What is Tezos?
Tezos is a blockchain that is trying to create a digital commonwealth that uses the cryptocurrency XTZ. A commonwealth is a self-governing community that has shared goals and interests. XTZ holders will make decisions and govern the blockchain together by voting in new protocols. Tezos is similar to Ethereum because it is a smart contract platform but has some key differences such as a built-in governance system, formal verification and a different consensus mechanism (Delegated Proof of Stake). Its most unique feature is that its network does not have to fork in order to upgrade.
In order to understand the problem that Tezos solves, you need to understand forks. A fork is when a network splits in order to implement new code and new upgrades. Bitcoin and Bitcoin Cash are a perfect example of this. The problem is that when a coin forks the value of the network is divided between the two networks. Often times there are disagreements about which network is the best network and which network has the most value. These updates can cannibalize the value of the network. The updates are very common because blockchain technology is still in its early phases of development. Blockchains need the ability to upgrade their code without destroying the value of the network and confusing the network participants.
Tezos solves this by incorporating a process for upgrading the network over time through an on-chain governance system. The on-chain governance system is designed to allow the blockchain to evolve and adapt new technology as it is needed.
Developers can submit proposals for network upgrades with a request for compensation. Token holders can vote on whether the proposal should be approved.
Delegated Proof of Stake
Tezos uses a delegated proof of stake (DPOS) consensus mechanism. Under a DPOS algorithm, token holders may vote for representative block producers to produce blocks (verify transactions). The software enables blocks to be produced every 0.5 seconds. This enables token holders to verify transactions by holding tokens instead of spending money on mining hardware and electricity,
Miners/stakers in the Tezos ecosystem are called bakers. Bakers need to have 10k Tezos tokens, plus a bond to run one of the nodes.
Tezos uses a programming language called OCaml. According to the Tezos whitepaper “Coq, one of the most advanced proof checking software is able to extract OCaml code from proofs. As the platform matures, it will be possible to automatically extract key parts of the protocol’s code from mathematical proofs of correctness.” The formal verification of the code will be able to prevent serious bugs in the Tezos protocol.
What are the negatives?
After raising $232 million in their ICO in July 2017, Tezos became one of the biggest and most controversial ICOs in history. On June 31st 2018, Tezos finally launched its betanet after a lot of confusion and drama. Basically, its foundation in Switzerland had a massive public dispute over control of the board which led to a delay in the release of the network. This also led to a class action lawsuit which accused Tezos of selling unregistered securities. If you want to read about the full drama, check out this article. It is ironic that the blockchain designed to handle governance struggled with the governance of their own foundation.
BlockWolf believes that Tezos needs to regain community trust in order to be successful. Blockchain networks are successful because of the community that participates in them. The Tezos foundation drama turned many community members off and even resulted in a class action lawsuit. In addition, BlockWolf believes that it will not be easy to get developer interest for a project that uses OCaml, as this is not a common coding language. However, the project could overcome these obstacles and be a huge success because of its ability to upgrade and update. In addition, the project has some notable investors such as the Winklevoss twins and Tim Draper. Since the Winklevoss Twins own Gemini exchange there are some rumors that it could get listed, which could dramatically increase exposure for the coin.