Historically, blockchain projects (such as Bitcoin and Ethereum) have left important decisions up to a small number of individuals who were directly implicated in their development. Though their solutions are undoubtedly more decentralized than what financial institutions have to offer, a certain degree of centralization is still observed. Core development teams and miners mostly got to govern and decide in which direction their project was going, largely leaving actual users and developers out of the loop. This led several blockchains to experience some setbacks and, in many cases, in the creation of forks to accommodate varying philosophies.
Tezos XTZ sees the concept of network in a completely different way, and believes in involving stakeholders in the decision-making process, without their opinions ever having to result in a hard fork. Let us explore this French blockchain through our Tezos guide.
Tezos (XTZ): Introduction and definition
Tezos, whose token is designated by XTZ, represents an open-source, self-upgradable blockchain platform created to host various assets and applications. In the Tezos model, primary protocol-related upgrades are made based on the stakeholders’ input. They can approve or disapprove all important changes proposed by developers for the network. The same goes for transaction broadcast and validation, which obey to a fully decentralized process to reach consensus. The idea is to create an incentive and to encourage stakeholders to truly participate in a more democratic version of blockchain technology, which is undoubtedly the main benefit of Tezos.
Tezos started out as a promising project and received much attention when husband and wife Arthur and Kathleen Breitman, along with a team of several bright developers, put their vision together. When they held the ICO for their completely innovative decentralized, security-oriented and self-regulated smart contract platform in 2017, the project raised the equivalent of $232 million: the largest amount any crypto-endeavor had ever collected at the time. Yet, despite this initial enthusiasm, the project ran into some problems, with the Swiss foundation in charge of managing the ICO funds locking up the assets and causing the participants much frustration. Indeed, the Tezos XTZ model did not rely on any pre-mined ERC-20 tokens to issue out to investors. Instead, it was understood that the reward would only come once the final product had gone live. This idea was to discourage investors looking for a quick profit, and to favor those who truly believed in a different future for blockchain technology. Despite a few mishaps, the (somewhat ironically labeled) self-governing project finally came to be.
The Tezos XTZ platform now combines on-chain governance with a self-correcting protocol and supports Turing complete smart contracts. As we write these lines, the XTZ token is valued at $3.07, and has a market cap of 13.
How does Tezos (XTZ) work?
The Tezos architecture relies on an agnostic native middleware called Network Shell. This system allows the Tezos blockchain to be completely modular and upgradable. In a typical blockchain, three layers participate in keeping the system in full working order. To give peers and nodes a means of interacting, most blockchains have a network layer. The transaction verification protocol is held by the transaction layer, and the consensus is governed by an eponymous layer as well. In the Tezos XTZ model, transaction protocols and consensus fall under the same layer: the blockchain layer. As for the communication between network and blockchain, Network Shell makes it completely seamless, allowing for changes to happen democratically.
But what makes Tezos so special are the concepts of on-chain governance and self-amending. Typically, a blockchain upgrade takes place by means of either a soft fork, or a hard fork. To put it simply, a soft fork blockchain update modifies the characteristics of the chain but is backwards compatible (you can still use previous functionalities). With a hard fork, on the other hand, there is no going back. These forks allow blockchains to keep moving forward and to accommodate new ideas, new technologies, and even new philosophies, should the need arise. However, some changes are not welcome by all members of the community, while others would love to implement even more. This is why Tezos XTZ allows its community to vote over a proposed amendment to avoid having to resort to a hard fork. On-chain governance is simply the voting approach, while self-amendment is actual upgrading process. The blockchain evolves smoothly with developers submitting upgrade proposals along with an invoice for their work, as getting compensated provides a strong incentive. These proposals then go through a testing period. The community gets to try out the protocol, make suggestion for possible improvements, and eventually vote to approve or reject the proposal. If legitimately accepted, the new version is implemented for good. This allows the process to be gradual and integrative.
Why use Tezos?
Through its self-amending blockchain, Tezos (XTZ) provides a rewarding experience for its backers as they do not run the risk of seeing a hard fork negatively impact all their efforts. Truly decentralized, Tezos also relies on a dependable funding process where stakeholders provide funding only if they approve a proposal. As for the individuals and groups working to improve the protocol, they feel validated and supported, which inspires them to keep investing their time efforts into the project.
As far as practical uses of the Tezos XTZ blockchain go, the platform focuses on Dapp building and smart contracts, which no third party may ever take down or censor in any way. Complex mathematical procedures ensure the security of these applications.
It should be noted that Tezos’ intention is not to provide a real-world cryptocurrency. Instead, XTZ simply gives holders a means of interacting on the blockchain, which relies on a Proof of Stake (PoS) protocol. While some consider it one of the main drawbacks of Tezos, most see this peculiarity as refreshing in a context where many crypto projects seem to center around profit.
Some prominent Gitlab participants and other talented teams have contributed to the Tezos project. Its TZScan tool, for instance, was developed by the OCaml Pro team, and several universities across the globe directly participate as well.
How to buy Tezos (XTZ) on Bitit?
While mining is impossible due to the PoS protocol the project relies on, tokens are necessary to anyone wishing to play a part in it. Some users may be interested in delegating some of their tokens, but you can also buy them very easily from Bitit.
Unlike exchanges, Bitit provides a straightforward user experience akin to that of a standard online shop. Just browse the currencies or check conversion rates straight from the dashboard and order just as much or as little XTZ as you like using your credit or debit card, cash, or via a bank transfer.
As soon as your payment is processed, your coins are immediately sent to your compatible wallet.
How to store XTZ?
There are several solutions to choose from to store your XTZ securely. As ever, hardware options are the safest, and Ledger and Trezor are among the most widely recognized brands on the market. As for software alternatives, Tezos endorses Galleon Wallet, Kukai, ZenGo and AirGap.
Tezos news has been showing a lot of movement in the past couple of weeks, with its currency bordering on bullish patterns and exhibiting a growth of 26% and raising daily transactions. As always, only time will tell if the project has indeed set a new standard in the industry.