Tezos XTZ is a cryptocurrency project created to address a major problem that has shaken the entire cryptocurrency industry. The DAO (decentralized organization) hack shocked most people, as hackers stole approximately $50 million from the network. Although they solved the problem by incorporating a hard fork, people became wary of investing in cryptos.
Tezos dispelled this fear by presenting a network capable of dealing with such issues. It divided the cryptocurrency industry into two major governance segments, allowing its users to participate in the project’s future growth. As a result, it quickly gained popularity after its release.
What is Tezos XTZ?
Tezos XTZ is a decentralized network on which users can build decentralized apps and smart contracts. It follows a similar pattern to Ethereum because it uses a PoS (Proof-of-stake) consensus protocol for transaction processing. Similarly, it has a distinct governance model that allows XTZ holders to vote for or against various proposed decisions.
As a result, it promotes network transparency and democracy. The best part is that it does away with the need for forking. The issue with forking is that it frequently divides stakeholders into two categories because some disagree with others. The same thing occurred with Ethereum, Bitcoin, and other cryptocurrencies.
Tezos XTZ History
In 2014, Arthur Breitman and his wife, Kathleen, presented Tezos with the assistance of a group of core developers. They launched the cryptocurrency offering in 2017 to raise around $20 million. Surprisingly, it received around $232 million in investment within two weeks since the idea was both unique and appealing.
The company hired the best developers to build the blockchain from the ground up to fulfill the expectations of the investors who have expressed interest in their concept. However, some investors lost faith when the tokens were not released on time. The mainnet was launched in September 2018 following successfully checking the beta network in June 2018.
Advantages and Disadvantages of Tezos XTZ
Tezos uses less energy than Bitcoin, Ethereum, and other crypto networks that employ the Proof-of-work (PoW) consensus mechanism. It allows most users to participate in block creation by allowing users to delegate their coins to bakers if they lack the required tokens for staking.
It maintains a distinct form of democracy by enabling users to vote on network decisions. You can also use this blockchain network for smart contracts, NFTs, and other Defi applications.
The disadvantage of this blockchain network is that it competes with larger cryptocurrency projects such as Cardano, Ethereum, Solana, and Polkadot. As a result of the small number of users, it poses a potential security risk.
How Does Tezos Work?
Tezos is an open-source crypto network that achieves consensus through a proof-of-stake consensus protocol. The Tezos network is divided into two parts.
This network component manages transactions and administration tasks. The updates are also added automatically based on community members’ votes.
You can utilize this network section to send proposals for the project’s future growth. XTZ tokens, unlike Ethereum and Bitcoin, cannot be mined. Users can, however, continue participating in the block-creation process and receive XTZ tokens as a reward.
To participate in the block creation, users must stake 8,000 XTZ tokens. Within the network, these participants are known as Bakers, and the process of creating blocks is known as Baking. By staking more XTZ tokens, users can increase their chances of earning rewards.
However, if they validate the incorrect transactions, they may lose their staked tokens. If someone does not have enough XTZ tokens to participate in the Baking process, they can delegate their tokens to a trustworthy Baker. The Baker divides the reward among the delegators based on their share.
Delegators are unable to vote on network changes. They can, however, change their baker if they disagree with the baker’s decisions.
The Tezos network’s native token is XTZ. It has a market cap of $1.23 billion and a circulating supply of 913 million tokens. In terms of market cap, it is one of the top 50 cryptocurrencies.
Holders of XTZ tokens can send these tokens to one another to purchase various products and services. They can also use XTZ tokens to pay for gas. Users can stake their tokens if they hold more than 8,000 tokens in their wallet, or they can delegate tokens to a trustworthy baker if they do not.
XTZ token utility
XTZ token holders can propose changes and vote for or against them. There are four stages to the voting process.
XTZ token holders can propose changes for the network’s future growth. Members of the community vote on the proposals based on their comprehension. The proposals that have been chosen advance to the next stage.
At this stage, community members vote again on the proposals that passed the previous stage. If more than 80% of users vote in favor of the proposal, it advances to the testing stage.
After making the necessary changes to the network’s temporary fork, the initiatives’ effects are monitored for 48 hours. It is advanced to the next stage if it does not harm the network.
The Bakers vote to implement the proposal once more. If more than 80% of participants vote in favor of the changes, they are implemented on the primary blockchain.
Tezos has a solid reputation in the crypto community because it split the blockchain industry in two by allowing community users to engage in governance. It has a fast transaction speed and very low fees. Don’t hesitate to contact us if you require additional information about the Tezos network.