Tezos is a scalable smart contract blockchain platform founded by Arthur and Kathleen Breitman. The network describes itself as a “blockchain designed to evolve”, and it’s capable of automatically upgrading without hard forks. The Tezos blockchain is governed on-chain by its users.
The Tezos ICO (initial coin offering) was one of the largest of all time, drawing in 66,000 BTC and 351,00 ETH within 13 days (approximately $232 million at the time). Despite running into a lengthy legal battle shortly after launching, Tezos is becoming increasingly popular for decentralised finance (DeFi), NFT minting and gaming. The language of Tezos – Michelson – is particularly suited to financial agreements, and the platform recently partnered with three Swiss financial firms (Crypto Finance Group, InCore Bank and Inacta) to create regulated financial products.
Tezos is now the official digital collectible blockchain for Manchester United, and the platform has attracted many alternative forms of NFT art products such as poetry, fiction, spoken word and more.
What makes Tezos unique?
Tezos is a user-governed decentralised platform whereby anybody who owns XTZ can vote on future changes within the network. The platform is capable of self-amendment, meaning once a consensus is reached, the software automatically updates the rules across all network nodes.
This structure eliminates the possibility of hard forks, giving users and developers a frictionless experience.
What is Tez (XTZ)?
Tez is the native digital currency of Tezos. The XTZ token is used to operate and maintain the Tezos network, and it can be spent, sold or traded like any other digital currency.
XTZ is an inflationary asset that has an uncapped token supply. The issuance rate is fixed at around 5.51%. The all-time high of XTZ is $12.19 but the price is approximately $1.1 at the time of writing.
Tezos holders can vote on network upgrades when they bake their XTZ.
What is ‘baking’?
Tezos’ proof-of-stake consensus mechanism is slightly different from its competitors. It uses a variation known as liquid proof-of-stake (LPoS), which enables holders loan their validation rights to other users without giving up ownership of their tokens. ‘Baking’ is the Tezos expression for ‘staking’.
When a baker stakes 8000 XTZ (known as a ‘roll’), they are permitted to operate a network node and earn a share of XTZ.
Users can stake smaller sums of XTZ through delegation, enabling them to participate in on-chain governance and validation rewards without staking the 8,000 XTZ required to make a roll. XTZ delegation is optional rather than required, which is why it’s referred to as liquid staking.
Any changes to the code voted upon by bakers undergoes a 23-day, four-step procedure before implementation.
Good to know
Tezos co-founder Arthur Breitman chose the name “Tezos” after writing a program to list unclaimed websites that could be pronounced in English.
Advantages of Tezos
- Forkless automatic upgrades give users and developers a frictionless experience.
- It’s extremely energy efficient, with an annual carbon footprint of just 17 people.
- There are flexible staking options, such as delegation.
- Low-fees make it a good option for NFT minting.
Disadvantages of Tezos
- XTZ is an inflationary asset, so it may not compete well with currencies like bitcoin (which has a decreasing inflation rate) in the long run.
- Mainstream adoption seems to be slower than other blockchains, potentially due to the legal complications following the ICO.
Where can I buy XTZ?
XTZ is smaller than Bitcoin, Ethereum and Cardano, but it is available to purchase on most major exchanges including Binance, Coinbase Pro, Kucoin, OKX, Kraken, Bybit and more. You can read a full list of exchanges that list XTZ here.
To buy XTZ, you will need to create an account on one of the listed exchanges. You will then need to verify your identity and deposit your local currency into your account to purchase the token. You will also need a wallet that supports XTZ, such as Kukai, Temple, Umami, Binance, Coinbase or Crypto.com.
If you purchase XTZ through an exchange such as Binance, the token will be automatically stored in your Binance wallet. If you purchase a large sum, it’s best to transfer your funds to a non-custodial wallet such as Kukai or Temple, or a cold wallet such as Ledger.
Our top 3 Tezos wallets are:
- Kukai (non-custodial, ease-of-use)
- Ledger X Nano (non-custodial, cold wallet)
- Temple (non-custodial, versatile)