Tezos (XTZ) blockchain

Gepubliceerd op 26 juni 2022 om 10:54

As a member in an organization, you have little influence and say in the management of that organization. In the blockchain world, there are many people who would like to increase their say and influence on the organization. According to these people, the administration and management should be decentralized, with each member or user having a say in the organization. More and more crypto projects are emerging where the organization is governed by the community (the members). The community votes on new updates, for example. This should lead to less disputes because everyone has a say in which direction the organization should go.
Tezos is a crypto project where the management of the project is in the hands of the Tezos community.

What is Tezos?

Tezos is a self-governance blockchain and has its own cryptocurrency, XTZ. The members of the Tezos community decide what happens to the blockchain. These members have complete control over the operation of the blockchain, updates, rules, etc.

Because the members themselves can decide which direction the blockchain can go, hard forks are no longer needed. In short, hard forks are splits from a blockchain when a disagreement arises. More technically: a fork occurs when two miners want to verify a transaction at the same time and there is a disagreement as to which miner should be followed. A hard fork can also be used to make updates or to continue as an independent blockchain.

Tezos is very similar to Ethereum (ETH). This is because the features that Ethereum has, Tezos also has. An important element of Ethereum is smart contracts. Tezos also makes it possible to run smart contracts on the Tezos blockchain. Tezos also allows users to program and build Decentralized Apps (Dapps).

But this is the only similarity between Ethereum and Tezos. Tezos differs from Ethereum in a number of aspects:

  • Governance. The governance of the blockchain is in the hands of the community behind Tezos, and not in the hands of one central authority.
  • Delegated Proof of Stake & Baking. The addition of new blocks to the blockchain is also called 'baking', and this is done by validators chosen in advance by the network.
  • Formal verification. Through formal verification, developers can prove that their dApp is free of errors and vulnerabilities. This keeps the code on Tezos 'clean' of errors. 

How does the Tezos blockchain work: Delegated Proof of Stake

The consensus protocol of Tezos is the Delegated Proof of Stake (DPoS). Everyone has the ability to run their own node (computer) at the same time within the Tezos network. You don't need many Tezos to act as a node in the Tezos network. Because anyone can become a node, the network remains decentralised. It is easy to join the network. This allows the network to grow and expand.

When you are a node, you have the possibility to work as a 'validator' within the Tezos network. Another name for a validator is a 'Baker'. Every baker can make a proposal to the network that can be voted on. If a proposal is accepted, it is then executed. The blockchain can develop continuously in this way.

How does the Tezos blockchain work: Michelson and formal verification

Tezos does not use Solidity as a programming language. Tezos uses the Michelson programming language. Michelson contains various protocols and algorithms that check all smart contracts before they can be included in the Tezos blockchain. This process is also called 'formal verification'. As the name suggests, formal verification involves checking the smart contracts for, for example, security. This is an extra check for errors such as bugs and certain vulnerabilities in the code. If the protocols detect an error, it can be solved immediately. This improves the code of the smart contract. With formal verification, only well-functioning and secure smart contracts can exist.

Self amendment

What is self-amendment? With self-amendment a proposal from the community can be incorporated more quickly into the Tezos blockchain. Everyone who is part of the Tezos community has the opportunity to participate in deciding the future of the Tezos blockchain. For example with proposals, updates etc. The phases from proposal to implementation are roughly as follows:

  • Proposal
    Any Baker of the Tezos blockchain and a Dapp developer can submit a proposal to the Tezos network. A proposal can be anything. For example, adjusting the blockchain, making an update, improving security, solving an error, etc. When a proposal is submitted, every member of the community can vote on it. The proposals with the most votes proceed to the next phase.

  • Vote test phase
    The Bakers study the proposal. The proposal must be workable and free of errors. If at least 80% of the Bakers approve the proposal, it proceeds to the next phase.

  • Testing by the community
    Every member of the community can test the proposal. Members have approximately 2 days to do this. After 2 days, the proposal automatically moves on to the next phase.

  • Testing phase by Bakers
    The community members have been able to test the proposal to see how it works in practice. With these test results, the Bakers will vote on the proposal again. If at least 80% of the Bakers approve the proposal, it will be included in the Tezos blockchain. If it concerns an update, this will be implemented.

Can Tezos be used anonymously?
As with many other cryptocurrencies, there is a certain degree of anonymity, but it is not absolute. Despite anonymity, in theory your public addresses and transactions can be traced. For example, if you buy XTZ from an exchange or trading platform, your personal information is required to verify your identity (Know Your Customer; KYC).

Pros and cons of the Tezos blockchain


  • By means of formal verification, the smart contracts are more secure and contain fewer errors before they are executed. The smart contracts on Tezos are therefore more secure than, for example, the Ethereum smart contracts.
  • If the blockchain needs to be updated, this does not require a hard fork. The community can decide this and it can then be implemented. The fact that no hard fork is required also means that there is no fragmentation of the network. We want to keep the blockchain and the network intact.
  • The DPoS is much more sustainable than the Proof of Work consensus algorithms. The Proof of Work algorithm uses a lot of energy, whereas the DPoS uses far less. The DPoS uses almost no electricity.

  • Governance does not lie with a few people who make decisions for the entire community. Decisions are made by the community.


  • There are many other blockchain projects doing the same thing as Tezos. Providing security and support for smart contracts. The fact that the community decides what happens to the blockchain is not unique either. The big competitor is Ethereum, currently number 2 just behind Bitcoin in market cap. So it is not easy to get close to Ethereum. But the potential of Tezos is great. Also, Tezos is getting more and more known. Tezos has a partnership with Red Bull Racing and soccer club manchester United FC.

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