Definition
Tezos is a blockchain-based, decentralized platform designed to support smart contracts and applications. It is unique for its on-chain governance model, wherein decisions and upgrades are made by stakeholders through the process called “baking.” Tezos was launched in 2018, following one of the largest-ever Initial Coin Offerings.
Phonetic
The phonetic pronunciation of the word “Tezos” is /ˈtɛzɒs/.
Key Takeaways
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- Tezos is a decentralized, open-source blockchain network that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts. This makes it highly applicable in finance, gaming, and a wide range of industries requiring secure and efficient operations.
- Unlike most other blockchain tokens, the Tezos protocol uses a self-amending model, which allows it to implement upgrades and enhance itself over time without the need for hard forks. This feature enhances its flexibility and longevity as it evolves along with technological advancements and user needs.
- The governance in Tezos is designed to be inherently democratic. It operates on a ‘Liquid Proof-of-Stake’ model, where stakeholders participate in network upgrades. This means that the network’s long-term development is largely in the hands of those who use and invest in it.
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Importance
Tezos is important in the world of business and finance due to its unique role in the sector of cryptocurrency. As an open-source platform for assets and applications, Tezos provides the opportunity for long-term upgradability and secure smart contract coding, reducing the risk of bugs. In comparison to other blockchains, the distinct protocol of Tezos allows all stakeholders to participate in network modifications. This approach to decision-making makes it a highly democratic and decentralized technology built on the mathematical technique called formal verification, ensuring a high level of accuracy. From a financial perspective, the ability of Tezos to innovate and adapt aligns well with the fast-paced changes in the blockchain market and can offer substantial opportunities for users, investors, and developers alike.
Explanation
Tezos is a blockchain platform designed to provide a framework for smart contracts, which aim to facilitate and streamline transactions by injecting an autonomous layer of trust into business processes. The primary purpose of Tezos is to ensure the long-term upgradability, open participation, and security of the network for all stakeholders. It is built on a technology that allows for a kind of automated evolution, which helps it avoid some of the political and technological dilemmas that earlier blockchains have faced. Tezos seeks to differentiate itself by offering a “self-amending blockchain” to fix bugs and make upgrades over time without having to undergo a hard fork – a radical change to a network’s protocol that makes previously invalid blocks or transactions valid and requires all users to upgrade to the latest version. This innovative feature is aimed at increasing flexibility, fostering more secure protocol, and promoting community coordination and participation. Tezos is widely used for a variety of applications like creating smart contracts and building decentralized applications (DApps) as it provides a more stable and democratic way to supervise and improve the network.
Examples
1. STOs (Security Token Offerings): Tezos has been used for several Security Token Offerings. For instance, in 2020, a Switzerland-based company called Sygnum Bank launched an STO on the Tezos blockchain. This was aimed at making it possible for their clients to invest in premium wines through digital tokens. This is a great example of how Tezos’s smart contract functionality can be used by businesses to raise funds and monetize physical goods.2. NFT Marketplaces: Tezos has also been used in the operation of NFT (Non-Fungible Token) marketplaces. For instance, Hic et Nunc (a Latin phrase that means “Here and Now”), which is an NFT marketplace, operates on the Tezos blockchain network. This marketplace allows users to buy, sell, and trade unique digital assets, demonstrating another economic aspect of Tezos in business.3. Institutional Adoption: A key example of the financial use of Tezos is the adoption by financial institutions. For instance, the French banking giant Societe Generale used the Tezos blockchain to issue a €100 million bond. This marked a step forward in the incorporation of blockchain technology into traditional banking systems.
Frequently Asked Questions(FAQ)
What is Tezos?
Tezos is a decentralized, open-source blockchain network that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts.
Who founded Tezos?
Tezos was founded by Arthur Breitman and Kathleen Breitman.
How is Tezos different from other Cryptocurrencies?
Tezos has a unique feature, known as self-amending , which allows it to upgrade itself without having to split (fork) the network into two different blockchains.
What is the native cryptocurrency of Tezos?
Tez or XTZ is the native cryptocurrency of the Tezos network.
What is a Smart Contract as used in Tezos?
A smart contract is a computer program that directly controls the transfer of digital currencies between parties under certain conditions.
How does Tezos achieve consensus in the network?
Tezos uses a consensus mechanism known as Liquid Proof-of-Stake (LPoS), which is a hybrid of delegated proof of stake and traditional proof-of-stake models.
What is baking as used in Tezos?
Baking in Tezos is the act of signing and publishing a new block in the chain. Essentially, it’s the Tezos version of mining.
Is Tezos a type of Blockchain?
Yes, Tezos is an example of a blockchain technology, used to maintain consensus across distributed systems and secure transactions of its cryptocurrency, Tez.
What are some potential use cases for Tezos?
Tezos can be used for peer-to-peer transactions, deploying smart contracts, countering electoral fraud, and other decentralized applications where trust, security, and permanence are important.
Where can I buy or sell Tezos (XTZ)?
Tezos (XTZ) can be bought or sold on various digital currency exchanges including Binance, Coinbase, Kraken, and others.
Related Finance Terms
- Blockchain: This is the underlying technology of Tezos, and is a system of recording information in a way that makes it difficult, if not impossible, to change, hack, or cheat the system.
- Cryptocurrency: This is the type of digital or virtual currency that Tezos is. Cryptocurrencies use cryptography for security and operate independently of a central authority.
- XTZ: This is the symbol or ticker for the Tezos cryptocurrency unit, similar to how “USD” represents the United States Dollar.
- Smart Contract: Tezos is designed to make the creation of smart contracts easier. These are contracts that are self-executing, with the terms of the agreement directly written into code.
- Decentralized Applications (dApps): Tezos is a platform that supports decentralized applications. dApps are applications that run on a P2P network of computers rather than a single computer.
