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Tezos is a blockchain network that’s based on smart contracts, in a way that’s not too dissimilar to Ethereum. However, there’s a big difference: Tezos aims to offer infrastructure that is more advanced — meaning it can evolve and improve over time without there ever being a danger of a hard fork. This is something that both Bitcoin and Ethereum have suffered since they were created. People who hold XTZ can vote on proposals for protocol upgrades that have been put forward by Tezos developers.
This open-source platform bills itself as “secure, upgradable and built to last” — and says its smart contract language provides the accuracy that is required for high-value use cases. According to Tezos, its approach means that it is futureproof and will “remain state-of-the-art long into the future,” meaning it can embrace developments in blockchain technology.
The technology underpinning Tezos was first proposed in a white paper that was released in September 2014. After a series of delays, the Tezos mainnet launched four years later.
Tezos Key Points
What Makes Tezos Unique?
Although staking is common across blockchains, Tezos has a unique twist on this process. Participants can get involved with the network’s governance through “baking,” where they effectively stake 8,000 XTZ. This creates a financial incentive to act honestly.
Bakers are then tasked with voting on proposed changes to the blockchain’s code in a four-step procedure that takes approximately 23 days. Proposals that receive support from the vast majority of participants are put through their paces on a testnet for 48 hours and are fully implemented if they are backed by a super-majority.
Tezos is also unique because of how it has started to be used by high-profile businesses. In September 2020, it was announced that the French banking giant Societe Generale planned to use this blockchain for experimenting with a central bank digital currency.
Big cryptocurrency exchanges such as Binance and Coinbase have also unveiled support for Tezos staking, meaning users can receive rewards based on the XTZ that they hold. This is not a feature that’s seen too widely across digital assets.
Self-amendment allows Tezos to upgrade itself without having to split (“fork”) the network into two different blockchains. This is important as the suggestion or expectation of a fork can divide the community, alter stakeholder incentives, and disrupt the network effects that are formed over time. Because of self-amendment, coordination and execution costs for protocol upgrades are reduced and future innovations can be seamlessly implemented.
In Tezos, all stakeholders can participate in governing the protocol. The election cycle provides a formal and systematic procedure for stakeholders to reach agreement on proposed protocol amendments. By combining this on-chain mechanism with self-amendment, Tezos can change this initial election process to adopt better governance mechanisms when they are discovered.
Proposed amendments that are accepted by stakeholders can include payment to individuals or groups that improve the protocol. This funding mechanism encourages robust participation and decentralizes the maintenance of the network. Fostering an active, open, and diverse developer ecosystem that is incentivized to contribute to the protocol will facilitate Tezos development and adoption.
Smart Contracts & Formal Verification
Tezos offers a platform to create smart contracts and build decentralized applications that cannot be censored or shut-down by third parties. Furthermore, Tezos facilitates formal verification, a technique used to improve security by mathematically proving properties about programs such as smart contracts. This technique, if used properly, can help avoid costly bugs and the contentious debates that follow.
Store & Use
Holding Tezos tokens (“tez”) enables one to interact with the Tezos blockchain. There are many wallets with which to store and use tez. Wallets listed below have undergone at least one independent external security audit.
Always remember: if you do not control your private keys, you do not control your tokens. Every user should make sure to exercise extreme care and take all available safety precautions when entering private key information anywhere. Any party or software, such as a wallet, that gains knowledge of private key information will have access to the tez controlled by the corresponding public key hash.
How Is the Tezos Network Secured?
Like other blockchains, Tezos uses a proof-of-stake consensus mechanism. Anyone can become a validator and contribute to the smooth running of the network by making a security deposit. To incentivize honest behavior, rewards are given to those who work in the best interests of the blockchain — and those who act dishonestly risk losing their stake altogether.
Where Can You Buy Tezos (XTZ)?
XTZ, otherwise known as “tez” for short, can be purchased from most major exchanges — including Binance, Coinbase and others. Trading pairs unite XTZ with fiat currencies, as well as other cryptocurrencies such as Bitcoin. If you’re looking to convert fiat into Bitcoin, you can read a comprehensive guide here.
Why Choose Tezos
Secure, Institutional Grade Smart Contracts
Tezos is designed to provide the safety and code correctness required for assets and other high value use cases. Its native smart contract language, Michelson, facilitates formal verification, a methodology commonly used in mission-critical environments such as the aerospace, nuclear, and semiconductor industries.
Upgradable to the State of the Art
Tezos’ modular architecture and formal upgrade mechanism allow the network to propose and adopt new technological innovations smoothly as they emerge. These aspects, combined with Tezos’ on-chain invoicing mechanism, enable the protocol to remain the state-of-the-art long into the future — without sacrificing community consensus.
Open Participation and Incentive Alignment
In Tezos, all stakeholders may participate in network upgrades by evaluating, proposing, or approving amendments. Unlike in Proof-of-Work and other Proof-of-Stake networks, all stakeholders can help to secure the network (via baking or delegating), and avoid being diluted by inflation.