance.

Ocalm’s unique computer language is not user-friendly, which holds back development. Lawsuits after the failed start-up ruined the project’s reputation. The problems began immediately after the ICO. The founders of the project expressed dissatisfaction with the human resources policy of the fund management and this led to a delay in the transfer of tokens to investors, due to which a scandal erupted. Eventually, the issue was resolved and the XTZ network was launched. The project managed to survive the winter and even made it into the Coinmarketcap top 100 ranking.

Conclusion

The long development and a much delayed launch lowered the competitiveness of the coin. However, in the new wave of the crypto boom, the coin tripled in value.

A contract has been awarded to issue tokenised assets to Swiss firms Incore Bank, Inacta and Crypto Finance Group. Some brands are even using Tezos to build their platforms and coin NFTs. XTZ cryptocurrency has growth potential, but if the developers don’t put enough effort into it, the project will get lost among little-known ecosystems and lose credibility.

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