The Ultimate Guide to
Trading Tezos (XTZ)
Tezos is an open-source platform that allows for asset transfer, smart contracts and applications. In order to function successfully, Tezos is backed by a worldwide group of validators, code builders and researchers. Its unique approach allows Tezos’ decentralised ledger technology to address key issues facing blockchains, including the safety of smart contracts, the platform’s upgradability over the long term, and open participation on the platform.
Tezos platform’s native digital tokens, known as “Tez” or “Tezzie” (XTZ), enables a user of the Tezos blockchain to interact with the platform. Users obtain wallets to store and use Tez tokens. Furthermore, this native currency is generated by a “baking” process where bakers post deposits and get rewards for publishing and signing blocks in the Tezos blockchain. Note, this differs from the mining process used with cryptocurrencies such as bitcoin.
Asset transfer, storage and payments require a high threshold of safety that has been designed into Tezos from the very start. Tezos platform uses the native smart contract language known as Michelson to perform formal verifications, similar to technology that has been used in both the space and nuclear industries.
Tezos has a modular architecture with a specific upgrade mechanism that allows the stakeholder community to suggest and implement innovative technology to the platform. This ensures Tezos remains current throughout the long term without having to give up its community consensus governance.
Moreover, stakeholders in Tezos can participate in upgrading the network by proposing, evaluating and approving amendments to its protocol. This differs from Proof-of-Work (POW) and most Proof-of-Stake (POS) networks as stakeholders can assist in keeping the network secure through the baking new Tez tokens. Consequently, they can also potentially avoid inflation diluting their influence over the token.
How to not get scammed when trading Tezos (XTZ)
Making transactions in Tezos’ native Tez tokens is generally safer when using a regulated online broker. Moreover, it always good to be conscious of fraudulent online activity. For more insights have a look at “Scams to be aware of”.
As a quick overview of certain behaviours could be cause for concern. First and foremost, be cautious of brokers asking a start-up fee to exchange Tez tokens for fiat cash. Similarly, be careful of schemes that claim to be able to multiply invested assets quickly as such a fast turnover is rarely achievable.
Additionally, watch out for fake cryptocurrency exchanges and cloud token mining scams. This is especially the case for Tez tokens that are not mined, but are instead awarded for participating in the network’s POS mechanism.
Another common con on both social media and through emails is phishing. This involves the perpetrator impersonating a business or brand to obtain currency wallet access or other personal information. While this scam seems obvious to some, to help minimize risks avoid making financial arrangements using a direct message.
Therefore, choosing a regulated broker should help minimize unregulated risks and cons associated with online trading. An example of a regulated broker is AvaTrade, a firm owned broker with a market cap of $17 billion registered in Ireland. Another popular forex and cryptocurrency broker that also supports social trading is eToro. These are only two examples, of EU based brokers which are subject to stringent EU regulations under the Markets in Financial Instruments Directive (MiFID) and its revision the MiFIR.
In short, selecting among the various regulated brokers may provide some peace of mind that your investments is regulated , as well as providing a relatively easy way to trade cryptocurrency tokens such as Tez.
Trading Tezos (XTZ) through AvaTrade
Like many regulated online brokers, AvaTrade offers a user friendly interface known as MetaTrader 4 (MT4). This popular platform is suitable for traders of all experience levels and operates on desktops, web browsers, tablets and smartphones.
MT4 even has advanced charting options for technical analysts to help determine market trends, as well as an interface that can be readily personalised, allowing users to select different display colours and styles.
Moreover, signing up with providers like AvaTrade is a simple process and doing so will normally also provide access to markets in thousands of other tradeable instruments.
That being said, trading in currency and cryptocurrency does inherently involve risk, as taking exchange rates can fluctuate based on several factors.
Key Influences on Tezos (XTZ)
As the native token of the Tezoz platform, Tez (XTZ) is a dynamic digital currency that’s value is influenced by various factors. Market forces operate in the determination of the value of Tez, with supply and demand strongly influencing its price.
Tezo’s flexible network drove the Tez tokens to gain substantial traction during their initial coin offering (ICO) in July 1st, 2017. As a result, Tezo’s ICO eventually raised $232 million, raking as one of the biggest ICOs to date.
This remarkable ICO success eventually lead to a dispute between Tezos’ Foundation President and the founders Johann Gevers, Arthur and Kathleen Breitman who together own the intellectual property rights to Tezos. Unfortunately, this disagreement substantially delayed the Tezos platform launch.
Another risk associated to tokens like Tez occurs when governments attempt to regulate digital currencies. This usually adversely affects the tokens price, especially if a ban on ownership, use or transfer is involved.
Moreover, events such the Cyprus banking crisis in 2013 can also have an impact on cryptocurrency values. Here, this crisis promoted bitcoin prices to rise as people secure their wealth in outside of the their local governments jurisdiction.
Digital token prices also tend to rise in value when there is an increase in companies accepting them as a form of payment. In contrast, exchange hacks tend to reduce the tokens value.
Another aspect to bear in mind, is that technological changes also impact the value of digital tokens. In this case, Tezos network has a built-in facility to allow for easy upgrades to cater for this need.
Chart of Tez (XTZ) from its ICO to 29th July 2019. Source: CoinMarketCap.
Tezos (XTZ) Quick Facts:
Source: CoinMarketCap
- Date of the Tez (XTZ) ICO: 1 July 2017
- Highest price to date: $12.19 on 17 Dec. 2017
- Market Capitalisation (29 July 2019): $670,191,341
- Daily volume of XTZ exchanged (29 July 2019): $5,387,806
- Total Supply: 801,312,599 XTZ
- Circulating Supply: 660,373,612 XTZ
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