Tezos (XTZ) burst onto the crypto scene with a phenomenally successful ICO in July 2017, raising $232 million in the process. However, disagreements between the founders followed, which led to delays in the token’s release. But those treacherous days seem to be a thing of the past, and it’s now the “next big thing” in the crypto industry. But, of course, it is certainly the only cryptocurrency that has received this approval. Looking into the future of Tezos cryptocurrency, can the hype be justified? Is Tezos cryptocurrency a good investment?
The price of Tezos Coin can be predicted based on a wide range. Typically, Tezos investors are bullish on the long-term price. Many point to the decentralized nature of the network, the growing demand for XTZ itself – which is why Tezos is a good investment, in their opinion.
What is Tezos (XTZ)?
Tezos is a platform for hosting smart contracts and decentralized applications (DApps). Its native cryptocurrency is called Tez, or Tezzie (XTZ). It is not mined like other cryptocurrencies. Instead, XTZ Coin holders are rewarded with tokens when they participate in the proof-of-stake (PoS) consensus mechanism.
However, there are some fundamental differences between Tezos and other blockchain-based cryptocurrencies. On the Tezos platform, there are people called bakers (bakers). They essentially perform the same function as miners, protecting and managing the network, checking transactions, and distributing rewards per block. But instead of using expensive mining equipment to perform these activities, everything happens virtually through a Proof of Stake (PoS) consensus.
A description of the “baking” process
To become a baker, one must possess 8,000 XTZ. When one becomes a baker, one can add blocks to the Tezos blockchain (XTZ) – this is the process called “baking” (baking). The more XTZ a baker has, the more likely he is to succeed in getting a reward.
However, if someone doesn’t have 8,000 XTZ or the processing power to take part in baking, they can pass their tokens to the baker. While not at the same level as bakers, delegates can still earn significant passive income through steaking. Delegates lend their tokens to bakers, increasing their chances of “baking” a block. Usually, the bakers then share an extra XTZ with the delegate.
A unique feature of Tezos is that it can be updated without the need for a hard fork. This means that changes can be implemented on the network without branching. The problem with branching is that it can lead to division and disagreement between the cryptocurrency community and miners. Tezos aims to solve this problem by letting the bakers make their own decisions about changes to the network.
Only backers can vote for any changes. However, if a delegate does not agree with a baker’s position, they can delegate authority to another baker who is more in solidarity with their position on an issue. Thus, any bakers who do not vote in accordance with their delegates’ views may be penalized by a reduction in delegated funds. In addition, only bakers can propose any changes to the minutes.
Because of all this, Tezos differs significantly from traditional PoS systems. In such scenarios, every token holder can participate in the management process. In Tezos, however, tokens vote on behalf of their delegates. This is why the PoS system used on the Tezos blockchain is essentially delegated proof of participation (DPoS). However, it is not the same system as other blockchains that use DPoS, such as EOS or TRON. More specifically, Tezos uses what is known as liquid Proof of Stake (LPO) because in this case, delegation is not mandatory, unlike DPoS.
Tezos history overview: rise, fall and rise again
The Tezos white paper was released in 2014 by its founders and detailed the Tezos project. Their ICO was launched in July 2017 and raised $232 million in bitcoin and ether, even though the goal was only $20 million. It was the most successful ICO at the time. The fact that they raised 11 times as much as they expected meant they were able to hire the best developers to build Tezos’ blockchain from the ground up.
However, internal squabbling between its founders led to a delay in the release of the token and a loss of trust from investors. Its mainnet was eventually launched in September 2018. Tezos traded at $2.00 in April 2020, but soared to $4.44 in August, hitting an all-time high.
How much of a good investment is Tezos Coin?
Many analysts in the cryptocurrency world are bullish on Tezos’ long-term prospects. Why? What makes Tezos a great long-term investment?
You may be surprised to learn that Tezos has no maximum reserve. Most cryptocurrencies have a limited supply, bitcoin, for example, has a limited supply of up to 21 million. There is also an annual inflation rate of 5.5%, which means that the number of tokens grows by 5.5% per year. You might think that these factors are bad for the prospects of its price soaring. But that’s not the case because of the convenience of its yield.
This means that people tend to hold an asset because it is profitable. Thus, if Tezos have a valid use, the lack of a finite supply is simply not appropriate. In addition, the rate of inflation may encourage people to stake their XTZs, which in turn may make the Tezos network more secure.
In addition, investors and traders must consider supply and demand. About 80% of all XTZ in circulation is locked up in stacking, which means fewer volumes are circulating on exchange tumblers. Nevertheless, demand for XTZ is growing. A May 2020 Coinbase blog post showed that cryptocurrency XTZ has more trading volume relative to market capitalization than all other cryptocurrencies on the list, even more than bitcoin.
In addition, developer demand for Tezos blockchain is also growing. Michelson, the native language of smart contracts, facilitates formal verification, which gives smart contracts an extra layer of security, allowing high value transactions to be tested before they are published on the blockchain. This has led to an increase in the number of STOs launched, on the platform. More than $2.5 billion worth of STOs have been launched, making Tezos the primary platform for these tokens.
Another reason to stick with the bulls is the Tezos fund. It was created in 2017 to attract developers to XTZ and continue to grow the entire XTZ blockchain ecosystem. Their job was to provide grants to developers working on projects in the ecosystem. Like the consensus mechanism, the structure of the fund is decentralized, and there are also elections to vote for the fund’s president.
It has also established several high-profile partnerships with various projects. These include Korea Blockchain Research University to study smart contracts. Also with Banco BTG Pactual, Latin America’s largest STO investment bank, which included a token transfer from Ethereum. All of these factors are promising for potential developers contemplating taking part in the XTZ project.
Last, but not least, is something we’ve already talked about, namely the decentralized management of Tezos. The Tezos blockchain is one of the most decentralized platforms in the world. All amendments to it are made based on the votes of its participants. Blockchain upgrades consisted of Carthage and Babylon, and both received high marks from voters. That’s what gives the network stability. In addition, there is something that hardcore crypto enthusiasts really love, and that is dedication to the decentralized nature, as Satoshi suggested.
Tezos Price Predictions.
Of course, when you are considering any asset as a long-term investment, the key factor you will pay attention to is the price forecasts for the long term. Fortunately, most analysts are optimistic about Tezos’ long-term outlook.
Analyzing the current price outlook for Tezos
Before analyzing Tezos’ long-term prospects, let’s take a look at its current price.
As of December 8, 2019, XTZ was priced at $2.32. Its value has dropped from its record high of $4.44 in August 2019, but it is still about $1 more than it was at the beginning of the year. It currently ranks 19th in market capitalization, according to Coinmarketcap.
Despite this correction, the forecast for the next few years remains bullish. So, what price for XTZ is projected by 2025?
What do analysts think?
- Crypto Geek is moderately optimistic about XTZ and predicts it could reach $8 by 2025. That would be a 232% increase over December 2020 prices.
- Wallet Investor is more bullish on XTZ, predicting it could reach $9.77 by 2025. That would be an increase of more than 321% over December 2019 prices.
- Digital Coin Price is also bullish on XTZ, predicting that it could reach $10.39 by 2025. That’s more than 344% higher than December 2019.
- Crypto Coin Society is most optimistic about XTZ, predicting that it will “take off” and possibly reach $24 by 2025. That would be nearly 1,200% higher than the December 2019 price. He talks about the huge advantage of being able to update the blockchain without hardforces, which leads to stability and therefore will attract more developers.
What do we think?
What particularly stands out about the XTZ price forecasts is that there are very few bearish price forecasts for the next few years among them. Almost all of them are bullish. As we mentioned earlier, supply and demand for XTZ point to higher prices in the future. Since most of its circulating supply is used in steaming, demand is growing exponentially. So we think Tezos is certainly a great long-term investment, but how far it can go depends on various factors.
Conclusion
We’ve looked at what Tezos (XTZ) cryptocurrency is and how good an investment it is. While we’re sure that XTZ is a great long-term investment, it’s hard to predict how high its price will rise. As with other cryptocurrencies, much depends on how high bitcoin rises. It will probably still have a huge impact on the altcoin market for years to come. However, for it to be a good investment, the coin has to be successful on its own, and we are sure that it will be.
The buzzword “etherium killer” is often seen in the cryptocurrency world, but we think it is unlikely to happen. The market recognition and laurels that Ethereum already has give it a significant advantage. On top of all that, the long-awaited Ethereum 2.0 update will likely solve problems that have plagued it for years, such as scalability.
Nevertheless, Tezos has already carved out a nice little niche for itself called “home to STO.” In addition, there is the fact that Tezos has unique features that make it very attractive to developers and investors alike. Its LPoS consensus mechanism makes it truly decentralized in nature. In addition to this, its self-configuring blockchain will prove attractive to developers looking for stability without the need for a fork. So while we don’t think Tezos will be the killer of Etherium, we do think they can coexist in peace and harmony.
Of course, it is impossible to predict what will happen with 100% certainty. It’s hard enough to predict the outcome based on what we think might happen. However, things are shaping up pretty well for XTZ. It is gaining momentum at the right time and growing in popularity slowly but surely. It has enough positive traits to stand out from the crowd, and we think it can succeed in the long run. We think it’s a great addition to your cryptocurrency portfolio.