Investing In Tezos In 2021 Explained
What is Tezos (XTZ)? Is it worth investing in XTZ in 2021? Will the cryptocurrency market recover from the ongoing pandemic? Will Tezos overtake crypto giants, such as Bitcoin, Ethereum, and Ripple? Keep on reading to find out more about cryptocurrency trading and blockchain technology.
Before we look into Tezos as an investment, let’s answer another fundamental question: “What is Tezos?”
What Is Tezos?
Tezos is defined as a fourth-generation blockchain-based platform used for the execution of cross-border payments, smart contracts, and decentralised applications.
The fact that Tezos is an open-source decentralised network that enables a host of functionalities is one of the major advantages of Tezos, which attracts researchers, developers, and traders worldwide.
It’s not only its decentralised nature that makes Tezos unique. Tezos is based on an on-chain governance model, which means that users can participate in the decision-making ecosystem and facilitate automatic changes without risking the occurrence of hard forks.
This also makes Tezos one of the most democratic blockchain platforms in the cryptocurrency sector.
As developers stated: “Tezos takes a fundamentally different approach by creating governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network. When a developer proposes a protocol upgrade, they can attach an invoice to be paid out to their address upon approval and inclusion of their upgrade.”
Here we should note that Tezos uses an improved proof-of-stake consensus mechanism, which means that users can confirm transactions without expensive equipment or technical knowledge; in other words, the need for mining is eliminated completely.
In fact, Tezos and its user-friendly staking led to the popularity of XTZ and an increase in its price in 2019 and 2020. Believe it or not, the price of Tezos tripled between October 2019 and February 2020!
The History of Tezos
Tezos - a state-of-the-art cryptocurrency worth watching in 2021 - had a turbulent start. Tezos was proposed in 2014 by Arthur and Kathleen Breitman, under the pseudonym LM, targeting a major drawback of blockchain technology: the notorious fork-based governance model.
Three years later, the Tezos Foundation launched one of the most impressive Initial Coin Offerings (ICOs) to date and managed to raise $232 million in less than two weeks.
Despite its promising start, Tezos was troubled by various delays, in-house drama, and lawsuits. Yet, the network managed to restore its image and it was launched in 2018.
After having established a more solid presence in the crypto market, Tezos implemented two protocol amendments (Athens and Babylon) to make staking and smart contract development more effective.
Additionally, Tezos started sharing grants and training opportunities to attract researchers and crypto enthusiasts alike.
Because of its promising features and social media image, now Tezos is working with different leading organizations to support the digitalisation of capital markets, including real estate. For example, Tezos is collaborating with tZero and Alliance Investments to tokenize real estate in the UK, as well as the Fundament Group in Germany to enhance digital property bonds.
How Does Tezos Work?
So how does Tezos work exactly? As stated above, Tezos is an open-source platform for digital assets, smart contracts, and dApps. But what makes it unique?
The platform’s native language for smart contracts is called Michelson. Many consider Michelson a highly-secure language as it provides formal verification and flexibility at the same time. Here we should note that this formal verification mechanism is crucial in real-world settings, such as the tokenization of assets with real-world value and loans.
The on-chain governance of Tezos explained above is another unique functionality. On-chain governance means that protocol amendments are voted by users; if approved, they are automatically implemented via self-amendment, avoiding the occurrence of hard forks.
To be more precise, when a developer proposes an upgrade, the protocol goes to the community to be tested. After the testing period, users can vote on the upgrade; if approved by the majority of users, the upgrade will be integrated via a protocol known as a hot swap.
In fact, Tezos has a unique architecture as a whole. Tezos has a modular style of blockchain network that can change itself based on certain rules; it uses the so-called network shell to enable self-amendment. Usually, blockchain has three layers: network, transaction, and consensus. Tezos’ network shell facilitates the communication between these layers and enables users to participate in a democratic manner.
Tezos is also the first cryptocurrency that popularised the process of staking, known as Tezos baking. Here we should note that Tezos combines the best features of traditional proof-of-stake and delegated proof-of-stake, so people without enough funds or technical knowledge can participate via delegating or getting someone else (a validator) to confirm transactions for them.
According to some figures, it’s possible to get around a 5.61% yearly return on staked Tezos.
Here we should also mention that the system allows you to operate under two account types: implicit and originated accounts. Implicit accounts are for everyday users, while originated accounts are for developers.
Interestingly, in March 2020, Tezos (being an evolving network) implemented a protocol called Carthage to allow developers to run more complex apps.
What Is XTZ?
Tezos is associated with its native digital token XTZ, known as tezzie or tez. As explained above, XTZs are not mined as Tezos uses a proof-of-stake mechanism and users receive incentives for participation in the core development process.
Though Tezos is much more than a cryptocurrency - with XTZ being used mainly to run the blockchain, there’s a growing interest in XTZ from both traders and investors.
To provide an example, currently Tezos has more than 400 active bakers and a staking ratio of almost 80%. Such interest gives XTZ room for growth and competition.
While it’s true that XTZ tokens are still recent entries, XTZ experienced significant growth in 2019 and 2020. Tezos managed to recover from the coronavirus-triggered bearish market and become one of the top cryptos in terms of market cap.
Note that at the time of writing, one XTZ is trading at $2.19, with prices expected to increase further.
And guess what! As reported by Forbes, Tezos might be on track to smash Bitcoin.
Would you consider investing in Tezos XTZ?
Is It Worth Investing In Tezos In 2021?
Yes, of course! With a market cap of $1,645,701,484, Tezos - currently ranking 19th in the crypto sector (as per CoinMarketCap) - is definitely worth watching in 2021.
Investors who believe in the democratic mechanism and innovative technology that Tezos offers feel particularly attracted by XTZ.
Many claim that Tezos will overtake other platforms for the deployment of dApps and smart contracts, including Ethereum, often referred to as the king of smart contracts.
No surprise that the interest in XTZ is increasing; as stated above, Tezos has a stake rate of almost 80% with more than 13,000 delegators and 400 validators across the globe.
On top of that, as many experts believe that proof-of-stake cryptocurrency projects will cause the next crypto bull market, Tezos financial development may continue to increase in popularity.
While XTZ is currently trading at $2.19, which can’t really compare with Bitcoin, XTZ price could grow further in the long-term. Since Black Thursday 2020, for instance, Tezos has managed to recover and remain above $2.00.
That said, when looking into Tezos and its investment potential, do not forget that all investments come down to the risk-reward profile of the asset you are interested in.
Cryptocurrencies, in particular, can be highly risky, so never invest more than you can lose.
How Much Will Tezos Be Worth?
If you decide to buy XTZ, you may ask “How much will Tezos be worth?”
While making price predictions is highly speculative, many experts expect a bullish trend thanks to Tezos’ on-chain and democratic governance. If Tezos exhibits higher lows and positive momentum, a bullish trend may burst and lead to a large margin.
Based on tech analysis and past data, it’s expected that Tezos may hit $4.30 in 2021.
Furthermore, according to WalletInvestor, XTZ can be worth $7.03 in 2025. CryptoGround also claims that Tezos is a good long-term investment; according to the source, XTZ will reach $9.01 in 2025.
Other more extreme predictions, such as those provided by CryptoCoinSociety, claim that Tezos will reach $24.06 by 2025.
While nobody can predict how the global economy will recover from the ongoing pandemic, investing in XTZ may generate high returns far beyond the year 2021.
Should I Invest In Tezos?
With different advantages of Tezos over other cryptocurrencies, such as automatic changes and accessible baking, investing in Tezos can be a good investment for you.
That said, while Tezos is a coin worth watching, always remember that cryptocurrency investing can be a risky venture.
This doesn’t mean that trading XTZ in 2021 is a bad idea: it just means that you should do your own research and analyse the risk to reward ratio of XTZ to decide if possible rewards outweigh potential risks.
If you decide to add XTZ to your portfolio, you’ll be pleased to know that with eToro, you can buy and sell cryptocurrencies and trade CFDs of up to 90+ crypto pairs.
Ready to start investing in Tezos XTZ?
Who Should Consider Adding XTZ to Their Portfolios in 2021?
With different unique features and growth potential, there’s no doubt that XTZ investing is on the rise. Tezos is a popular asset among investors who believe in XTZ in the long-term, as well as day traders who aim to profit from its volatility and diversify their portfolios to reduce risks.
Tezos is also a popular choice among crypto enthusiasts who believe that Tezos is much closer to Satoshi’s philosophy in terms of decentralisation and democratic principles.
Let’s not forget that Bitcoin’s enigmatic creator Satoshi wanted to make financial services available to people from all walks of life and eliminate the need for central banks and costly third parties.
Of course, corporations also take interest in XTZ. For example, Tezos is highly valued by major financial institutions, such as Dalam Capital, Enabling Future, BTG Pactual, and Alliance Investments. That’s right! When it comes to strategic investments, Tezos has gained a lot of backing because of its innovative and self-governing blockchain.
In the end, cryptocurrency investing is not a get-rich-quick scheme, so you should decide for yourself whether you should invest in Tezos and its highly democratic self-governing mechanism.
Key Points
Tezos is an innovative and secure self-amending blockchain platform, designed primarily for the development of smart contracts and dApps.
Tezos was launched in 2018 after a highly successful ICO, followed by different in-house drama and lawsuits.
Despite its ups and downs and the bearish market triggered by the ongoing pandemic, Tezos has managed to establish itself as one of the leading projects in the cryptocurrency market.
Tezos is unique because it has democratic on-chain governance and relies on baking instead of mining. On top of that, it uses a secure programming language that guarantees formal verification.
XTZ is the native token of Tezos, currently trading at $2.19 (as of December 14th, 2020).
With a market cap of $1,645,701,484, Tezos is an attractive investment option for both beginners and experienced investors, as well as large financial institutions.
In fact, many financial experts believe that Tezos will grow further in the long-term and reach new highs by 2025.
Is Tezos a safe investment?
Yes, Tezos is a safe investment. Tezos uses a decentralised blockchain, so there’s no central database that can be hacked. On top of that, Tezos uses a novel language and cryptographic encryption, ensuring both formal verification and safety. If hackers ever find a way to access the network, amendments cannot be made without stakeholders’ consensus, which makes Tezos highly secure. That said, cryptocurrency investing can be risky, so always proceed with caution.
Is Tezos anonymous?
Tezos is a relatively new cryptocurrency that is still developing in terms of privacy and mass adoption. So far, Tezos has the same level of privacy as Ethereum and Bitcoin: while they are anonymous, a digital footprint is still present. On the other hand, trustworthy exchanges are required to comply with Know Your Customer and Anti Money Laundering regulations, so users who want to trade XTZ may have to provide personal details. That said, Tezos has announced plans to introduce new Zcash’ privacy features in the upcoming months, which may affect its anonymity in the future.