Regular readers know I've been struggling lately about how to get you all up to speed on new developments in cryptocurrencies without resorting to writing 5000 words every time I want to talk about something like Bitcoin or Ether or ICOs or forks or any other super-complicated topic that you might not be familiar with.
I've been talking about different forks recently and getting into the weeds on exactly what a fork is, and I wanted to write something that was much more accessible than my usual. So today we're going to talk about Tezos: what it is, why it's so controversial, how it works, and whether or not you should buy some XTZ or other cryptocurrencies. Essentially this will be an introduction to Tezos for beginners! If any of you want me to take things further down the rabbit hole later on - e.g., if someone wants me to explain how cryptographic keys work - then please let me know in the comments section!
Tezos has been called the "new Ethereum" but that's not really true. Tezos is a decentralized blockchain computer similar to Ethereum, but with some key differences - namely its governance structure and how it resolves smart contract disputes.
Tezos is a blockchain platform with two token classes: XTZ & OX. Like Ether, Tezzies are used by dApps on the Tezos Platform to pay for computation. Unlike Ether, however, whose value derives from scarcity due to its use in paying for computing efforts by developers of dApps running on top of Ethereum's virtual machine(s), XTZ derives its value from being paid as a reward to bitcoin miners and proof-of-stake validators. The value of XTZ tokens will also be determined by the demand for smart contracts on the Tezos platform, as it is intended that those using, creating services on top of, or building dApps on top of Tezos' smart contract engine will need to use the token as payment (or staking) for their contributions.
The OX token is a separate entity from XTZ and has no direct relation to computation; rather it acts as a governance token whose value derives from voting on development proposals for changes to Tezos. Users will vote on whether or not specific protocol upgrades should be implemented and paid out rewards based on how much their votes align with other voters.
Tezos is controversial because it raised $232 million worth of bitcoin & ether in its Initial Coin Offering - the largest ICO ever - but was embroiled in an internal scandal after the husband-and-wife team that created Tezos got into a fight and Kathleen Breitman took over sole control of the company. The drama even resulted in Arthur Breitman filing a lawsuit against his ex-fiancée; luckily, at this point she has stepped down as CEO though retains her spot on the board, while Ryan Jesperson remains as interim CEO.
