Why Tezos is the most advanced Blockchain to date
Why this project could be a competitor to larger blockchains like Ethereum
What is Tezos?
Tezos is a self-amending blockchain that can evolve over time by upgrading itself. Through self amendment it allows Tezos to upgrade itself without having to fork the network into two different blockchains. Stakeholders can vote on amendments to the protocol not limited to any factor to reach consensus on proposals. Much like Ethereum, Tezos supports smart contracts and offers a platform to allow others to build decentralized applications (Dapps) on top of it.
What makes Tezos unique and a strong competitor to Ethereum?
Currently, Ethereum is a smart contracts platform built on top of a Proof of Work (PoW) consensus blockchain. There are some negatives to this:
- Proof of Work (PoW) is expensive
- Ethereum transactions per second (tps) is very slow with only 15 tps
- Smart contracts cannot be formally verified
- Smart contracts are written in Solidity and don’t lend themselves to formal verification
- Fundamental changes to the blockchain are handled through hard forking, which can lead to many problems in the community and disrupt the network effects that are formed over time.
Tezos, on the other hand implements several features that ensure unity and validity across the network driving incentives to hold Tezos (XTZ).
- Self-amendment: Allowing the network to upgrade itself over time without having to hardfork and cause a divide in community, alter stakeholder incentives and disrupt the network effects that are formed over time.
- On-Chain governance: Where stakeholders in Tezos can particpate in the governing protocol, allowing for a formal and systematic procedure for stakeholders to reach agreement on proposed protocol amendments.
- Decentralized Innovation: Proposed amendments to the protocol by stakeholders will include payments to groups or individuals to improve the protocol, furthering innovation and decentralizing the maintenance of the network.
- Smart contracts & Formal verification: Tezos offers a platform to create smart contracts and build Dapps that cannot be censored or shut down. Unlike Ethereum, Tezos facilitates formal verification to prove validity of smart contracts. Learn more about formal verification here: https://en.wikipedia.org/wiki/Formal_verification
- Proof of Stake (PoS): Unlike Ethereum, Tezos utilizes PoS where participants provide the necessary computational resources to keep the network running. This is less costly compared to PoW and unlike other PoS protocols any stakeholder can participate in the consensus process and be rewarded for contributing to the security and stability of the network.
- Delegation: A security deposit is required to participate in the consensus process. The consensus process relies on an honest majority for its security and thus will penalize any dishonest particpants to the point of losing their deposit. But, will be rewarding to honest behavior.
What is “baking”?
How does this help the Tezos Proof of Stake (PoS) consensus mechanism?
Baking is a unique term coined to the consensus mechanism of the Tezos chain. It is the act of signing and publishing blocks to the Tezos blockchain. Bakers validate all transactions and add them to the blockchain. They are also rewarded with additional XTZ for securing the network. If a baker chooses to act dishonestly, there is a built in mechanism that can cause them to lose their security deposit and not be allowed to contribute to the network. This ensures unity, honesty and validity across the Tezos network.
When Lunch (launch)?
After the prolonged amount of time from the Tezos ICO which started on July 1st of 2017 and ended on July 14th, 2017 many people and investors have been eagerly anticipating the release of the Tezos beta network. Recently, the Tezos foundation has made public of its plans to the launch the beta network after running a test network successfully for well over a year. A genesis block will be proposed by the Tezos foundation at the betanet launch. Investors can check their contribution here: https://check.tezos.com/
Why Tezos will flourish in the coming months and years
Due to the scalability, problems with smart contracts and formal verification plaguing Ethereum, Tezos has a great opportunity to become the dominant chain in the cryptocurrency ecosystem. Through it’s self amending protocol, Tezos will be able to upgrade and evolve over time which is a strong characteristic of a 3rd generation blockchain. With an on-chain governance mechanism, bad actors will be punished, allowing for unity and honesty to drive the Tezos ecosystem forward and reward honest participants. Essentially, upon release of the Tezos betanet and mainnet launch, Tezos will be ahead of projects like Cardano, Neo, Ethereum right out of the gate.
An excellent interview with the Co-Founder of Tezos can be viewed here: https://youtu.be/PJR39_Yw2qg
Disclaimer: I am not a financial advisor and all thoughts presented in this article are merely opinions of myself. Please as always do your own research.