The volatility of the markets facing the global coronavirus crisis poses new challenges for investors. The cryptocurrency market is already beginning to take a breather from the declines registered in mid-March and, in addition to Bitcoin, other altcoins are emerging that should not be overlooked. In this article, we address 5 reasons why Tezos and its cryptocurrency XTZ would be one of the best investments during the pandemic.
The fundamental perspective of this project is one of the strongest on the market, according to many experts and advocates of Tezos. Its potential was demonstrated after its Initial Coin Offering – or ICO – raised more than $ 232 million in July 2017, according to ICO Bench.
The funds to promote the development of the project were a milestone, making this ICO the largest to date. In technological terms, Tezos goes one step further with respect to counterparts such as Bitcoin or Ethereum, introducing a blockchain capable of updating itself automatically and democratically, through the “meta-consensus”.
This allows, for example, participants to vote to change the size of the blocks in the chain. The blockchain can adapt to these changes on-the-fly, providing greater potential for scalability.
The network uses a variant of the delegated Proof-of-Stake (DPoS). It’s called a liquid participation test and it opens the door to “baking”, which will be explained in the next section.
Tezos opens the door to delegated participation through “baking”
The liquid participation test, named after Jacob Arluck, enables robust and secure coordination, validation and the establishment of governance mechanisms. In short, anyone who decides to buy Tezos and store them in a compatible wallet will also have the ability to ‘bake’ them.
Instead of using the typical concept of digital mining, those who want to actively participate in network tasks should have minimal resources and will not require advanced equipment such as ASICs. With 10,000 XTZ it is now possible to bake and start generating passive income.
But this is not a mandatory requirement: those who do not have this amount, can delegate the task to a third party, blocking their funds and receiving quite an attractive passive income in the process. Passive income is around 5% per year, and we also need to add the potential profits from the crypto coin itself.
XTZ was one of the fastest growing cryptocurrencies in 2019
In the same order of ideas, it is also important to look at the technical perspectives. In this regard, Tezos broke all paradigms in 2019 and became – along with Chainlink – the most profitable cryptocurrency in the Top 20 of CoinMarketCap. The growth in terms of capitalization was also notable, allowing XTZ to quickly sneak into the ranking of the 10 most important cryptocurrencies by market capitalization.
With limited growth of 200% in 2019 – and highs of almost 300% -, Tezos managed to gain the attention of both the media and investors. If that were not enough, the currency rose again 210% in the first weeks of 2020, until the coronavirus crisis returned it to its January levels. So, is it an ideal time to invest?
Adoption of Tezos
One of the reasons for the growth outlined in the previous sections has been adoption. The model proposed by Tezos has not only attracted common investors but has also been considered as sustainable for institutional arenas.
Coinbase Custody – the side of the exchange for institutional investors – was one of the first companies to offer this service to those who have large portfolios. For reference, the minimum balance that these investors must have is one million US dollars.
The Tezos Foundation, a non-profit organization working behind the project, recently released its biannual update. The document shows that the project is in a solid position in terms of liquidity and is very likely to come out stronger after the coronavirus spread has been stemmed.
The foundation would hold more than $635 million in assets, a significant jump from the ICO held just under 3 years ago. This momentum would be supported by the positive price action of Bitcoin and XTZ itself. This has opened the door for Tezos to award more than $ 37.6 million to the developers of the ecosystem. This will provide Tezos with a medium-term livelihood and would make it much less vulnerable to the crisis.
A report by ‘crypto enthusiast’ William McKenzie, reveals how Tezos is preparing to host more than $ 2.6 billion in STOs (financial securities tokens). This would allow for the tokenization of real-world securities to carry them into the digital world, and entities such as tZERO, Alliance Investments, BTG Pactual, Dalma Capital are already preparing to launch their own tokens on the Tezos blockchain.
Thus, XTZ is emerging as one of the big bets amid the volatility and uncertainty that currently exists in the marketplace. In any case, we suggest caution and adequate risk management for the unpredictable days to come. Ready to invest in Tezos? We recommend doing it through the following platforms: