If you are a follower of the many popular crypto accounts on Twitter you would be hard-pushed to have not seen posts about Tezos.
While many cryptocurrencies – Bitcoin included – have been performing well since the start of the year, Tezos is likely to be the one you hear about the most.
Is there a particular reason for the recent bullishness for Tezos or is this part of a wider trend in the cryptocurrency industry? Let’s start with the basics…
What is Tezos?
Tezos completed its ICO in the boom of the cycle raising $232 million in the summer of 2017. Created by husband-and-wife team Arthur and Kathleen Breitman.
Tezos shares similarities to smart contract platform Ethereum. The key difference between the two lays in Arthur Breitman’s belief that Ethereum was beholding to the core developers – an argument that was prescient during the DAO hardfork – and therefore Tezos bases itself upon a self amending nature.
The launch of Tezos didn’t go very smoothly though. Issues surrounding lawsuits between members of the Tezos foundation and the Breitmans created headlines. Tezos also had to deal with the issue of whether the cryptocurrency should be classed as a security. This is a common issue with many including Siacoin and EOS which have both recently settled with the Securities and Exchange Commission in the US. For now, Tezos seems to be safe in this regard.
What is Tezos baking?
One of the key selling points for Tezos holders is the passive profits that can be achieved by “baking” – a process similar to ‘staking’. In essence, this is equivalent to earning interest in a traditional bank account.
With Tezos being based on a ‘proof of stake’ protocol it allows for users with more than 8,000 Tezos to ‘bake’ Tezos and earn more in return. This process can be achieved by setting up your own node.
Alternatively, Tezos holders can delegate their baking rights with big cryptocurrency platforms such as Coinbase and Ledger offering the service. Ledger is offering an approximate 6% annual yield for baking Tezos through its system.
Recent Tezos price rise
Tezos has been making waves recently as the cryptocurrency has proven strong in the tumultuous market. Many of the popular traders on Twitter have shown their support for the cryptocurrency and suggested the price is only just beginning to show its true nature.
Since the start of the year Tezos has more than doubled and even got close to the lofty heights of $4 before struggling this week – much the same as the rest of the markets. Unlike many ICOs though, Tezos is intriguing because the price hasn’t struggled comparatively with the other failed projects.
Members of the community believe the option of baking on sites such as Coinbase could prove to be key if new members arrive into the cryptocurrency market, much like they did in 2017. The offer to make passive income, particularly at a time when banks are increasingly offering low interest rates, is an attractive alternative.
As supporters of Bitcoin, Ethereum and many others continue to bicker with each other online proclaiming their chosen cryptocurrency is going to change the world, Tezos has quietly gone about it’s own business. Whether it can detach fully from other cryptocurrencies and rise when the market is falling permanently is unlikely though. Bitcoin still plays the leading role as the price signal for the rest of the cryptocurrency market.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.