What Is Tezos XTZ And Is It Worth Investing In Tezos In 2021?
Is It A Good Time To Buy Tezos?
What is Tezos (XTZ)? Is it worth investing in XTZ in 2021? Will Tezos overtake crypto giants, such as Bitcoin and Ethereum?
Tezos became a well-known name in 2017 after one of the largest ICOs (Initial Coin Offering) at the time, raising $232 million. The journey to today has been bumpy but there is still a lot of promise for Tezos.
What Tezos offers traders is certainly unique. Their philosophy is not to focus on the actual technology, but how that technology is governed (which in turn leads to better technological solutions).
They believe that by putting governance first, Tezos will be able to develop more effectively and build more advanced infrastructure. Effectively, they want to nurture the evolution of blockchain technology and aim to stick around for the long term.
Read on to find out more about how this crypto works and what its future might hold.
Before we investigate Tezos’s worthiness as an investment, let’s start by answering the fundamental question: “What is Tezos?”
What Is Tezos?
Tezos is defined as a fourth-generation blockchain-based platform used for the execution of cross-border payments, smart contracts, and decentralised applications.
The fact that Tezos is an open-source decentralised network that enables a host of functionalities is one of the major advantages of Tezos, which attracts researchers, developers, and traders worldwide.
How Is Tezos Different?
It’s not only its decentralised nature that makes Tezos unique. Tezos is based on an on-chain governance model, which means that users can participate in the decision-making ecosystem and facilitate automatic changes without risking the occurrence of hard forks.
As we’ve seen with Bitcoin Cash and Ethereum Classic, the possibility of factions breaking off to start their own project because of disagreements can greatly harm the development of cryptocurrency.
This also makes Tezos one of the most democratic blockchain platforms in the cryptocurrency sector.
As developers stated:
“Tezos takes a fundamentally different approach by creating governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network [...] When a developer proposes a protocol upgrade, they can attach an invoice to be paid out to their address upon approval and inclusion of their upgrade.”
Here we should note that Tezos uses an improved proof-of-stake consensus mechanism, which means that users can confirm transactions without expensive equipment or technical knowledge. In other words, the need for mining is eliminated.
In fact, Tezos and its user-friendly staking led to the popularity of XTZ and an increase in its price in 2019 and 2020. Believe it or not, the price of Tezos tripled between October 2019 and February 2020!
The History of Tezos
Tezos had a turbulent start. Tezos was proposed in 2014 by Arthur and Kathleen Breitman, under the pseudonym L.M. Goodman, targeting a major drawback of blockchain technology: the notorious fork-based governance model.
The 17-page Tezos white paper explained Tezos as a ‘self-amending crypto-ledger’ - self-amending being the most important part that will help the project stand out.
Three years later, the Tezos Foundation launched one of the most impressive ICOs to date and managed to raise $232 million in less than two weeks.
Despite its promising start, Tezos was troubled by various delays, in-house drama, and lawsuits. Yet, the network managed to restore its image and it was launched in 2018.
After having established a more solid presence in the crypto market, Tezos implemented several protocol amendments to introduce staking and make smart contract development more effective.
Additionally, Tezos started sharing grants and training opportunities to attract researchers and crypto enthusiasts alike.
Because of its promising features and social media image, Tezos now works with different leading organisations to support the digitalisation of capital markets, including real estate.
How Does Tezos Work?
Tezos is an open-source platform for digital assets, smart contracts, and dApps. But what makes it unique?
The platform’s native language for smart contracts is called Michelson. Many consider Michelson a highly secure language as it provides formal verification and flexibility at the same time.
Here we should note that this formal verification mechanism is crucial in real-world settings, such as the tokenisation of assets with real-world value and loans.
The on-chain governance of Tezos explained above is another unique functionality.
On-chain governance means that protocol amendments are voted on by users. If approved, they are automatically implemented via self-amendment, avoiding the occurrence of hard forks.
To be more precise, when a developer proposes an upgrade, the protocol goes to the community to be tested.
After the testing period, users can vote on the upgrade. If approved by the majority of users, the upgrade will be integrated via a protocol known as a ‘hot swap’.
Tezos has a unique architecture as a whole. Tezos has a modular style blockchain network that can change itself based on certain rules; it uses the so-called network shell to enable self-amendment.
Usually, blockchain has three layers: network, transaction, and consensus. Tezos’s network shell facilitates the communication between these layers and enables users to participate democratically.
Tezos is also the first cryptocurrency that popularised the process of staking, known as Tezos baking.
Here we should note that Tezos combines the best features of traditional proof-of-stake and delegated proof-of-stake, so people without enough funds or technical knowledge can participate via delegating or getting someone else (a validator) to confirm transactions for them.
According to different figures, it’s possible to earn between 5 to 7% a year staking Tezos.
Here we should also mention that the system allows you to operate under two account types: implicit and originated accounts. Implicit accounts are for everyday users, while originated accounts are for developers.
Interestingly, in March 2020, Tezos (being an evolving network) implemented a protocol called Carthage to allow developers to run more complex apps.
Would you consider investing in Tezos XTZ?
What Is XTZ?
Tezos is associated with its native digital token XTZ, known as Tezzie or Tez. As explained above, XTZs are not mined as Tezos uses a proof-of-stake mechanism and users receive incentives for participation in the core development process.
Tezos also uses the symbol êœ© and can be broken down into one-millionth of a token (0.000001 or 1⁄1000000), which is known as a ‘Mutez’.
Though Tezos is much more than a cryptocurrency - with XTZ being used mainly to run the blockchain, there’s a growing interest in XTZ from both traders and investors.
To provide an example, currently, Tezos has approximately 395 active bakers and a staking ratio of almost 77.65%, according to tzStats. Such interest gives XTZ room for growth and competition.
While it’s true that XTZ tokens are still recent entries, XTZ experienced significant growth in 2019 and 2020. Tezos managed to recover from the coronavirus-triggered bearish market and become one of the top cryptos in terms of market cap.
Note that at the time of writing, one XTZ is trading at $3.26, with prices expected to increase further.
And guess what! As reported by Forbes, Tezos might be on track to smash Bitcoin.
Tezos Vs Ethereum Vs The Rest Of The World
One of the best ways to understand what makes Tezos a gamechanger is to compare it to other, more well-known cryptocurrencies.
Can Tezos Replace Ethereum? Is Tezos An Ethereum Killer?
There is a possibility that Tezos could replace Ethereum, though it would likely take years to accomplish. As it stands, Tezos is not an Ethereum killer.
This is because Ethereum is still incredibly popular. It is the second-largest cryptocurrency. If most people who know almost nothing about cryptocurrency can name at least Bitcoin, Ethereum is most likely to be the second project they know.
Many newbie crypto traders start with Bitcoin, then look into Ethereum and then look elsewhere. Tezos is more reserved for traders who are already deeply involved in crypto and know what makes XTZ stand out from the rest.
According to Etherscan, there are approximately 158 million unique Ethereum addresses (though how many are active is anyone’s guess). It’s a hell of a lot of users.
Meanwhile, according to tzStats, there are around 1.3 million funded accounts.
Even if Tezos proves itself to be better than Ethereum, popularity tends to beat innovation. (McDonald’s is always going to be more popular than your favourite gourmet burger place, even if it’s not as good!)
Perhaps the closest competition Tezos has for beating Ethereum is Cardano. The two projects are similar in that they focus on governance.
Cardano has its peer-review stages before implementing new ideas while Tezos aims to be a democracy.
But there are ways in which Tezos is better than Ethereum. It uses proof-of-stake, which is something Ethereum is moving towards implementing in 2021. So, until this point is reached, Tezos could be said to be technologically better.
Ethereum’s proof-of-work algorithm has also meant that it is more expensive to use. In 2021, there was a peak in the volatility of Ethereum transaction fees, which led many people to look for alternatives.
So, while beating Ethereum is going to be tough, it’s not impossible. In the end, Tezos’s governance philosophy could triumph.
Is Tezos Better Than EOS?
Tezos can be said to be better than EOS in several ways, but the differences do not always imply a clear-cut winner.
Both Tezos and EOS are considered ‘Ethereum killers’ and both use delegated proof-of-stake but in slightly different ways.
Once you own 8,000 XTZ you have the option to become a baker (validate transactions and get rewards), but to become a block producer with EOS you need to be voted in.
Tezos is perhaps seen as more democratic because no voting is necessary, while with EOS only 21 people can be validators at once and this has led to validators paying token holders for their votes.
Furthermore, with Tezos, once you own 10,000 XTZ you can vote on anything, even if you don’t choose to be a validator.
But there are other ways in which EOS could be better.
Supposedly, EOS is faster than Tezos and EOS uses C++ which is popular and even used for Bitcoin. Plus, any programming language can be used to create smart contracts. Meanwhile, with Tezos, Michelson is the only option.
Another way in which EOS could be said to be better is that there are no transaction fees.
However, some crypto enthusiasts have noted that Tezos has not done as well as EOS in marketing itself, which may have been one of the reasons XTZ didn’t do too well in the last bull market.
In the end, though, Tezos’s secret weapon is its ability to self-amend which could mean it could last much longer.
Meanwhile, EOS’s most important asset, its creator Dan Larimer, left in January 2021, which could mean they are now lacking direction.
Is It Worth Investing In Tezos In 2021?
Yes, of course! With a market cap of $2,757,954,984, Tezos currently ranks 42nd in the crypto sector, as per CoinMarketCap. It is definitely worth watching in 2021.
Tezos price from launch till the time of writing. Source: coinmarketcap.com
Investors who believe in the democratic mechanism and innovative technology that Tezos offers feel particularly attracted by XTZ.
Many claim that Tezos will overtake other platforms for the deployment of dApps and smart contracts, including Ethereum, often referred to as the king of smart contracts.
It’s no surprise then that the interest in XTZ is increasing. Tezos has a staking ratio of approximately 77.65% with more than 124,110 active delegators across the globe.
While XTZ is currently trading at $3.26, which can’t compare with Bitcoin, XTZ price could grow further in the long term.
That said, when looking into Tezos and its investment potential, do not forget that all investments come down to the risk-reward profile of the asset you are interested in.
Cryptocurrencies, in particular, can be highly risky, so never invest more than you can lose.
What’s Wrong With Tezos?
Many crypto investors decided to stay far away from Tezos when a scandal erupted involving the founders, the Breitmans, and former Tezos Foundation president Johann Gevers.
Long story short, after raising a record-breaking $232 million in an ICO in 2017, Gevers supposedly was incredibly difficult to work with.
The Tezos Foundation was put together as a non-profit organisation to administer the funds from the ICO and to keep Tezos decentralised. This way the money raised would not remain in just the hands of the Breitmans.
But trouble started almost instantly with Gevers supposedly preventing the Breitmans from using any of the raised funds to develop Tezos.
Meanwhile, Gevers argued that the Breitmans were trying to exert control over the project, which goes against the decentralised structure they were trying to create.
This power struggle effectively stopped all work on Tezos. It delayed the launch and, more worrying for investors, prevented them from receiving their XTZ. Eventually, though, Gevers left and the project could move on.
The scandal did a lot of damage to Tezos’s image.
Firstly, as a project that focuses on governance, it was pretty embarrassing. It put into question their ability to run a decentralised organisation if they couldn’t even get on with each other.
On top of that, it also put into question their ability to appoint professionals who could get the job done.
And finally, it made the whole project look like a money-grabbing scam. You could not be 100% sure of who was right - the Breitmans or Gevers?
But Tezos’s legal grievances didn’t end there. Just like Ripple, Tezos got into legal trouble with the SEC over whether its token was a security or not.
Though no real conclusion was made, Tezos was forced to pay out $25 million to investors and lawyers.
The action by the SEC was initiated by investors who were concerned that they wouldn’t get their XTZ after the Gevers scandal broke.
Does Tezos Have A Future?
Tezos has a future as it continues to build partnerships and develop, despite not being able to break its previous all-time high from 2017, as many other cryptos did in 2021.
However, it’s quite likely that the team behind Tezos doesn’t care too much about their image. They aim to develop first and then get people’s attention.
They recognise the pitfalls of promising too much too early on. People have expectations, they don’t realise that it takes time to develop things, and so they get bored and lose interest.
Indeed, the Tezos team doesn’t strive for too much attention with most updates being announced quietly via Twitter and it has been pointed out that they put development before marketing.
Tezos has been working towards a closer relationship with Ethereum. StakerDAO has created a bridge, called StakerBridge, between the two blockchains that allows holders to transfer tokens back and forth.
This suggests that we may see more bridges being made between Tezos and other cryptos, which will enable Tezos to take advantage of other tools and services.
And Tezos is seeking to make access to these tokens easier with QuipuSwap, an open-source market maker exchange specifically designed for tokens on the Tezos blockchain.
More recently though, Tezos has been muscling its way into NFTs may be more than most other cryptos, perhaps seeing it as a possible way to gain more attention.
And for music NFTs specifically, OneOf, an NFT platform for music, secured $63 million to create a more environmentally friendly platform on Tezos.
Elsewhere, Tezos will be used by Groupe Casino, a French retail giant, to create a stablecoin pegged to the euro called EURL.
But perhaps what will give Tezos the push it needs into mainstream consciousness is its partnership with Red Bull as their ‘official blockchain partner’.
Or, its new relationship with Huge, a global marketing company that will help Tezos build its brand identity strategy.
How Much Will Tezos Be Worth? Tezos Price Predictions
Trading Beasts cautiously but optimistically believes Tezos could reach a maximum price of $4.14267 in 2021, an increase of 1.66%.
Remember, while making price predictions is highly speculative, many experts expect a bullish trend thanks to Tezos’ on-chain and democratic governance.
If Tezos exhibits higher lows and positive momentum, a bullish trend may burst and lead to a large margin.
While nobody can predict how the global economy will move on from the ongoing pandemic, investing in XTZ may generate high returns far beyond the year 2021.
What Is Tezos Worth In 2025?
At the most extreme, Cryptocurrency Price Prediction forecasts Tezos will be worth $162.62 by December 2025.
However, elsewhere most price forecasters seem to believe XTZ will be between $6 at the lowest and $18 at the highest in 2025. And predictions between $9 and $11 seem the most common.
For example, DigitalCoin forecasts $11.49 by March 2025 while Coin Price Forecast believes XTZ will reach $9.22 by the end of 2025, and they are also joined by CryptoGround, believing XTZ could reach $9.49 in 2025.
At the lowest, there is The Economy Forecast Agency who sees a maximum of $6.03 by July 2025.
Other more extreme predictions, such as those provided by CryptoCoinSociety’s Jesus Cedeño, claim that Tezos will reach $24.06 by 2025.
What Will Tezos Be Worth In 2030?
$355.31 by December 2030 according to Cryptocurrency Price Prediction at the very highest. Elsewhere, Coin Price Forecast gives a more grounded prediction of $7.97, an increase of +141%.
Remember though, 2030 is still a long way away and a lot could happen by that point. So, don’t make any trading goals based on these predictions!
Should I Invest In Tezos?
With different advantages of Tezos over other cryptocurrencies, such as automatic changes and accessible baking, investing in Tezos can be a good investment for you.
That said, while Tezos is a coin worth watching, always remember that cryptocurrency investing can be a risky venture.
This doesn’t mean that trading XTZ in 2021 is a bad idea: it just means that you should do your research and analyse the risk to reward ratio of XTZ to decide if the possible rewards outweigh potential risks.
If you decide to add XTZ to your portfolio, you’ll be pleased to know that with eToro, you can buy and sell cryptocurrencies and trade CFDs of up to 90+ crypto pairs.
How Much Tezos Should I Own?
You should not invest more than 1-2% of your funds for investing in Tezos. Don’t put all your money for investing into one crypto, and don’t invest the money you need to live!
The 1% rule is a very solid rule practised by many experienced traders to reduce risk. It works very simply. If you have $100 then you should only invest $1 or $2 per investment.
Why is this a big deal? Let us explain.
If you lose 1% of your investments on Tezos, it will not be such a big deal. But if you gain from it, you’ll probably be pleased and that gain will be pooled to make your funds larger, increasing what 1% would have been before.
However you decide to trade Tezos, don’t aim to be rich, don’t let investing stress you out. Just aim to improve your financial situation.
Alternatively, if you own 8,000 XTZ, you can start baking and make money from your locked up funds.
Given how slow Tezos works, you should be in for the long term. It could be more than 10 years before we see any serious results from Tezos because of how they have decided to develop.
Ready to start investing in Tezos XTZ?
Who Should Consider Adding XTZ to Their Portfolios in 2021?
With different unique features and growth potential, there’s no doubt that XTZ investing is on the rise.
Tezos is a popular asset among investors who believe in XTZ in the long term, as well as day traders who aim to profit from its volatility and diversify their portfolios to reduce risks.
Tezos is also a popular choice among crypto enthusiasts who believe that Tezos is much closer to Satoshi’s philosophy in terms of decentralisation and democratic principles.
Let’s not forget that Bitcoin’s enigmatic creator Satoshi wanted to make financial services available to people from all walks of life and eliminate the need for central banks and costly third parties.
Of course, corporations also take interest in XTZ. For example, Tezos is highly valued by major financial institutions, such as Dalma Capital and BTG Pactual, who will use Tezos for token issuance.
That’s right! When it comes to strategic investments, Tezos has gained a lot of backing because of its innovative and self-governing blockchain.
Whatever you decide, cryptocurrency investing is not a get-rich-quick scheme, so you should decide for yourself whether you should invest in Tezos and its highly democratic self-governing mechanism.
If you remember anything from What Is Tezos XTZ And Is It Worth Investing In Tezos In 2021? Make it these key points.
- Tezos is an innovative and secure self-amending blockchain platform, designed primarily for the development of smart contracts and dApps.
- Tezos was launched in 2018 after a phenomenally successful ICO, followed by a series of in-house drama and lawsuits.
- Despite its ups and downs and the bearish market triggered by the ongoing pandemic, Tezos has managed to establish itself as one of the leading projects in the cryptocurrency market.
- Tezos is unique because it has democratic on-chain governance and relies on baking instead of mining.
- On top of that, it uses a secure programming language, Michelson, that guarantees formal verification.
- XTZ is the native token of Tezos, currently trading at $3.26 (as of June 2021).
- With a market cap of $2,757,954,984, Tezos is an attractive investment option for both beginners and experienced investors, as well as large financial institutions.
- Many financial experts believe that Tezos will grow further in the long term and reach new highs by 2025.
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How To Buy Tezos?
You can easily buy Tezos from a cryptocurrency exchange or broker after signing up and depositing some funds.
Here we’ll show you the four quick steps to signing up with eToro.
Step 1. Go to the eToro website and click ‘Join Now’. You’ll then need to provide your personal information, such as your name and address.
Step 2. Your information will now need to be validated. To do this, you will need to upload a copy of your ID. This is done to prevent fraud and money laundering.
Step 3. Make a deposit. You’ll need to do this to buy Tezos. Note that the minimum deposit is $200 in most countries (or $50 in the USA), however, in certain parts of the world, the required deposit is higher and so you should check before signing up.
Step 4. Buy Tezos. On eToro, go to Trade Markets → Crypto → XTZ (Tezos). Note that there will be more than one way in which you can buy Tezos.
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Still have questions on Tezos? Maybe these frequently asked questions will help?
Who Runs Tezos?
Founders Arthur and Kathleen Breitman lead development, but as decentralisation is a key focus of Tezos, power is broken down into different organisations.
And there is also the New York City-based TQ Tezos that leads blockchain ventures on Tezos.
Is Tezos A Safe Investment?
Tezos is a safe investment. The digital asset uses a decentralised blockchain, so there’s no central database that can be hacked.
On top of that, Tezos uses a novel language and cryptographic encryption, ensuring both formal verification and safety.
If hackers ever find a way to access the network, amendments cannot be made without stakeholders’ consensus, which makes Tezos highly secure.
That said, cryptocurrency investing can be risky, so always proceed with caution.
Why Did Tezos Drop So Much?
When Bitcoin was dropped by Tesla the entire cryptocurrency market sank, and like most altcoins, Tezos is very vulnerable to changes in Bitcoin’s price.
But even before that, Tezos appeared to be stagnating and people likely misjudged how quickly the project would materialise. Amateur investors likely expected too much too fast.
Despite it all, at the time of writing Tezos is trading at a higher price than most of its existence, suggesting that in the long term, Tezos is increasing in price.
Is Tezos Anonymous?
Tezos is a relatively new cryptocurrency that is still developing in terms of privacy and mass adoption.
So far, Tezos has the same level of privacy as Ethereum and Bitcoin: while they are anonymous, a digital footprint is still present.
On the other hand, trustworthy exchanges are required to comply with Know Your Customer and Anti Money Laundering regulations, so users who want to trade XTZ may have to provide personal details.
That said, Tezos has announced plans to introduce new Zcash’ privacy features which may affect its anonymity in the future.
Is Tezos An Altcoin?
Tezos is an altcoin as are all other cryptocurrencies aside from Bitcoin. An altcoin is any coin that is not Bitcoin, which includes Tezos.
Is Tezos Dead?
Tezos is far from dead, in fact, they are super busy if you take the time to see what they are working on, such as major upgrades and new partnerships.
The biggest change coming to Tezos soon is the Granada upgrade. It will introduce Emmy*, a new consensus algorithm that will halve the time to validate blocks.
There will also be improvements to gas costs. Supposedly a decrease of three to six gas consumed per deployed contract.
Granada will also introduce ‘Liquidity Baking’, a new concept that offers a decentralised exchange for single pairs. The aim is to increase the liquidity of XTZ.
The idea that Tezos is dead perhaps comes from the fact that its price hasn’t been as volatile as other cryptos and it has slipped to 42nd in CoinMarketCap. But it’s far from true.
Don’t just look at the price of Tezos, you have to look at the partnerships it is developing as well as the range of services it now offers.
Tezos has big goals that won’t be fulfilled instantly. It all takes time, that’s just how software development works.
How Do I Get Free Tezos?
Several sites offer free Tezos, but it is probably best to avoid them because they might not be trustworthy. They might not be the best people to trust with your personal information.
They can also be a big waste of time. Some ‘faucets’ require users to complete tasks that could be too time-consuming for too little XTZ.
Before there was a Tezos faucet, where you could get free Tezos from the Tezos Foundation, but unfortunately ‘the faucet has run dry’.
Alternatively, if you already have some XTZ, you could start baking (staking) and earn coins from that.
Are Tezos Limited?
There is no maximum supply on the number of Tezos tokens that can exist, though a cap could be voted in place in the future.
Tezos does not intend to become a store of value like Bitcoin. Instead, to operate effectively, Tezos needs a steady supply of tokens to keep running.
Without a maximum supply limit, it can theoretically exist for much longer too, but it does mean we are not likely to see the astronomical prices Bitcoin has reached.
Is Tezos Built On Ethereum?
Tezos is not built on Ethereum, the two both use different blockchains and offer different platforms.
However, Tezos does intend to compete with Ethereum in several areas, such as smart contracts, dApps and DeFi, so there are similarities.
The Tezos team believes that on-chain governance will give them the upper hand in the long run.
In the meanwhile, the two are starting to work closely together with the arrival of the StakerBridge.
Can Tezos Overtake Ethereum?
Tezos probably won’t overtake Ethereum for the foreseeable future, primarily because Ethereum is so incredibly popular. Approximately 200,000 devs work on Ethereum.
The two also use different coding languages. Solidity has become a widely accepted language to use for coding smart contracts. Other smart contract platforms, such as Tron (which started as an ERC-20) also use it.
While Tezos uses Michelson, an entirely new language, made specifically for them. This makes it harder for devs to move over.
How Much Can You Earn Staking Tezos?
You can make approximately 7% ROI by staking Tezos, according to Atomic Wallet. Different wallets and staking services will vary though and will likely charge a fee.
However, tzStats gives a lower number of 5.87%.
How Many Tezos Are Staked?
77.65% of all Tezos coins are staked, equating to approximately $2,275,064,850 (689.41M XTZ), according to Staking Rewards. Tezos is the 16th largest crypto in terms of the value of the crypto that is currently being staked.
How Often Do You Get Tezos Staking Rewards?
Roughly every three days you should receive rewards from your validator. However, in the beginning, you will first need to wait five weeks before your first payment.