What is Tezos? Tezos is a platform home to the cryptocurrency known as tez or tezzie, where holders can transact and also build smart contracts and decentralized applications.


Original authorArthur Breitman, Kathleen Breitman
Date released30 June 2018
Consensus mechanismLiquid proof-of-stake
Block reductionNo
Block time60 seconds
Supply limitN/A

‘Secure. Upgradable. Built to last.’ is the confident slogan of an intriguing cryptocurrency project called Tezos. The native token on the Tezos platform is known as a tez or tezzie (XTZ).

Despite a rocky start after its $232 million’s fundraiser in 2017, which included legal issues and a bearish crypto market for 2018 and 2019, Tezos started prospering in 2020. This recent performance is evidenced by being the 21st most traded cryptocurrency according to CoinMarketCap. 

The project boasts an approximate market capitalization of $2.1 billion, and each coin is currently worth around $2.83 (all data correct as of 01 February 2021). This article will cover how Tezos began, how it works from a basic user and technical perspective, and why it’s unique.


Although the official release of the XTZ wouldn’t occur until 30 June 2018 due to legal controversies happening after its 2017 ICO (initial coin offering), the concept was in full steam as far back as August 2014. 

There are several interesting facts about the creation of Tezos. Like most cryptocurrencies, Tezos began with a paper interestingly titled the ‘Position Paper’ and then the official whitepaper in 2014, both penned by a pseudonymous L.M Goodman, who was later discovered as Arthur Breitman. 

Arthur Breitman

Along with his wife, Kathleen, the Breitmans formed a start-up called Dynamic Ledger Solutions who began working on the code of XTZ’s blockchain. This company was eventually absorbed into the Tezos Foundation, a Swiss-based non-profit organization.

Amid the ‘crypto boom’ in 2017, the Tezos Foundation held one of the most financially successful ICOs in history by raising an unprecedented $232 million (more than ten times surpassing the forecasted $20 million). 

Though we were not able to find information on how many XTZ tokens this equates to, the $232 million consists of a sum of 65,681 BTC and 361,122 ETH at the time.

How does Tezos work?

At its basic level, Tezos is a blockchain network, and its digital token is known as a tez or tezzie. XTZ is an open-source, peer-to-peer, decentralized, and transactable cryptocurrency. 

From this user perspective, XTZ is available on plentiful cryptocurrency exchanges that provide different wallet storage options. 

Another function of the Tezos platform is for developers to create and run custom programming logic known as smart contracts and decentralized applications (dApps). There is no hard cap on the supply of tezzies. At the time of writing, according to CoinMarketCap, 758,591,850 XTZ are in circulation, with a yearly inflation rate of around 5%.

Tezos’s ledger

Tezos’s blockchain utilizes the proof-of-stake (PoS) consensus mechanism. In PoS, rather than proof-of-work mining, where advanced computers compete to add blocks, the blockchain automatically adds blocks based on who has the largest stake.

However, the model Tezos employs is known as liquid proof-of-stake. Liquid PoS is very similar to delegated PoS, except that in the latter, delegation isn’t optional, while in the former, it is. 

In liquid PoS, users can delegate their stake to validators without transferring ownership. Validators (those responsible for securing the network) are known as ‘bakers.’ The minimum required minimum stake for ‘bakers’ is 8,000 XTZ for the privilege to validate blocks, resulting in the ‘mining’ of new XTZ. 

Furthermore, ‘bakers’ have voting rights on the governance of the Tezos project. ‘Bakers’ receive 16 XTZ for every block, which forms roughly every 60 seconds. In addition, ‘endorsers’ are assigned for each block, for which they receive 2 XTZ. Users simply delegating their stake can expect about a 5% yearly return after ‘baker’ fees.

What makes Tezos valuable?

To understand what makes Tezos unique, we have to look at two of the most significant projects in the market currently, Bitcoin and Ethereum. Although both cryptocurrencies are technically decentralized, due to their mining structure, there are a few groups responsible for much of their creation.

Both coins rely on the proof-of-work consensus mechanism (although Ethereum is slowly moving towards proof-of-stake). This system creates many problems, such as somewhat of a centralized and overwhelming mining concentration who are the only ones able to handle the enormous expenses of partaking in this activity. 

In contrast, a proof-of-stake cryptocurrency does not possess these challenges. This model is known to be far more scalable, and the decision-makers are visible within the network. Research suggests around 80% of all existing XTZ is staked across at least 450 validators and 13,000 delegators, making it one of the most decentralized platforms.

The blockchain can also essentially self-upgrade itself without any hard forks. Furthermore, any digital currency involved with smart contracts and dApps sets itself apart from the pack as both these fields will become increasingly important.


Any investor in cryptocurrencies should be bullish about most projects in the space, including Tezos, which is quite a fascinating addition to consider. Many of them should be looking into cheaper-priced coins less than $10 rather than the more expensive options like Bitcoin and Ethereum. 

Currently, the Tezos Foundation has not announced any future developments that may drastically affect its value. However, we should, as with most coins, expect continuous upgrades to the network.

Ultimately, the future success of any cryptocurrency lies in how heavily the market will adopt it, any possible market regulations, and the growth of the crypto space, among other things.