In this Tezos (XTZ) review we will take a look at one of the most contentious blockchain projects over the past year.

What started as a blockbuster ICO with star backers and a strong team devolved into spurious lawsuits and intense infighting. Despite that though, it seems as if the team has managed to right the ship, restructured internally, allocated tokens and moved to a beta release.

So there appears to be light at the end of the tunnel. However, there are still some loose ends for investors, and the release of the token has caused the price to crash from $4.44 on June 20, 2018 to $2.05 as of July 4, 2018.

Below I’ll outline some of the events of the past year, and then go on to explain what Tezos is for those who might want to invest. Now could be the ideal time given that the betanet has finally been launched, and investors have been able to claim their tokens.

Given the price drop since launch, now could be a good time to get in as the idea behind Tezos is still a very good one. Let’s jump in!

ICO to Infighting

The history of Tezos is little more than a year old, but it’s already been quite a rollercoaster ride for investors and backers.

Tezos had its ICO, which was wildly successful, almost 1 year ago on July 14, 2017. It raised an astounding $232 million in one day, which was 10 times the founders expectations. It looked as if things were going well for Tezos indeed.

Unfortunately that wasn’t the case, as things soon spiraled rapidly out of control for founders Arthur and Kathleen Breitman. Like many cryptocurrency projects, Tezos had created a Swiss Foundation to control its assets, due to the relaxed banking regulations in Switzerland. What the pair failed to factor in is that under Swiss law the board of directors of a foundation have complete control of all the assets of the foundation.

Tezos ICO Completion
Tezos ICO Completion

In this case that was Johann Gevers, who was quick to lock the Breitman’s away from Tezos’ assets. Since then the Breitmans have been fighting to regain control of Tezos, attempting to oust Johann Gevers, and dealing with no less than 4 class action cases. The Breitmans did retain control of the source code of the project via a Delaware-based company, Dynamic Ledger Solutions, but that did them little good without control of the ICO assets.

Meanwhile, all the investors in Tezos were also locked out of their investments, with no way to claim the tokens, let alone trade of sell them. It’s interesting to note that the XTZ token was listed on on October 2, 2017 at $1.66 per token and was trading at $4.44 a token on June 30, 2018 even though no one had yet been able to claim a single Tezos token.

Also, due to the rise in the price of Ethereum and Bitcoin since the ICO, the $232 million raised had grown to $555 million.

Regaining Control of Tezos

Gervers Out of Tezos
Getting the Boot. Source: Youtube

After months of fighting to remove Gevers from the board, in February 2018 he added a new board member to help keep himself in power. That was short lived and by the end of February the entire foundation board had resigned, including Gevers.

That finally opened the door for the Breitmans to regain control of the Tezos assets, and they and the community were quick to step in and get ready to launch. According to a February 22, 2018 press release:

“The [Tezos] foundation is preparing itself to assist in the timely launch of the Tezos network.”

Four Months of Silence

Following that press release and a promise from Kathleen Breitman to go rouge and simply release the token within weeks, there was little communication from the Tezos founders. This was understandably frustrating to investors, who had seen their investments more than double since the ICO, yet remain inaccessible.

Despite claims that there was a lack of technical progress as developers couldn’t be paid and left the project, Tezos finally went on to launch the betanet, nearly one year following the ICO. Tokens were released to the long-suffering investors, but their saga wasn’t quite done just yet.

Unanticipated KYC/AML Requirement

Investors got an ugly surprise on June 10, 2018 when the Tezos Foundation announced that they would be requiring Know Your Customer / Anti-Money Laundering verification from all investors in the Tezos project who wanted access to their tokens.

In a statement from the foundation:

We value and respect the privacy of our contributors, and along with countless others around the world, we personally oppose the unnecessary collection of personal information that has become pervasive on the Internet. However, it is important to comply with a rapidly evolving regulatory landscape. To that end, performing a KYC/AML check — as has become the norm for blockchain projects — is the best way forward

Separately, one of the Tezos founders, Arthur Breitman, responded to a Reddit user who complained that there were no KYC/AML requirements in the initial ICO FAQ with a terse “Not my call.”

The KYC/AML process has been started by the foundation, and the verification process can be done by investors at any time.

The Past is Past

With the launch of Tezos finally occurring on July 1, 2018 some feel that all the bad news, events and press are behind Tezos, and that the project can now settle down and deliver on its technical promise. At the other end of the spectrum are the investors who immediately dumped their Tezos tokens after release, sending the price skidding by more than 50% in a few days.

This could be a great opportunity for new believers to get on board the Tezos project, or it could be the beginning of the end chapter in what has been a highly dramatic and frustrating story for many.

You know the history, let’s look now at the future.

What is Tezos?

Tezos is a unique blockchain, built from the ground up by its developers. It wasn’t based on any other blockchain by forking or building an extra layer on top of an existing project.

The stated goal of Tezos is a deceptively simple one: it wants to create a blockchain that is able to incorporate new innovations without risking a hard fork that could divide its community.

Like Ethereum, Tezos will allow for smart contracts, and it has been designed to be secure and future proof, with a decentralized community-driven consensus mechanism.

Tezos vs. Ethereum
Tezos Compared to ETH. Source: Medium

Tezos wants to build blockchain technology that works better than existing leaders Bitcoin and Ethereum. Already it has developed a blockchain that is far less computationally intensive, requiring less power from miners (or bakers as Tezos calls them), but still maintaining a reliable proof of stake consensus mechanism.

With the PoS consensus on Tezos, users will be rewarded for helping to maintain consensus on the blockchain. And it will also offer a formal process through which stakeholders can efficiently govern the protocol and implement future innovations. I’m not aware of any other blockchain project taking such a view to governance.

How Does Tezos Work?

Tezos works in many ways in the same manner as other blockchains, but with a key difference. That innovative difference is in how additions and changes are made to the blockchain. It works like this:

A developer proposes some change or upgrade to the Tezos protocol. When doing so they can also attach an invoice to the proposal and if the change is approved by the community and added to the next upgrade they get paid in XTZ tokens. This has two benefits. It encourages developers to participate in Tezos development, and it also decentralizes the maintenance and development of the network.

Because developers are receiving tokens for their approved upgrades they get compensated immediately for their work on the Tezos network. They don’t need a corporate sponsor, and employer or any other traditional financial reward. They are free to work on what interests them.

Formal mathematical proofs are used to verify that the key properties of the blockchain are upheld throughout any upgrades. This was Tezos is able to rapidly evolve technologically, while still maintaining a type of constitutionalism.

Tezos Ecosystem
Tezos Ecosystem. Source: Oxana Kunets

Tezos is also interesting in that it allows for the creation of bounties on-chain, which should speed the development of new features, as well as allowing bugs to be spotted and eliminated more quickly. These bounties can be created by any stakeholder.

What Makes Tezos Different

Tezos wants to be a major blockchain, and is marketing itself as an alternative to blockchains such as Ethereum, Zcash, and the venerable Bitcoin. So, what is it that makes Tezos different enough to be considered as a viable replacement for these other major blockchains?

Every other blockchain can be described by a triplet (state, apply, and score):

  • State: An internal, mutable state type. In bitcoin, for example, this would be the set of unspent outputs.
  • Apply: A transform that takes a state S, a transaction T, and produces a new state S.
  • Score: Scoring function that determines the valid blockchain branch. In bitcoin, this is the total amount of hashing power on the chain.

Tezos differentiates itself by making the apply and score variables a part of the mutable state, allowing the ledger rules to be self-governing. This is key because the ledger rules control the very evolution of the ledger.

Tezos Features

Tezos carries many of the same features as other blockchains. It is transparent, highly secure, decentralized and encyption based to make it virtually unhackable.

Of course Tezos also has its own unique features that differentiate it from other blockchains. These features are:

Decentralized, Automated Upgrades:

Modern software has most of us used to easy upgrades to new releases, but that hasn’t been the case with blockchains, where upgrades can be complex, contentious, and downright difficult. Tezos is a refreshing exception, where the upgrade process has been decentralized, making it nearly as easy as modern sofware upgrades.

No Hard Forks:

Tezos has laid out a clear set of government rules that allow stakeholders to easily vote and reach consensus on upgrades. These rules are programmatically enforced and can’t be avoided. This will avoid the political deadlock that has led to hard forks so many times with other blockchains because no one group will have enough power to force their will on the community.

Who’s Behind Tezos?

The Breitmans
The Breitmans. Source:

As mentioned above, the primary founders of Tezos are Arthur and Kathleen Breitman. Also contributing to the founding of the network and blockchain are Vincent Bernadoff, Bozman Çağdaş, Benjamin Canou, and a team of other developers.

Arthur Breitman is an ex wall street quant who used to work at Goldman Sachs and Morgan Stanley. He has a background in Mathematics, computer science and Economics. Kathleen has worked at a range of different companies including Bridgewater Associates and R3, which is a blockchain consortium.

Tezos also has some pretty influential backers and investors. One of the most prominent is Tim Draper. Draper is one of the most prolific Silicon Valley venture capitalists who first made a name in the cryptocurrency field when he bought a large chunk of the silk road Bitcoins that were placed on auction by the FBI.

Draper was also pretty vocal in his support of the Breitman’s when they were facing all of the negative publicity during the Tezos infighting episodes.

Buying & Storing  XTZ

If you did not partake in the Tezos crowdsale then you can buy XTZ on an exchange. There are currently only two exchanges that offer trading in XTZ tokens. These are currently available on HitBTC and on the Kraken Exchange.

Register at HitBTC and Buy XTZ Tokens

We are hopeful that as Tezos  moves out of Betanet that more exchanges will list XTZ tokens. Given that Tezos raised so much funds in their crowdsale they no doubt have the resources required to obtain prominent listings on exchanges like the Binance exchange amoung others.

Once you have bought your XTZ, you will want to make sure that you move it off of the exchange. This is because of the inherent risk that comes with leaving large amounts of coins in the control of another entity. As the saying goes: “Not your keys, not your coins”.

For large holdings of Tezos, you are probably best suited to place them on a hardware wallet that is kept offline and safe from hackers. Tezos also has a paper wallet option as well as a range of third party wallets. We have covered a list of the safest Tezos wallets to store your XTZ.


Tezos is an innovative blockchain that was built from the ground up, and seeks to create true decentralized community consensus, and avoid the hard forks and political divisions seen in other blockchains. It’s ironic then that the project suffered a division almost from its start that caused a year long delay in the issuance of tokens and the creation of the betanet.

The project remains as valuable as it was as launched, but I wonder if it has lost trust from the community to such an extent that it can never fully recover.

Tezos would allow the blockchain to evolve and improve without the need for complex upgrades or hard forks, and this remains a valuable feature.

Everything considered, Tezos remains a very compelling use case for blockchain technology as it could solve the protocol governance problems that have faced so many blockchains – from Bitcoin to EOS to the DAO hard fork. If Tezos can get beyond the controversies of the past year it has significant potential and bears watching over the coming months.

Featured Image via Tezos & Fotolia

Posted by Steve Walters

Steve has been writing for the financial markets for the past 7 years and during that time has developed a growing passion for cryptocurrencies.