Tezos The Self Amending Cryptographic Ledger

Tezos is a blockchain project aiming to address problems with governance that are affecting current cryptocurrencies. The idea is let coin holders vote on the direction the coin is going to take and upgrades they are going to implement. At the time, Tezos was the most successful ICO raising $232 million dollars in 20 days.  There are plans to build Turing complete smart contracts on their proof of stake blockchain. An initial controversy around the founders have set the currency back but recent development could unshackle an innovative project and let it achieve what was promised to very patient investors.




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What is Tezos Coin

Co-founder, Arthur Breitman, saw a problem with the governance of Bitcoin and other blockchains. Bitcoin forks are decided in spartan court by miners, who profit the most from keeping things exactly the same. As a result, forks are kept to a minimum and this slows development. There is even a mentality that looks down on folks believing that when developers make upgrades they are violating the "code is law" philosophy of the blockchain.  https://youtu.be/7m7EU4JWI88 The  SegWit2x debate and eventual abandonment  is a good example of a break down in governance, of the Bitcoin blockchain, that Tezos is trying to address. Bitcoin developers cancelled a hard fork because they couldn’t get miner support. Since the only way to make a change to the code is through a fork. If someone doesn’t agree with the change they can continue mining the old one, which leads to Ethereum Classic situations.  Tezos decided instead to create a governance system where Stakeholders vote on all minor and major alterations to the blockchain network. “Governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network. When a developer proposes a protocol upgrade, they can attach an invoice to be paid out to their address upon approval and inclusion of their upgrade. This approach provides a strong incentive for participation in the Tezos core development and further decentralises the maintenance of the network. It compensates developers with tokens that have immediate value rather than forcing them to seek corporate sponsorships, foundation salaries, or work for Internet fame alone.” - Tezos Through Tezos’ PoS consensus algorithm, protocol upgrades can be quickly deployed on the network. To manage all this on their blockchain and compete in the same space as Ethereum, the Tezos team are planning to implement smart contracts to their blockchain, Smart contracts are accounts with an address that can run executable code. Tezos could potentially run decentralised applications programmed in Michelson, which is Tezos’s programming language.   Another interesting difference between Michelson and Solidarity (Ethereum’s language, is the Michelson - “is a functional language which facilitates formal verification. Formal verification essentially allows developers to mathematically prove the correctness of their smart contract code. Formal verification proves that some properties of the contract will be maintained, but does not necessarily mean that the code is 100% correct. Formal verification is used in industries where there is little room for error (e.g. nuclear reactors, aircraft, medical devices).” - Linda Xie - A beginners guide to Tesos. Competing with Ethereum is easier said than done. Vitalik’s opinion on blockchain governance  and the Ethereum Foundation’s own experiences with community driven voting explained in the blog post on his website are the worth a balanced read. Vitalik notes that Ethereum’s own experiments with voting like the DAO has resulted in very low participation and whales manipulating consensus. I guess the philosophical question here is, does everyone have an equal voice? Is it better to be lead by a small group of knowledgeable developers or any one who can invest in a coin?

Tezos Proof of Stake

“Tezos’ PoS mechanism of creating the blockchain network consists of three major technologies, including Slasher, chain-of-activity, and proof of burn. Since miners do not exist on PoS consensus protocols, stakeholders are equipped with the task of processing transactions and ensuring that the network does not sign fraudulent transactions or smart contracts.” - Lunyr Ethereum is also planning a transition to proof of stake called Casper. It is on the test net and there is no set release date for the main Ethereum blockchain, but if I had to guess, it will be released before Tezos has a working product. Similar to Casper, Tezos lets stakeholders forge blocks at random and rewards them for locking coins up in an escrow like account. Casper is only planning to have a 3 - 4 month withdrawal time on staking rewards, but Tezos has taken this even further with a whole year of mandatory commitment on all staked funds to become a validator. This avert the nothing at stake problem and massively discentivie malicious actions.   in an event of a double mining or double signing, which is a violation of the governance rules of the Tezos blockchain network, the stakeholder is required to forfeit the deposit.

Tezos ICO Controversy and Team

During an uncapped ICO that went for 20 days, $232 million dollars were invested in Tezos'. Husband and wife, and co-founders, Arthur Breitman and Kathleen Breitman had brought a lot of attention to their cryptocurrency. At the time it was a record breaking ICO. The expectation wasn't that they would mine the genesis block right away so investors were prepared to wait for their returns.  In the coming days it was announced that Arthur and Kathleen Breitman had set about ousting the head of the foundation, a man named Johann Gevers, demanding he give up the reigns of the foundation. tezos foundersThe irony that a cryptocurrency designed to decentralise governance has potentially been undone by a disagreement between founders is poetic, but investors aren’t seeing the funny side. The foundation was supposed to be independent. hundreds of millions worth of Bitcoin and Ether are tied up in the foundations. The Breitmans still control the Tezos source code through a Delaware company. I think that Tezos received way more money in funding than it would/should have in a normal market. The ICO bubble put over 200 million dollars in the hands of a nameless team that weren't even close to a finished product.  

Should I Invest In Tezos?

Surprisingly things are looking up. In early February, Grevers announced that he was stepping down as head of the foundation  It remains to be seen if he will follow through on this promise. A Medium article explaining why the foundation first started trying to remove Grevers days paint a bleak story of his character. It is co-authored by James Hogan, former EVP Engineering at PayPal, and Patri Friedman, software engineer at Google and financial backers of Tezos. The article, and a large portion of the committee are calling for the Tezos foundations to publicly deferring leadership of the Tezos project to the T2 Foundation, and fund the T2 Foundation at sufficient levels to significantly advance both organizations’ shared mission. If the T2 Foundation does manage to reclaim Tezos it is possible they might mine the first block and start building their network. General sentiment among the community is rallied behind the competent T2 foundation but it seems like all they really want is progress.   If, and this is a big if, the new community, or the old community without Grevers manages to put those funds to go use Tezos has a shot at bringing their hundred million dollar idea to fruition. Read more about buying Tezos here.  

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