Tezos (XTZ) Price Forecast: Examining the Growth of Self-Amending Smart Contract Platforms

Introduction

Tezos (XTZ) shares a lot of common features with Ethereum. Particularly in how both of them execute programmable smart contracts and enforce consensus. 

In this article, we will discuss the growth of the smart contracts platform. We will also evaluate controversies surrounding the Inception of Tezos and governance. In addition to the benefits and potential risks of the blockchain.

We will examine the controversies surrounding Tezos’ initial governance and legal disputes that occurred afterwards. The subject of self-amending contracts is also another topic that will appear throughout this fundamental price forecast.

Tezos Market Capitalization Graph Since Inception

According to CoinMarket Data, there are  743,862,304 XTZ tokens in circulation as of this writing.

Tezos conducted a token sale in July 2017. During the sale, the blockchain raised an impressive sum of 65,681 BTC and 361,122 ETH. 

At that time, this amounted was worth approximately $232 million. For this reason, the blockchain solidified its position as one of the largest initial coin offerings ever undertaken.

Of the initial token supply, 80% found its way into the hands of investors. The foundation distributed the remaining 20% between the Tezos Foundation and Dynamic Ledger Solutions.

The launch of the mainnet faced multiple delays due to legal disputes. These disputes arose from disgruntled investors who contended that XTZ tokens were tantamount to unregistered securities.

Source: Coinmarketcap

Tezos Price History

Source: Coinmarketcap

Controversies Surrounding Tezos’ Initial Governance and Legal Disputes

Tezos made headlines in the cryptocurrency world with its record-breaking initial coin offering (ICO) in 2017, raising over $230 million. However, this success was marred by internal conflicts, legal disputes, and allegations of mismanagement. The primary controversy revolved around the project’s governance structure and the role of its founders, Arthur and Kathleen Breitman.

The Breitmans’ vision for Tezos was to create a self-amending blockchain, allowing the protocol to evolve through on-chain governance. However, disagreements arose between the founders and the Tezos Foundation, leading to delays in the platform’s development and deployment.

These controversies raised concerns about the project’s viability and caused a significant dip in XTZ’s price shortly after its ICO. However, Tezos eventually resolved these issues by reconstituting its governance and expanding its leadership team. Overcoming these challenges demonstrated Tezos’ resilience and commitment to its vision of self-amendment.

Evaluating XTZ’s Ability to Gain Developer Adoption and Build a Robust Ecosystem

Developer adoption and ecosystem growth are pivotal factors for the long-term success of any blockchain platform. Tezos has been actively working to attract developers and build a robust ecosystem of decentralized applications (dApps) and projects.

One of Tezos’ strengths is its ability to facilitate formal verification, a process that mathematically proves the correctness of smart contracts. This feature has attracted developers who prioritize security and reliability, enhancing the quality of applications built on the Tezos platform.

Tezos also boasts a grant program and partnerships with organizations like TQ Tezos and the Tezos Commons Foundation, which provide support and funding to developers and projects. These initiatives have contributed to the expansion of Tezos’ ecosystem, which includes DeFi projects, NFT platforms, and gaming dApps.

The Impact of Self-Amendment and On-Chain Governance on Tezos’ Price Stability

Tezos’ unique feature of self-amendment through on-chain governance sets it apart from many other blockchain projects.

This mechanism is super effective for proposing and voting new on-chain upgrades without the need for undertaking hard forks, which in most cases arise due to lack of consensus. 

This feature has several implications for XTZ’s price stability. First, it can lead to a more adaptable and future-proof blockchain, as improvements can be made without the need for contentious debates and network splits. This stability can attract long-term investors and users, positively impacting XTZ’s price.

However, on-chain governance also carries the risk of contentious decision-making processes and potential disagreements among stakeholders. If not managed effectively, these disputes could lead to uncertainty and negatively affect XTZ’s price.

The Potential Risks and Benefits of Tezos’ Proof-of-Stake Consensus Algorithm

Tezos employs a proof-of-stake (PoS) consensus algorithm, where token holders can participate in block validation and governance decisions by staking their XTZ. PoS has gained popularity for its energy efficiency and reduced environmental impact compared to proof-of-work (PoW) systems like Bitcoin.

The benefits of PoS for Tezos include improved scalability, energy efficiency, and network security. PoS encourages token holders to participate in network activities, as they can earn rewards for staking their XTZ, which further enhances network security.

However, PoS systems are not without their risks. Centralization can occur if a few large stakeholders dominate the network, potentially leading to governance issues and a lack of decentralization. Additionally, PoS networks like Tezos face the challenge of ensuring that token holders remain engaged and active in the governance process.

Conclusion

While staking is a common practice in the world of blockchain, Tezos introduces a distinctive approach to this process. Through a method known as “baking,” participants engage in the network’s governance by staking a substantial 8,000 XTZ tokens, thereby creating a compelling financial incentive for maintaining honesty and integrity within the system.

Bakers assume the crucial role of voting on proposed alterations to the blockchain’s code, following a meticulous four-step procedure that spans roughly 23 days. Proposals garnering overwhelming support from the majority of participants undergo rigorous testing on a testnet for 48 hours, with final implementation contingent upon approval by a super-majority.

Tezos sets itself apart further through its adoption by prominent enterprises. In a significant development in September 2020, the French banking behemoth Societe Generale revealed its intention to employ this blockchain for experimental purposes related to a central bank digital currency.

Additionally, major cryptocurrency exchanges like Binance and Coinbase have thrown their weight behind Tezos staking, enabling users to earn rewards based on their XTZ holdings. This feature represents a relatively rare offering within the realm of digital assets.

Investors and enthusiasts should closely monitor Tezos’ progress, governance decisions, and ecosystem growth to assess its long-term price trajectory. The cryptocurrency market is dynamic, and Tezos’ innovative approach to blockchain technology may play a significant role in shaping its future.

Looking to Acquire Tezos (XTZ)?

Tezos, often referred to as “tez” for brevity, is readily available for purchase on a variety of prominent cryptocurrency exchanges, with options like Binance and Coinbase being among the most notable choices. 

These exchanges offer trading pairs that pair XTZ with both fiat currencies and various cryptocurrencies like Bitcoin. If you’re interested in transforming fiat currency into Bitcoin, you can explore an in-depth guide on this topic here.