Tezos Beginner's Guide - Part 1

The decentralized finance (DeFi) space has taken center stage in the crypto world for the past three years. DeFi has seen more cutting-edge and next-generation financial protocols developed, giving users and investors additional options for managing and investing money. At the helm of this DeFi push are projects like Tezos.

Tezos provides an infrastructure that enables easy payment between users globally. Are you interested in Tezos but have little information on them? Don’t worry. This Tezos beginner’s guide will shed light on Tezos, looking at what it is, where to buy the XTZ token, and other details.

Tezos
Source: Tezos
What Is Tezos?

Tezos is one of the OGs of DeFi. It is an open-source platform for carrying out peer-to-peer transactions and creating decentralized applications (DApps). The Tezos Foundation backs Tezos. Also like Ethereum and Bitcoin, Tezos has its own utility token, Tez, also known as XTZ.

Tech couple Arthur and Kathleen Breitman developed Tezos in 2014 with a mission to build the “largest multipurpose and self-amending blockchain.” However, the platform has grown into one of the most distinct blockchain platforms.

Tezos was designed to enable XTZ holders to vote on future rule changes to the platform. The software updates the rules on network nodes after a consensus has been established on these rule changes. This way, the users are in control of directing and managing Tezos’ affairs.

Implementing this form of governance makes Tezos a community-focused project with increased user satisfaction. This almost completely eliminates the possibility of a hard fork. Now, let’s talk about what makes Tezos different from the pack.

Why Is Tezos Different?

Tezos has features that are comparable to those of other cryptocurrencies. But its operational model is very distinct. Developers can leverage Tezos’ software to design new dApps and run custom programming logic.

We can divide Tezos’ blockchain into two parts:

  1. Network shell: This is the aspect of the code that’s in charge of administrative operations and transactions, and that amends itself based on users’ votes.
  2. Network protocol: This part of the code sends proposals to the shell for review.

Tezos uses a type of the traditional proof-of-stake (PoS) consensus mechanism known as liquid proof-of-stake (LPoS). This system operates by users “staking,” or in the case of Tezos, “baking,” XTZ. A single node needs to bake 6,000 XTZ tokens before they can become bakers.

Bakers vote on changes proposed by developers, thereby playing a role in the governance of the system. Tezos is both decentralized and self-governing, which is one of the ways it differs from other cryptocurrencies.

The unique qualities of Tezos are also enhanced by its automatic updates and upgrades. The network is ideal for crypto enthusiasts since it allows users to quickly vote in favor of or against suggested improvements.

XTZ Use Cases

Tezos had one of the most successful ICOs in crypto history that raised $232 million. The project also has several partnerships with companies like Ubisoft. The reason isn’t far stretched from its use cases.

Now let’s explore some of the use cases for the XTZ token.

  • Staking: Staking to protect the network is the main use case for the XTZ token. As mentioned earlier, the LPoS implementation enables stakeholders to participate in the validation of transactions on Tezos and earn incentives.
  • Smart money: XTZ, by its design, can function as smart money. The token is scalable and can be used for dApps and smart contracts within the network. Transaction fees on Tezos are cheap and affordable when compared to other networks like Ethereum.
  • A store of value: Like other cryptocurrencies, XTZ is a convenient and reliable transfer and store of value.
  • Network development: The token is used to reward holders, which helps stabilize the network.

How to Buy XTZ

The XTZ token is available on several exchanges. But we advise you to use trusted platforms like Binance. If you are using Binance, you’ll have to create an account with the exchange and follow all the requirements. This article provides a brief but detailed guide on buying XTZ on Binance.

How to Be a Validator on Tezos

We’ve talked about this a bit today. Being a validator on Tezos is pretty rewarding and quite straightforward. As said earlier, you need to have 6,000 XTZ tokens to become a baker (validator) on Tezos. You can sign, produce, and validate blocks and be rewarded in proportion to your stake.

To bake, you only need to run a node with baking software and keep it online and current. If you want something less technical, then you can delegate your tokens to other bakers and earn rewards.

Conclusion

Tezos is one of the pioneers of the DeFi movement. Despite old issues that plagued the network, Tezos remains a formidable force in crypto. As of this article, the XTZ token trades at $1.13.

We’ve got the second part of our beginner’s guide series now available. In the next piece, we’ll talk about how to use the Tezos Explorer and simplify some technical things.

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