What is Tezos (XTZ) and How Does it Work? Don’t invest unless you’re prepared to lose all the money you invest.This is a high-risk investment and you should not expect to be protected if something goes wrong.Tezos is a blockchain network with a native cryptocurrency tagged Tez or XTZ — also called Lizzie.Like other crypto networks, Tez lets people use decentralized apps, NFTs, and DeFi services.
Most blockchains need “hard forks” to upgrade their rules.But hard forks can split the community when changes happen.So, in place of hard forks, Tezos lets token holders vote to pick upgrades.Users’ votes are weighed by how many XTZ they own — more tokens mean more voting power.
If a proposal gets majority approval, Tezos can transition smoothly to the new features without forking the blockchain.This on-chain governance avoids disputes and network splits when upgrading.Interesting Details to Keep in Mind – The Tezos blockchain network has a native virtual token called Tez, also known as tezzie.- The network allows people who own more tokens to have a higher stake in its governance, which is used when deciding on updates instead of hard forks.- Unlike Bitcoin, which uses energy-intensive mining, Tezos uses an eco-friendlier proof-of-stake system to confirm transactions on its network.- Tezos raised significant funds through a remarkably successful ICO, but legal issues and internal leadership disputes arose afterward.- The Tezos cryptocurrency reached $8 in October 2021 during a peak in the cryptocurrency market but later dipped below $1 by May 2023 during the crypto winter.History of Tezos Blockchain Tezos, created by Arthur Breitman and his wife Kathleen, started as an idea outlined in a white paper by Arthur in 2014.
Before Tezos, Arthur worked at Google X and Waymo, while Kathleen had experience at Bridgewater Associates and R3, a software company.The couple met at a meetup in New York centered around Anarcho-Capitalism.The Tezos project gained momentum when, in July 2017, the Tez Foundation, led by Johann Gevers, a Swiss entrepreneur, organized a highly successful initial coin offering (ICO).Tez labeled its ICO as a “donation” despite warnings from the US Securities and Exchange Commission about illegal securities sales.In just 13 days, it raised 66,000 Bitcoins and 361,000 Ethers, totaling $232 million.
However, there were power tussles and disputes over distributing the new XTZ tokens.Tezos founder Arthur Breitman battled Johann Gevers, the president of the Tezos (XTZ) Foundation.Gevers eventually resigned in early 2018 after months of power struggles.More delays happened when buyers had to undergo identity checks to get their XTZ coins.
By November 2020, over 94% of coins had finally been verified and distributed.Lawsuits and a $25 million settlement in March 2020 created additional turmoil for Dynamic Ledger Solutions, the Breitmans’ company.Through it all, the Tezos cryptocurrency (XTZ) saw many unpredictable price ups and downs.It began trading just under $3 in July 2018, dropped to a low of $0.36 by December of the same year, peaked at $8.55 in October 2021, and stood at $2.21 on June 9, 2022.Tez’s market capitalization reached $1.99 billion, placing it at 33rd among cryptocurrencies.
Tether’s announcement of deploying its stablecoins on the Tezos network contributed to a nearly 9% increase in Tez’s value on June 9, 2022.How Tezos Works? Tezos is a decentralized system that uses blockchain technology, much like Bitcoin and Ethereum.
Like Ethereum, Tezos is built to use smart contracts, and the name “Tezos” might come from an ancient Greek term for “smart contract” or, more likely, from a name generated by an algorithm created by Arthur Breitman.In the Tezos network, staking 8,000 Tez, called a roll, allows the owner to run a network node and earn a share of Tez rewards for validating transactions.Those with smaller amounts of Tez can be delegated to a network node, a baker.During protocol upgrade cycles, when more Tez is created to reward developers for adopted upgrades, baker stakes increase proportionately as an inflation adjustment.
Decisions about adopting protocol upgrades rely on bakers’ votes based on the size of their stakes.These changes are automatically applied throughout the blockchain.The final vote needs participation from owners holding at least 81% of the current coin supply.Tezos emphasizes decentralization, where all network activity and governance are handled without the involvement of the Tezos Foundation.
The foundation supports the development of Tezos infrastructure and provides grants and funding to encourage the network’s adoption.What Puts Tezos Ahead of Other Networks and Tokens Tezos stands out from Bitcoin and Ethereum because it has formal governance protocols.Unlike Bitcoin and Ethereum, which lack such systems, Tez has a clear way of deciding its future.Another unique feature is that Tez doesn’t allow its blockchain to be forked, a process where a new version of the blockchain splits off from the original.In a distinctive move, Tez adjusts the stakes of active participants when new tokens are created.
This uncommon approach is designed to encourage more people to get involved and play a role in the network.Tezos supporters also highlight its proof-of-stake model for validating the blockchain.This method is said to use less energy compared to the energy-intensive process of Bitcoin mining.
So, Tezos has unique governance features and takes an eco-friendlier approach in its blockchain validation process.Promising Outlook of Tezos We’re still uncertain if Tezos’s way of dealing with inflation can safeguard stakeholders in the long term by giving them more tokens.However, the network has some advantages with its governance protocols and protections against blockchain forks.Tezos technology came into the spotlight when [European central banks used it](https://xtz.news/en/adoption/tezos-technology-used-in-digital-euro-model-experiments/) in a recent experiment to check if a digital euro, a type of central bank digital currency, could be feasible.Tez has also caught the attention of One Of, an NFT platform backed by music producer Quincy Jones.But there’s a question about how well Tez will fare in other situations like cryptocurrency yields farming, which depends on the value of cryptocurrencies going up and robust financial markets.These scenarios might not be as resilient over time.Nevertheless, Tez has a potential for high growth if notable developments happen in its ecosystem.
But remember that [cryptocurrencies](https://techreport.com/cryptocurrency/new-cryptocurrency/) are extremely speculative, and their values are highly volatile.Whether you’re considering Tez for investment, it’s advisable to exercise due diligence and make the most of adequate risk management tactics..
