What is Tezos (XTZ) and How Did it Start?

Tezos (XTZ) is a blockchain network connected to a digital token commonly referred to as ‘Tez”. It is an altcoin where token holders get rewarded for participating in a proof-of-stake consensus mechanism. That’s why Tezos doesn’t rely on the mining of tez.

Tezos came into the limelight after collecting over $230 million in their first ICO, making them one of the top DeFi tokens. The launch of the cryptocurrency did not happen until September 2018. It is considered one of the best staking crypto today.

How did Tezos start?

Kathleen Breitman and Arthur Breitman are the co-founders of Tezos. Together with a group of other developers, they have been working on crypto since 2014. The company is headquartered in Switzerland. The delay in the launch of the cryptocurrency was attributed to management issues that arose almost immediately after collecting money from the record-breaking ICO.

Understanding Tezos

Just like Ethereum and Bitcoin, Tezos is a decentralized ledger that uses blockchain technology. The crypto is designed in such a way that it makes use of smart contracts. But unlike other cryptocurrencies, Tezos supersedes previous offerings. It goes beyond the smart contract concept and allows participants to directly dictate the rules of the network.

Tezos is basically meant to be an evolving network. The flexibility part of it is viewed as a vital aspect of the system. The developers may have learned the limitations in Bitcoin where there’s no proper flexibility and scalability. That’s the reason why Ethereum has managed to grow quickly compared to Bitcoin.

Tezos Architecture

Tezos blockchain makes use of what is referred to as a network shell that allows developers to create a modular style with a self-amending ledger. The generic blockchain is categorized into three layers:

1. Network protocol

This is known as the gossip protocol. It is responsible for peer listening as well as broadcasting between nodes. It is the layer that ensures there’s proper and effective communication between nodes within the network.

2. Transaction protocol

This is the layer that defines the accounting model being implemented by the blockchain. It is one of the most important layers in the entire network.

3. Consensus protocol

Just as the name suggests, the consensus protocol defines the protocols between different nodes to ensure that the blockchain reaches a proper agreement on the state of all transactions taking place in the network. Through the consensus protocol, additions, blockchain modifications or upgrades must be voted by all the stakeholders of the platform.

The network shell within the platform is what connects the various protocols together. Also known as the blockchain protocol, the network shell links together the consensus and transaction protocol.

In most cases, the last two transactions, consensus, and protocols are put together to form a blockchain protocol. On the other hand, the network shell enables the communication between the blockchain protocol and the network protocol.

In order to support the ability of the platform to “self-amend”, all the blocks added by stakeholders to the chain are permitted to implement changes within the whole network.

How Tezos is different from other cryptocurrencies

One thing that distinguishes Tezos from other cryptocurrencies is governance. Most of the blockchains developed earlier depend on mining communities and development teams to come up with new design choices. This is contrary to Tezos that tries to create a decision-making process and integrate it into the network of users.

As a result, incentives are generated for anyone taking part in the development process of Tezos. This allows for the decentralization of maintenance as well as democratization of the entire development process. Tezos uses mathematical proofs to ensure that the properties are well maintained since the developers knew that certain vital properties needed to be held for a longer period.

How many transactions can Tezos perform?

Tezos has the capacity to perform approximately 40 transactions per second (TPS). This is a higher figure compared to the TPS performed by Ethereum and Bitcoin. Bitcoin has a TPS of 4.6 while Ethereum has a TPS of 15.

The other feature that makes Tezos popular and different from other cryptocurrencies is its ability to undertake real-time modifications within the chain as required. In some chains, changes in protocols can lead to hard forks.

Block time

Block production time for Tezos is set at one minute per block. But this time may differ depending on the conditions of the network.

How to stake Tezos?

Considering the fact that the platform operates under the DPoS model, there are no mining requirements. It instead uses what is referred to as staking. To implement the stakes, a holder of an XTZ has to stake his or her coins in a smart contract. This will then allow them to delegate their tokens to a particular baker.

Bakers are similar to miners and validators. Their primary role is to maintain the health and integrity of the chain. They do this by approving only valid transactions.