Thinking you might invest in Tezos (XTZ)? Wondering if it’s really worth it? Well, then you need to know everything you can about it! Let’s look at the advantages and disadvantages of investing in XTZ.
Tezos is one of few cryptos that’s built to last long-term, one that is purposely designed to be democratic and flexible so it can potentially outlast all other alternatives.
But while its premise is pretty appealing, Tezos got off to a very rocky start and in many ways, it’s still recovering.
Nevertheless, investing in Tezos could hold some quality returns over the years, but any wise investor must know the perks and flaws of XTZ before they part with their funds.
Who knows investing in XTZ might be your first step to becoming the next crypto king!
In this guide, we will cover:
What is Tezos?
Tezos is an innovative blockchain-based platform that supports cross-border transactions, smart contracts, decentralised apps (dApps), DeFi projects, NFTS, and the tokenisation of assets (e.g., real estate).
Tezos was launched in 2018 after a mind-blowing Initial Coin Offering (ICO). The Tezos ICO took place in 2017; it lasted for 13 days during which $232 million were received (66,000 Bitcoins and 361,000 Ethers).
At the time, it was one of the biggest ICOs and garnered them a lot of attention.
Now, just a couple of years after its initial release, Tezos is one of the leading crypto behemoths in terms of market sentiment, market cap, and leading technology. Note that Tezos currently ranks 44th, as per CoinMarketCap.
Who Created Tezos?
Tezos was first proposed in 2014 by Arthur and Kathleen Breitman in their white paper (written under L.M Goodman, an alias of Arthur).
Arthur Breitman is a former Morgan Stanley employee who worked in quantitative finance. Before he had studied applied mathematics, computer science, physics and financial mathematics, according to Stephen O’Neal of Cointelegraph.
The reason he wrote the white paper under an alias was that he was still working at Morgan Stanley.
Kathleen Breitman is a former employee of Ray Dalio’s hedge fund Bridgewater Associates, and R3, a distributed database technology company. The Breitmans met at an anarcho-capitalist event.
Arthur initially had trouble funding the project, originally creating a company, Distributed Ledger Technologies, to own the intellectual rights. Eventually, an ICO was seen as the best approach and by 2018, Tezos was finally launched.
Sources disagree where the name Tezos came from. Some claim that Arthur Breitman said in an interview that Tezos is the ancient Greek word for smart contracts (which if true was probably a joke).
Other sources claim that Breitman used an algorithm to find names of domains that had not yet been claimed and were easy to pronounce in English.
Interestingly, venture capitalist and Bitcoin enthusiast, Tim Draper was an early investor in Tezos before the ICO.
What Does Tezos Do?
Now, while many of the features above (smart contracts, dApps, etc.) all sound familiar, what makes Tezos stand out is its focus on network governance or ‘on-chain governance’.
What this means is that the people behind Tezos recognise that the only real way to progress is by having open dialogue, putting the team first and allowing them to suggest changes.
Users can vote on proposed upgrades on the actual blockchain, and it is this approach that could enable Tezos to stay ahead of the game and outlive other cryptos.
While older cryptos like Bitcoin struggle to overcome issues of scalability, Tezos will be able to continuously update.
As stated on the Tezos Foundation’s official web page:
“Tezos is an open-source blockchain protocol for assets and applications backed by a global community of validators, researchers, and builders”.
Tezos plans to be ‘the last cryptocurrency’, a crypto that can handle everything and absorb the best features of every crypto so far.
They want to prevent the endless creation of new coins - today there are 17,072 cryptos listed on CoinMarketCap, and so it wouldn’t be surprising if the real number is much larger. And arguably, the number is very unnecessary.
Furthermore, they see community splits as a major problem. Just look at how many splits there have been in the Bitcoin community (Bitcoin Cash, eCash, and Bitcoin SV - and a lot more!). Even Ethereum has Ethereum Classic.
Tezos believes with a more democratic approach that focuses on governance, these splits won’t happen.
Note that Tezos’ native cryptocurrency is XTZ, often referred to as a tez or a tezzie or by its symbol ꜩ. At the time of writing, one XTZ trades at $6.21.
Is Tezos PoS (proof-of-stake)?
As a later generation cryptocurrency, Tezos uses a variant of ‘delegated’ proof-of-stake called ‘liquid proof-of-stake’. It does not use proof-of-work.
This makes Tezos more efficient than older cryptos, meaning that less energy is required to validate transactions and create new coins.
Plus, it means no mining is required, preventing hashing power from falling into the control of centralised mining pools.
This gives Tezos an advantage over Ethereum, the crypto most similar to Tezos, which is still in the process of transitioning to proof-of-stake over the course of several upgrades.
Does Tezos Have dApps?
Yes, Tezos has a growing number of dApps, some of which include games, DeFi services and DEXs, token farming, stablecoins, and NFT marketplaces. You can see them here.
As a younger proof-of-stake crypto, it is an excellent alternative to Ethereum, which at times struggles with congestion.
Who Builds On Tezos?
Some of them have been made by the Tezos team or for the sole purpose of making Tezos more accessible
Examples include Tezfin, a lending platform like Compound specifically for the Tezos blockchain and Quipuswap, a decentralized exchange.
One of the most well-known partners on the list is Red Bull Racing Honda. While it is not known if they will build anything on the Tezos blockchain yet, they have declared Tezos their ‘Official Blockchain Partner’.
So, now you know the basics of Tezos, let’s explore the pros of trading XTZ - a state-of-the-art ‘self-amending’ cryptocurrency.
Would you consider investing in Tezos XTZ?
Pros of Investing in Tezos
Tezos has numerous advantages over other digital giants, including Ethereum, EOS, and Cardano. Advantages that make investors believe that this flexible altcoin can potentially become a profitable financial venture.
Below are some of the major pros of Tezos:
✅ Tezos Is More Than A Cryptocurrency:
Tezos is a highly scalable platform based on smart contracts. Given the fact that Tezos is not only a cryptocurrency but an innovative blockchain platform, some investors believe that Tezos has some promising growth potential.
Tezos can be used in any kind of business, including gaming, which is one of the largest and fast-growing industries worldwide.
✅ Tezos Has Impressive On-chain Governance:
One of the biggest advantages of Tezos is the fact that it has impressive on-chain governance.
This means that (theoretically) all Tezos coin holders can propose and vote for changes, creating a commonwealth where all users can be heard and eliminate top-down decisions.
Unlike other cryptos, Tezos has built decision-making into the network of users, so Tezos doesn’t have to rely only on developers and miners.
Its democratic nature also allows for constant changes to be implemented without radical hard forks.
✅ Tezos Is A Self-amending Blockchain:
Tezos is highly flexible and has automated upgrading, often referred to as self-amending.
By self-amending nature, it means that upgrades happen without having to split into two different blockchains.
In other words, as changes are decided by users, the occurrence of hard forks is eliminated. This advantageous feature eliminates stagnation and enhances the implementation of improvements as they emerge.
✅ Tezos Relies On An Innovative Process Known As Baking:
The unique network’s governance process described above is called baking. Tezos describes baking as the “act of signing and publishing blocks to the Tezos blockchain”.
Baking is a multi-stage process that requires users to make a security deposit and stake a roll of 8,000 XTZ.
The baking process is not only accessible but also a great way to generate income by earning rewards in XTZ, which is a great pro to investing in XTZ.
✅ Tezos Uses An Improved Liquid Proof-of-stake Mechanism:
Tezos combines the best of traditional proof-of-stake and delegated proof-of-stake.
Bakers who take part in Tezos’s proof-of-stake consensus system can generate not only awards but contribute to the network.
Here we should note that traditional proof-of-stake is when nodes lock up their tokens to validate blocks, while delegated proof-of-stake allows less wealthy users to have a say as well.
Tezos allows bakers to accept delegated tokens, allowing users with smaller holdings to participate, too.
✅ Secure Smart Contract Programming Language:
Tezos uses a language called Michelson that enables formal verification of smart contracts.
The most important aspect is that Michelson can mathematically prove the correctness of the code governing transactions.
This formal verification - often used in mission-critical settings (e.g., aerospace) - can also prevent the occurrence of bugs in the system.
As such, this programming language is also more secure and flexible than other languages and is a feature absent from Ethereum smart contracts.
✅ Safe And Reliable System:
By incorporating a language that enhances formal verification, Tezos is considered a safe project.
In terms of code correctness, Tezos is ideal for high-value use cases and provides resistance against attackers and crypto scams.
✅ Tezos Is A Valued Asset Among Investors:
Because of its innovative technology and ideology, Tezos is highly valued among investors.
To provide an example, when Tezos burst into existence, it gained high-profile investments from firms like PolyChain Capital.
Tezos has also entered into diverse partnerships with major financial institutions, such as one of Brazil’s leading banks, Banco BTG Pactual.
Check Out: Can Tezos Be A Millionaire Maker?
✅ Growing Community Of Supporters:
One of the best pros of Tezos is the fact that the team offers generous grants for developers to study the platform.
They are working with Kingsland University, Georgia USA, to provide training for those interested in XTZ.
According to stats provided by Hacker Noon, Tezos had more than 1,600 Facebook subscribers, 25,000 followers on Twitter, and 22,600 Reddit members in April 2020.
Cons of Investing in Tezos
While Tezos has numerous advantages over other cryptos, knowing the disadvantages of investing in Tezos is vital to help investors decide for themselves if Tezos can lead to satisfactory returns.
So, here are some of the biggest drawbacks of Tezos investing:
❌ The Tezos ICO Was Followed By Delays, In-fighting, And Lawsuits:
The successful Tezos ICO in 2017 was followed by numerous disagreements and lawsuits, which is still seen as a massive drawback.
Long story short, the Tezos Foundation and the Breitmans had a very big and public falling out when the then president of the Tezos Foundation, Johann Gevers, was asked to use the raised funds to work on the project.
This led to a struggle over the funds and prevented Tezos from releasing XTZ tokens to investors, which led investors to take Tezos to the SEC.
The SEC then declared that Tezos had sold unregistered securities and they were fined $25 million.
❌ Not As Popular As It Used To Be:
Though Tezos has managed to somewhat restore its public image, with Tezos reaching a high price of $8.40 in May 2021, the platform has a long way to go in terms of mass adoption.
Furthermore, in terms of market cap, it has failed to keep up with the ever-growing list of DeFi crypto projects, which have pushed XTZ further from the limelight.
❌ Tezos Is A Young Ledger:
Despite its impressive technology, Tezos is still young and lacking commercial support.
Though XTZ is an attractive investment, those who want to use their cryptos for everyday transactions should remember that Tezos is not widely supported in commercial transactions.
The platform hasn’t reached its capacity and still has to deal with future transaction fees, speed, and delegation issues as the network continues to grow.
❌ Tezos Is A High-Risk Investment:
An analysis by Macroaxis suggests that Tezos is a ‘strong sell’, noting that it is exceptionally volatile, could be overvalued, and is ‘very regressive towards the market’.
While it can be argued that all cryptocurrencies are high-risk investments, Tezos may represent a slightly riskier choice because of its history and stagnating popularity.
❌ Tezos Is Poorly Marketed:
Even on Reddit, there have been discussions among Tezos holders about the lack of marketing the coin.
Macroaxis points out that Tezos’s Hype Condition is ‘Under hyped’, which they consider good. But in the crypto market, that could signify that no one is interested in this crypto, which is very bad for adoption and therefore growth.
Though it appears some efforts are being made to improve Tezos’s image, we’re yet to see any major results.
❌ Tezos Is Not As Decentralised And Open As It Aspires To Be:
You could make the argument that having to own a roll of Tezos (8,000 XTZ) to vote or giving up your vote to a delegator is not democratic. It could be argued that in a real democracy, anyone can participate, regardless of their wealth.
But with Tezos, voting power is determined by how much XTZ you own, which is closer to a ‘plutocracy’, which is defined as “a state or society governed by the wealthy”.
It can be suggested that such a system creates an environment that will always favour the rich over the poor because if a proposal would affect the wealth of the rich, the rich can vote it out as they have more voting power.
Furthermore, looking back again at the Gevers scandal, it is super embarrassing that a blockchain project that puts governance first had such trouble working with their foundation president.
In the end, it gave a terrible impression to investors because it looked as if they were failing at the key thing they were supposed to be good at.
And more recently there was some concern over the Grenada upgrade proposal gaining enough votes to be implemented, as reported by Derek Rose of Stockhead.
Thankfully, they received the 53.43% they needed, but it was perhaps too close to failing.
❌ Transaction Fees Could Get More Volatile As Network Grows:
To be fair, Tezos transaction fees are not really that high, some enthusiasts even boast about how low or even non-existent they are.
But there is plenty of volatility already and according to data from Messari, who recorded several big spikes in XTZ transaction fees, that volatility has increased since the 2021 bull run.
Average XTZ transaction fees and XTZ price. Source: messari.io
And so, the real question is if Tezos does grow and attracts more investors, will it be able to handle a busier network? And will that busier network become a lot more unpredictable in how it charges its users?
(None of us want to see what happened to Ethereum happen to Tezos too!)
❌ There Are Rumours The Breitmans Will Leave:
As late as April 2020, it still looked like the Breitmans were having problems with the Tezos Foundation, even though their former foundation president, Gevers, had already left, according to Decrypt.
These rumours were partially fuelled by Kathleen’s announcement not to release her game, Emergents, on Tezos as previously planned citing that she had “a lot of concerns about the platform”.
On top of that, Arthur Breitman’s name had been removed from the Technical Advisory Committee.
Is Tezos a Good Investment?
Now when you know the pros and cons of Tezos, you may also ask if Tezos is a good asset worth investing in.
The truth is that all investments come down to a simple factor: the so-called risk-reward ratio or if potential rewards outweigh possible risks.
Tezos has some risks, true! It still has a long way to go in terms of commercial support and adoption when compared to market rivals, such as EOS, NEO, and other blockchain platforms that support smart contracts and dApps.
But despite what looked like stagnation, Tezos does seem to be improving in terms of awareness and adoption - both of which are key to price appreciation.
In August 2021, the Tezos Foundation announced six large-scale grants for projects on Tezos, as reported by U.today. The initiative, if successful, could lead to some major projects launched on the Tezos platform.
Before this, in July 2021, Gitcoin announced a hackathon called ‘NFT Me, You Can DAO It’ to kickstart integration with Tezos by expanding the NFT and DAO ecosystems on the platform.
It is super important that Tezos has been taking these steps. Firstly, to improve its image, and secondly, to remind everyone it still exists and has a lot of untapped potential.
At the same time, Tezos has impressive technology and has managed to establish itself as one of the leading cryptos in the market.
And there’s more to come in 2021, specifically the Granada upgrade, which according to TQ Tezos:
“[F]ocuses on a few key factors: reducing gas costs, improving Tezos finality, and the addition of liquidity baking”.
On top of this, due to scalability issues on the Ethereum network, Tezos has a great opportunity of becoming a leader in the field of cryptocurrency investing and even the next king of smart contracts.
Whatever you decide to do, just remember an important mantra in the financial sector: never invest more than you can afford to lose and never risk more than 1% of your account on a single trade.
Ready to start investing in Tezos XTZ?
Will Tezos Be A Millionaire Maker?
With a market cap of $2 billion, in a sense, Tezos is already a millionaire maker. Without a doubt, plenty of millionaires were made when the ICO launched.
As it’s always good to compare a coin against Bitcoin, the most popular and well-known of the crypto bunch. Not only has Tezos performed well in comparison to BTC but has had great price appreciation.
Despite its bumpy road to success and some bad PR, Tezos has the potential to jump into the spotlight and become one of the top 10 cryptocurrencies soon.
The value of Tezos is likely to increase further as the protocol becomes more widely adopted.
So, they must continue to bring on and create more projects for the ecosystem to increase Tezos’s reach and continue to work on their image and marketing presence.
And it looks like they recognise this. In June 2021, Tezos appointed marketing company Huge as their agency of record. Working together, they may be able to turn Tezos’s image around.
Elsewhere, given Tezos’s technical and governmental advantages over other cryptocurrencies, Tezos could become a profitable investment.
What Will Tezos Be Worth In 2030?
Predicting Tezos’s value by 2030 is a tall order that arguably is impossible to predict. Firstly, because the market is still so young and volatile and secondly, it’s just too far away - who knows what things will be like in the next decade.
Because of this, not many price forecasters are brave enough to make predictions for 2030.
And remember, you can’t take these predictions too seriously! The first thing you’ll notice is how far apart these predictions are.
|Price Forecaster||Lowest Price||Highest Price|
|Coin Price Forecast||$7.96||$8.36|
|Cryptocurrency Price Prediction||$127.85||$167.67|
While making price predictions, especially of novel and volatile assets, remain speculative and should be always taken with a grain of salt, some experts claim that Tezos may reach $1,000 in the years to come.
Nevertheless, remember that cryptocurrency prices also depend on demand and supply principles, regulations, adoption, and crypto news, so Tezos and any other crypto investing remain unpredictable, hence risky!
If you remember anything from Pros And Cons Of Investing In Tezos (XTZ), Will It Be A Millionaire Maker? Make it these key points.
- Tezos is one of the most innovative blockchain-based platforms around today. It’s used for online payments, smart contracts, and dApps.
- Though Tezos had a rough start marked by numerous internal issues and lawsuits, in technical terms, Tezos is highly appealing to investors. It offers an improved proof-of-stake mechanism, smart contract security, and self-amending procedures.
- One of the main pros of investing in Tezos is its proposed democratic nature. Theoretically, this should mean Tezos can assimilate any new ideas and adapt to change quickly.
- Tezos also has a supportive community and a fair number of bakers. A factor that may help Tezos become a dominant asset in the crypto space.
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Still have questions on investing in Tezos? Perhaps these frequently asked questions will help?
What Wallets Hold XTZ?
According to Coinfunda, the best Tezos wallets are:
- Atomic Wallet (mobile/desktop)
- Coinbase (web/mobile)
- Trezor Model T (hardware wallet)
- Ledger Nano S (hardware wallet)
- AirGap (mobile)
- Exodus (mobile/desktop)
- Galleon Tezos Wallet (desktop)
- Trust Wallet (mobile)
- Kukai Tezos Wallet (web)
- Atomex Tezos Wallet (desktop)
- Guarda (desktop/mobile)
Note that you should decide on the type of wallet you think will best suit your needs before signing up.
For practical purposes, it would be wise to get a desktop, web, or mobile wallet for making transactions, and for security purposes, a hardware wallet when you don’t intend to make any transactions.
How To Withdraw XTZ?
To withdraw your Tezos from an exchange to your wallet, you need to log into your exchange, go to your wallet, add your personal wallet’s address, and enter the amount you want to move.
And as a wise precaution, make sure you leave not a penny in the exchange! As we all know very well, crypto exchanges have a habit of getting hacked!
Is Tezos A Privacy Coin?
No, Tezos is not a privacy coin and from tzstats, you can see all blocks and transactions publicly. However, Tezos is working towards improving privacy by adding Zcash’s Sapling privacy features.
According to Crypto Briefing, Sapling will enable developers to create dApps that keep data private. But in regards to regular transactions, Tezos does not have any features to obfuscate the details.
Is Tezos Supply Limited?
Tezos has an unlimited supply, just like Ethereum. There is no limit on the number of XTZ that can be created, though, at the time of writing, there are 875,426,144 XTZ in circulation.
How Many Tezos Are Left?
There are 875,426,144 XTZ in circulation at the time of writing, according to CoinMarketCap out of a total supply of 903,666,822.
But this is nothing to worry about because more can easily be created and there is no limit on the number of XTZ coins that can be created.
Does Tezos Run On Ethereum?
Nope, Tezos runs on its own blockchain and has never run on top of the Ethereum platform. That said, there are many similarities between the two projects and so it’s not surprising if people get the wrong impression.
What Network Is Tezos On?
Tezos runs on its own blockchain as it always has. As it grows, more coins will likely be added to its network alongside XTZ, which is used as fuel for smart contracts and dApps.
There are three token standards used on the Tezos network for different coins, according to ProtoFire.io:
- FA1 (abstract ledger)
- FA1.2 (approval ledger)
- FA2 (multi-asset interface)
They work in a similar way to Ethereum’s ERC-20 tokens, and we could see an entire ecosystem appear over the coming decade.
Is Tezos A Better Investment Than Ethereum?
In technical terms, Tezos might be considered a better investment than Ethereum.
Tezos is a blockchain that has always operated within a proof-of-stake ecosystem, which makes it more robust than the current proof-of-work consensus of Ethereum.
Nevertheless, in terms of market cap, adoption, and market cap, Ethereum - often referred to as the king of smart contracts - is still the second-largest cryptocurrency after Bitcoin.
Is It Worth Investing In Tezos?
Tezos is a worthy investment amid the ongoing pandemic.
Though at the time of writing Tezos is trading at $2.85, which can’t be compared to other leading cryptos, Tezos has opened the door to delegated participation and has a solid position in terms of liquidity.
Some experts claim that XTZ may hit $1,000 in the next few years.
How To Participate In XTZ Baking?
To participate in XTZ baking, you need to first decide if you are going to self-bake or delegate your XTZ.
To self-bake, you need to run a node with baking software and keep it online and up to date, according to Aditya Gautam.
However, they argue that delegating your stake to another baker is usually better because although their rewards are higher, it’s more work and they need to cover hosting costs.
How Much Do You Need To Bake XTZ?
To bake XTZ, one needs a row of XTZ or a minimum of 8,000 XTZ. The more XTZ you have, the higher the chances are of validating blocks and earning rewards.
Nevertheless, those who do not have enough capital can delegate their share to a baker who will be randomly selected from other bakers.
How To Send XTZ To A Baker?
To delegate XTZ to a baker, as explained by Aditya Gautam, you need to open your Tezos wallet, choose a baker, click delegate and you’re done.
What Is The Best Staking Service For XTZ?
According to hedgewithcrypto, Ledger is the best place for security, Binance is the best for zero fees, and Coinbase is the best for US customers.
They also recommend Guarda wallet and Atomic wallet for Tezos staking as well.
Who Facilitated The Tezos ICO?
The Tezos ICO took place in Zug, Switzerland.
What Is A KT1 Account In Tezos?
There are two types of accounts in Tezos TZ1 and KT1, the difference is that KT1 accounts have smart contract functionalities while TZ1 accounts don’t. However, both accounts can be used to make transactions.
Furthermore, TZ1 accounts allow self-baking but not delegating and KT1 are the opposite - they allow delegating, but not self-baking.