Tezos is a multifunctional decentralized blockchain platform for hosting smart contracts, applications, and creating tokens. Its cryptocurrency is Tez, or Tezzie (XTZ). This currency is not subject to mining, so users who have a certain amount of Tezzie are rewarded in the form of tokens when participating in the proof–of–stake (PoS) consensus. Block producers are called “bakers”, and the process of baking is called block validation. Bakers perform the same function as miners – they protect and manage the network, verify and validate transactions, and distribute block rewards. But instead of expensive mining equipment, everything operates with the help of the Proof of Stake (PoS) consensus.

History of Tezos

Tezos (XTZ) appeared on the crypto market in July 2017 and managed to raise 230 million dollars. The owners of this currency are Arthur and Kathleen Breitman. 

Preparations for the crypto network launch began in 2011. But the full development team was able to assemble only 3 years later. After that, the work on the project became progressive, a technical basis was created, legal documentation and a WhitePaper were prepared. As a result, Tezos achieved huge success in the market.

How does Tezos work?

On the basis of Tezos, the goal is to expand the functionality of Bitcoin with the help of smart contracts. The Tezos team focuses specifically on creating a blockchain that facilitates adaptation and changing through community consensus with minimal disruption to the network. Tezos runs on an algorithm Proof of Stake (PoS). Technically, the network uses one of the PoS variants, which is called Delegated Proof of Stake (DPoS). The Tezos architecture allows users to update the network without performing hard forks. 

The system is divided into three modules: Consensus module; Transaction module; Network module.

Importance of Tezos 

Firstly, Tezos has several distinctive features that differ it from other platforms that also use smart contracts in their blockchain space. Secondly, The Tezos protocol supports the ability to update the network without splitting it into two different blockchains. In this context, we can recall the Bitcoin hard fork, which resulted in the Bitcoin Cash cryptocurrency. Finally, it facilitates Tezos to adapt to the ever-changing regulatory and technological environment. The Tezos protocol provides for the possibility of making amendments and continuing to work in such cases without problems.

Advantages and disadvantages of Tezos

First of all, we cannot help but mention the fact that the Tezos blockchain is self-regulating, which provides a high level of security. There are also no hard forks in the Tezos system.  According to the disadvantages, there is low network bandwidth in the Tezos platform. Among other disadvantages, we can also mention that the possibility of inflation is quite high as there is an unlimited issue of tokens. Also, many well-known personalities, such as Vlad Zamfir, Vitalik Buterin, Hasib Qureshi, and Dean Eigenmann wrote review articles about the project, some of them criticized the startup. It is said that someone agrees that the concept of the project is pretty questionable. According to the white paper of XTZ, its governance system can give every Tezos user a voice, but the centralization of wealth and user apathy can cause the system to become inefficient in the same places as Bitcoin, Ethereum, and EOS. In addition, no management system can meet the needs of all users. In this case, the only decision is made, and there is a high possibility of a fork due to dissatisfied users.

However, with its unique approach to the process of updating and collecting votes, the platform can be more flexible than some competitors. It’s potentially proving to be a big advantage in the long run. Tezos has come a long way before launching and gives us hope that XTZ will become useful for both government and common users.