What is Tezos (XTZ)?

In this article, we will mention “bakers” and explain what baking is and for what purposes someone would bake. This is not an article about baking a loaf of bread or a cake, in this article, we’ll be learning about one of the cryptocurrencies with a groundbreaking idea that was considered a game-changer when it first launched in 2014.  If you haven’t already guessed, we’ll be talking about XTZ (Tezos), this unique idea, and how tezos work. So, keep on tight, and let’s begin.

What is XTZ (Tezos)?

XTZ

Tezos was set out in 2014 to create a cryptocurrency that has a blockchain, not like other blockchains and quite unique at its core. Tezos (XTZ) was created in 2014 to create what it likes to call a “self-amending” blockchain. But what is a self-amending blockchain, and how come it was a new idea.

Tezos started with a revolutionary idea that set a new record when raising funds for the project. But more on that later. Let’s find out what Tezos (XTZ) is and what is so special about it?

The core concept of Tezos is pretty simple. Tezos would allow anyone who holds XTZ tokens (Tezos’s native token) to vote for possible rules and platform changes. Once a change in the platform was decided, the software would automatically update itself to make sure the changes have been set on the blockchain. But why is Tezos (XTZ) like this?

The idea behind this is to prevent the Tezos blockchain from being a hard fork with two distinct prices. A hard fork is when the blockchain splits into two different blockchains, after the hard fork has happened, different information will be saved on each of the forked blockchains. For example, Bitcoin (BTC) has experienced a hard fork already, Bitcoin Cash (BCH) is Bitcoin’s hard fork, Bitcoin Cash (BCH) then also had its hard fork later on. Bitcoin cash (BCH) blockchain has experienced a hard fork, and the blockchain has split into two, one Bitcoin Cash (BCH), and the other Bitcoin SV (BSV).

The real reason for a hard fork is a divide between what two major groups and nodes of a blockchain want. In Bitcoin’s case, for example, those agreeing to a hard fork wanted a replica of Bitcoin (BTC) that was faster to transact, and with lower transaction fees. 

What are Bakers? What do they have to do with Tezos (XTZ)?

Since the Proof of Work (PoW) consensus algorithm has been issued as harmful to the environment, a lot of projects seem to be using Proof of Stake (PoS) instead. Tezos (XTZ) is also a cryptocurrency that uses this more environment-friendly method to confirm the transactions and to fairly reward those involved. 

Stakers are called bakers. Who is a staker?

In a blockchain such as Tezos which works using a PoS (Proof of Stake) consensus algorithm to confirm and make transactions and save the information on blocks, stakers play a major role. Anyone can be a staker, to do so, you have to have some XTZ tokens, then lock them up for as long as mentioned in the contract, and not move those tokens, to help secure the Tezos blockchain. 

Bakers are locking their XTZ tokens by staking them, helping to secure the blockchain, validating and confirming transactions like what a miner would do, in return they would receive some XTZ tokens.

Stakers (Bakers) in a blockchain that uses a PoS algorithm, are like miners in a blockchain that uses a PoW consensus algorithm. Meaning the stakers act like nodes in the network.

Should you consider investing in XTZ?

Should I invest in XTZ? Is Tezos (XTZ) a good investment? The short answer is Yes. 

But before investing in a cryptocurrency or any other material or medium for that matter, you should consider a lot of things to make sure it’s worth the money and time you’re putting into this.

There is a unique idea behind it:

The purpose of building Tezos (XTZ), the idea behind it comes from a very unique perspective. Tezos is meant to be a self-amending blockchain, which means it’s set to self-upgrade in the future. The process is quite simple in theory, people who own tezos (XTZ tokens) can vote and participate in the upgrade of the blockchain in the future. After it is decided which route the next upgrade is gonna take, another smart contract takes care of applying the upgrades. 

Tezos’ smart contract language is well suited for financial agreements:

Tezos (XTZ) claims that their Michelson smart contract language is especially helpful for the purpose of financial agreements. It’s said that the Michelson smart contract language is safe in a way that funds won’t get lost or freeze and not get to their destination because of the bugs in the code. 

In August, three Swiss firms, Incore Bank, Incata and Crypto Finance Group, announced that they would be using Tezos’s special language to develop DAR-1 tokens. Incore bank also announced that they would enable and offer staking services for the Tezos network. These firms are going to use Tezos to avoid money laundering and also to help with the governance. 

Q&A

Is Tezos better than Ethereum?

Tezos has the capacity of developing sooner than Ethereum 2.0. If you’re a developer who wants to build a dApp that can’t be shut down, you should consider Ethereum, and if you’re thinking more about scalability and being quick you should consider Tezos (XTZ). As you can see they have different use cases and there is no reason for them to not be able to coexist alongside each other as the crypto industry has room for every useful project.

Is Tezos built on Ethereum?

Tezos is a smart contract platform built with formally verifiable code and integrated self-governance. Tezos is really similar to Ethereum, they both have similar principles but Tezos (XTZ) is written in a different language which is said to be more secure. If someone wants to build an app that doesn’t shut down, they build it on Ethereum. But if the developers are looking for scalability and fast transaction speeds, they will choose Tezos.

Is Tezos its own blockchain?

Tezos is a layer-1 blockchain network, Emmy, which is XTZ’s own Proof of Stake (PoS) consensus algorithm. To develop smart contracts and dApps on XTZ two programming languages can be used, Michelson which is a low-level language, and Liquidity which is a higher-level language that compiles to Michelson. Tezos is a self-sufficient blockchain that needs no one to upgrade it. Staker’s vote on the update they want to see and once it’s decided the update is done by the smart contracts.

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