Things Worth Knowing Before Buying Tezos(XTZ)

You may be aware that Tezos is one of the many programmable blockchains. These programmable blockchains can carry out related functions by executing a small amount of self-executing code. This is referred to as a smart contract. Decentralized finance (DeFi) services in particular benefit greatly from using smart contracts to deliver products and services. Smart contracts can eliminate the need for intermediaries in traditional banking services, resulting in faster and more secure transaction processing. But if you are thinking about investing in Tezos (XTZ), there are a few key things you should be aware of.

Providing tokenized assets to Swiss companies

InCore Bank, Inacta, and Crypto Finance Group announced that they would use Tezos to create the new standard dubbed the DAR-1 tokens at the end of August. Tezos will use smart contracts with these new tokens to comply with anti-money laundering regulations and improve governance. In addition, InCore Bank has announced the launch of a staking service for the Tezos network. This agreement lends credence to Tezos’ claim that its smart contract language is particularly well-suited for financial transactions. For example, the company’s Michelson language ensures that funds will not be lost or frozen due to code bugs.

Tezos claims to be a self-correcting blockchain.

Tezos stated that the blockchain’s significance lies in “continuous evolution”, with the self-correcting chain one of Tezos’ distinguishing features. The self-correction function allows Tezos owners to propose and vote on changes to the chain without needing to discuss them face-to-face. The approved update will then be automatically implemented by Tezos, an unusual governance model that, in theory, can reduce the possibility of community division. As reported by Benjamin Godfrey in Coinspeaker, “This feature is ideal for financial services firms, as many products are bound to be rolled out in sequence.” On the other hand, off-chain governance involves more discussions in meetings or through forums and mailing lists, which may slow down decision-making.

XTZ has risen by about 170% since the start of 2021

The Tezos native cryptocurrency the tez (XTZ), has made significant gains this year. Although its price has not risen as much as other major cryptocurrencies, it has increased by approximately 170%. So, if you bought XTZ for $100 at the start of the year, it is worth around $270. Cryptocurrencies, like stocks, are by their nature risky investment vehicles. Investing in cryptocurrencies can result in both significant gains and losses for investors. However, past behaviour does not predict future success in crypto trading, and it may be difficult to achieve another 170 percent return in the short term by investing in XTZ. As for 2022, some think Tezos will continue a bullish trend, perhaps reaching the $6 mark in November, according to Digital Coin Price.

But, as with any investment, if you believe Tezos will perform well in the long run, you should spend some time studying the basics of Tezos and understanding what problems it hopes to solve in the future. This method can help you better understand the virtual currencies you own or plan to purchase and increase your confidence in these currencies. You should conduct your research to determine whether it will on balance perform well over time, and you should do this as thoroughly as possible. Researching a cryptocurrency is a lot like shopping for a new car. While you can make a purchase based solely on technical specs, it’s also important to consider how the ride feels on the road, the maker’s reputation and whether the color of the interior will match your tastes. Investors call that research, which is also used for stocks and shares: fundamental analysis.

Putting its troubles behind it

We discussed the Tezos governance model earlier, but we did not discuss in detail the internal struggles that hampered its early development. Following the ICO’s $232 million fundraising success in 2017, internal disputes between the token’s creators (Arthur and Kathleen Breitman) and the Tezos Foundation caused significant delays in the platform’s release.

The promised XTZ token took nearly a year to materialize, prompting investors to file a lawsuit. The Tezos Foundation in 2020 reached a $25 million settlement agreement, with $16.5 million going to loss-making investors. While Tezos should now be able to progress its business, challenges remain. One year is a long time in the world of encryption. While Tezos works to resolve internal issues, other cryptocurrencies such as Cardano (ADA), Solana (SOL), and Polkadot (DOT) are working on rival new technologies. Only by accelerating the development of new technological innovations will Tezos be able to compete with other cryptocurrencies. At the same time, Tezos’s internal troubles have called into question the token’s on-chain governance model, owing to the failure of its real-world governance, which has had a significant impact on its reputation.

The future of Tezos

Tezos is available on many popular cryptocurrency exchanges, including BigONE, and investors can earn interest by staking XTZ through exchanges, wallets, or directly with the Tezos network.

In addition, Tezos, as opposed to Bitcoin (BTC), uses a more environmentally friendly proof-of-stake model to verify transactions and ensure network security. When you pledge your XTZ, you bind your tokens to the network, allowing them to power it. According to staking rewards data, nearly 77% of XTZ tokens are currently pledged, with an average annual interest rate of 4.66%.

A fascinating aspect of the cryptocurrency sector is that blockchain technology is constantly evolving, and there are still many problems to be solved. At the moment, many programmable blockchains are vying for market share from the dominant player Ethereum. Unfortunately, despite being the first programmable blockchain to hit the market, Ethereum is still plagued with network congestion and high fees. Tezos is also currently competing for a lion’s share of the programmable blockchain market, and its recent Swiss tokenized asset deal demonstrate that its technology has practical applications and is finding customers in the financial sector. “This work by Crypto Finance, InCore Bank, and Inacta is a tangible example of how FA2 on Tezos broadens the potential for tokenization significantly.” Stijn Vander Straeten, CEO of Storage Infrastructure with the Crypto Finance Group, adds in a report in ‘Institutional Asset Manager’: “The launch of these Tezos use cases for the financial sector make innovative, compliant on-chain financial products a reality today.”