What Is Tezos (XTZ)?
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What Is Tezos (XTZ)?

Tezos, an exceptional blockchain endeavor, distinguishes itself with an intrinsic governance mechanism to facilitate network upgrades. Rather than relying on hard forks, modifications to the Tezos blockchain are initiated through code proposals put forth by Tez (XTZ) holders who possess a specific quantity of this digital asset. These proposals undergo a voting process among peers, rendering network advancements seamless within the self-amending framework of Tezos.

Basics

Within the cryptocurrency industry, the domain of smart contract platforms thrives with fierce competition and an abundance of participants. As the industry seeks solutions to its current technological challenges, various approaches have emerged to meet the soaring demand for robust underlying smart contract frameworks.

Amidst this dynamic landscape, Tezos has positioned itself as a prominent contender, garnering recognition in the blockchain realm. Its growing and vibrant global community has embraced Tezos as the bedrock of its endeavors. At the core of Tezos' ecosystem lies the Tez (XTZ) token, fueling diverse activities such as decentralized finance, art, gaming, and more.

What Is Tezos (XTZ)?

Introducing Tezos, an innovative blockchain that facilitates the seamless operation of decentralized applications and smart contracts. Originating from a proposal in 2014, the Tezos mainnet appeared in 2018, swiftly gaining traction and emerging as a formidable competitor to the Ethereum network.

The Tezos ecosystem flourishes with the support of numerous global entities, most notably the Tezos Foundation. This non-profit Swiss organization spearheads initiatives to enhance awareness and foster widespread adoption of the Tezos blockchain.

In a remarkable feat, Tezos orchestrated a momentous fundraiser in July 2017, amassing an impressive $232 million, thus solidifying its position as one of the most substantial fundraising endeavors in the history of blockchain projects. Notably, despite the challenging bear market conditions, the Tezos mainnet launched successfully in 2018 and thrived.

How Does Tezos (XTZ) Functionate?

Understanding the intricacies of Tezos' operational framework unveils a distinctive landscape. Smart contracts on Tezos leverage the Michelson programming language, unique to the platform, while developers often employ higher-level languages like SmartPy, Ligo, or Archetype, which compile into Michelson. Transacting on the network entails the utilization of gas, seamlessly converted into fees denominated in the Tezos cryptocurrency, Tez (XTZ).

Tezos operates on a Proof of Stake (PoS) blockchain, employing a Liquid Proof of Stake (LPoS) variant exclusively tailored to Tezos. Remarkably, stakeholders with a minimum of 6,000 Tez are eligible to become delegates, affectionately called "bakers." These bakers are responsible for crafting, validating, and disseminating new blocks within the Tezos blockchain, in addition to endorsing blocks generated by their fellow bakers. Alternatively, token holders who lack the minimum 6,000 Tez or prefer not to configure the requisite hardware can delegate their tokens to a trusted baker.

The Significance of Tezos (XTZ)

Tezos sets itself apart through several notable distinctions. It stands out with its on-chain governance and self-amendment mechanisms, uniquely designed to foster consensus surrounding blockchain upgrades while evading the necessity for hard forks. This diverges from the well-known example of Bitcoin's hard fork, resulting in the emergence of Bitcoin Cash. Tezos aspires to avert such scenarios.

Enabled by its self-amendment capacity, Tezos demonstrates remarkable adaptability in navigating the ever-evolving regulatory and technological landscape. Upgrades can be seamlessly implemented, allowing for uninterrupted progress and even enabling the replacement of fundamental components like the consensus mechanism, as demonstrated in the Ithaca 2 protocol upgrade. In contrast, Ethereum 2.0 represents a substantial leap for Ethereum, requiring the establishment of a novel and distinct blockchain infrastructure.

A Paradigm of On-Chain Governance 

The governance of Tezos operates through an on-chain model that enables the implementation of upgrades. Delegates initiate blockchain modifications by proposing code updates, subject to voting by stakeholders who determine the approval or rejection of these changes.

The on-chain governance model empowers the Tezos ecosystem, allowing significant upgrades to transpire whenever delegates endorse proposed blockchain amendments. These transformations encompass a broad spectrum, ranging from systemic adjustments such as fee amendments and baking processes to foundational alterations like the consensus algorithm. This fosters a vibrant community where discussions thrive, shaping the system's evolution and refining rules for enhanced performance.

A prime example of the system's agility occurred in April 2022, as Tezos introduced the Ithaca 2 update. This significant upgrade replaced the existing Tezos consensus algorithm with "Tenderbake," a pioneering algorithm inspired by Tendermint, renowned for its implementation within the Cosmos protocol. In another notable development, the Delphi update in November 2020 significantly reduced gas consumption by approximately 75%. Such advancements hold immense potential for DeFi advancements on the Tezos blockchain, exemplifying how on-chain governance enables nimble adaptation and the integration of groundbreaking ideas across the blockchain industry.

Use Cases of Tezos (XTZ)

Tezos, akin to its blockchain counterparts, offers expedited verification of financial transactions, minimizing reliance on trust. In a noteworthy development, Gendarmerie's cybercrime division (C3N) embraced Tezos in September 2019, pioneering the adoption of this technology among governmental agencies to validate their judicial expenses.

Tezos further facilitates the transfer of ownership for traditionally illiquid assets, including real estate, art, and jewelry. For instance, MountX, an innovative company, harnesses Tezos's power to tokenize real estate ventures in Mexico.

A thriving NFT ecosystem has emerged within Tezos, capturing the attention of prominent brands such as Manchester United, Ubisoft, Redbull Racing, McLaren, and many others, further amplifying the platform's appeal and potential.

Securely Storing Tezos (XTZ) Tokens

Tezos (XTZ) token storage utilizes well-established wallet options, including software wallets like Trust Wallet. Additionally, leveraging third-party software integration can securely store Tez on reputable hardware wallets such as Ledger and Trezor.

Conclusion

Tezos, although not experiencing the same level of network activity and DApp fervor as Ethereum, remains far from lacking in merit. Distinguished by its unparalleled approach to dynamic upgrades and on-chain voting, Tezos emerges as a remarkably agile platform, positioning itself advantageously for long-term success amidst its competitors.

Tezos has managed to captivate an authentic community of visionary individuals who highly value the platform's decentralized nature, energy efficiency, and user-centric ethos. Through its proven utility and unwavering resilience, Tezos establishes itself as an alluring proposition for governmental entities and industry stakeholders.

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