What is Tezos

Tezos is a smart contract and decentralised applications platform. Tezos's block creation process is called ‘baking’, through Tezos, holders who stake their tokens can receive Tezos (XTZ) tokens as a reward for creating and verifying blocks. XTZ is the cryptocurrency that powers Tezos. Tezos, a blockchain network, links to a digital token known as a ‘tez’ or a ‘tezzie’.

A Brief History of Tezos

Established by Arthur and Kathleen Breitman and was initially suggested in 2014. The non-profit Tezos Foundation, located in Zug, Switzerland, was founded to assist the project in 2017 and raised US$232 million in Bitcoin and Ethereum in one of the largest initial coin offerings (ICOs) at the time. According to the developers, ‘Tezos’ is ancient Greek for ’smart contract’.

In the early days, Tezos faced several delays and legal challenges after a promising start and a successful initial coin offering (ICO). The price of tez quadrupled and hit all-time highs between October 2019 and February 2020. Tezos continues to gain attention in 2021 and is among the top 40 cryptocurrencies.

Least Authority, an audit company, disclosed the findings of five audits completed for the Tezos Foundation in 2018 and March 2019. Tezos, with a high likelihood, protects against chain reorganisations and selfish-baking, two typical concerns with blockchains that use Nakamoto-style consensus. A second analysis confirms that selfish baking in Tezos yields little profits, even when the baker trying it has a sizable stake. One study discovered a potential fault in Tezos' existing consensus proof of stake (PoS) mechanism, offering a theoretical analysis of feasibility and profitability of a block snatching attack known as ‘selfish endorsing’.

This study led to the recommendation of a protocol adjustment that would reduce the profitability of dishonest activity. The Tezos blockchain can build decentralised applications and smart contracts that cannot be censored or removed by third parties. It allows a formal verification process, which improves the security of these applications using mathematical procedures. This mechanism can also identify bugs and fix them before significant repercussions occur.

How Tezos Works

While Tezos has some similarities to other cryptocurrencies, its operating system is distinct. Tezos's blockchain splits into three protocols: a network protocol that discovers blocks and broadcasts transactions, a transaction protocol that specifies what makes a transaction valid, and a consensus protocol that forms consensus around a unique chain.

Tezos employs liquid proof of stake (LPoS), a variant of the classic proof of stake (PoS) consensus mechanism. This mechanism operates by its user's staking or ‘baking’ XTZ in the case of Tezos. A single node must bake 8,000 XTZ tokens to become a baker. The bakers play an essential role in blockchain governance by voting on code changes offered by developers. The voting process lasts 4×23 days.

What is Tezos Used for

Tezos, like Ethereum, is intended to leverage smart contracts. Tezos goes above and beyond initial offerings. It extends the smart contract concept by letting participants control the network's rules directly.

Tezos aims to integrate decision-making into the user network itself. Tezos creates incentives for user involvement in the core development process by decentralising maintenance and democratising the development process. Tezos's creators knew that some crucial attributes would need care throughout time.

Tezos employs explicit mathematical arguments to preserve these qualities. It also contains a system for making group decisions allowing token holders to vote on future protocol updates.

Tezos operates on a decentralised blockchain network, which means no central database can be hacked to update or delete data. Even if a hacker discovers tries, no changes can occur without the consensus of stakeholders.