Tezos is one of the oldest and most famous blockchains and cryptocurrencies. Like all other blockchains, Tezos has a broad-term aim, and a more specific one. Tezos calls itself “the first self-amending blockchain”. In this article, we will explain how Tezos works and what self-amending means. Stay with us.
What is Tezos?
The first thing we have to mention about Tezos is that this blockchain also supports smart contracts, and it uses the proof-of-stake consensus algorithm. So, it is more scalable than Ethereum. Like a lot of other blockchains that have come after Ethereum and support smart contracts, Tezos has aimed at the scalability challenge of Ethereum by using proof of stake.
Besides being scalable, in its official website, Tezos defines itself with the following two features:
- Self-amendment: this feature allows Tezos to go through updates without being forked. It preserves the unity of the community, even after an update happens. It also reduces the executive costs.
- On-chain governance: all XTZ stakers can participate in the governance of Tezos. On-chain governance along with self-amendment lets Tezos change the voting process in case more efficient solutions are found.
With this introduction in mind, we can now investigate how Tezos works in more technical terms.
How does Tezos work?
Tezos has a multilayer design, and this design has an important role in this blockchain’s functions. It has a “network shell” that consists of different protocols. To better understand how the network shell works in Tezos, we’d better first go through different protocols all blockchains have. A blockchain generally consists of the following protocols:
This protocol determines how transactions are distributed between nodes all over the network. Some other tasks like downloading the blockchain, finding other nodes, and publishing the created blocks are also done by this protocol. In general, the network protocol contains most of the innovations and activities related to a specific blockchain.
The transaction protocol consists of all processes related to a transaction, from creating new coins, to transferring these coins using digital signatures. Changes to this protocol are usually possible through a soft fork.
In simple terms, this protocol determines the consensus algorithm the blockchain uses. Changes to this protocol are usually made through a hard fork. A hard fork divides the community of a cryptocurrency, so Tezos aims to solve this problem.
The network shell of Tezos combines the network protocol and the transaction protocol, and calls it “the blockchain protocol”. The blockchain protocol in Tezos can assess itself, and correct itself if needed. This self-amending feature is the most important feature of Tezos, and has many advantages including higher security and higher integrity.
Who created Tezos?
The whitepaper of Tezos was published in 2014 by Arthur Breitman. He published this whitepaper under the nickname of L.M. Goodman. He decided to run an ICO to gather enough funds for Tezos. This ICO was run in July 2017, and 232 million dollars was gathered. In June 2018, the Tezos foundation announced that all investors who participated in the ICO must pass KYC (Know Your Customer). This decision raised serious criticisms, and a lot of users disagreed with it. The first version of Tezos was created and backed by a company called Dynamic Ledger Solutions. Kathleen Breitman, Arthur Breitman’s wife, is now the CEO of this company.
The XTZ token; market cap and price history
At the time of writing, each unit of XTZ is being traded at $1.93. this coin’s all-time high goes back to October 2021 when its price went above $8. Tezos is thirty-seventh largest cryptocurrency by market cap. Its market cap is more than $1,750,000,000. More than 904,000,0000 XTZ tokens are in circulation now. XTZ doesn’t have a max supply, but its total supply is 926,305,993.
Like all other cryptocurrencies, you need digital wallets to store XTZ. Tezos has introduced 4 software wallets that you can use for this purpose. These wallets include:
- Galleon Wallet (macOS, Windows, Linux)
- AirGap (IOS, Android, Web)
- ZenGo (IOS, Android)
- Kukai (Web)
You can also use Ledger and Trezor (which are both hardware wallets) for storing XTZ.
Tezos is a well-known, relatively old cryptocurrency with its own strengths and weaknesses. It is a familiar name to cryptocurrencies’ early users and lovers. During these years, it has been able to preserve its position among successful cryptocurrencies, while not being among world’s top-10 cryptos. Have you ever invested in Tezos or made a transaction in it? How was your experience? Share your opinions with us.