Want to jump straight to the answer? You can buy XTZ on Coinbase and eToro.

Tezos is a cryptocurrency token that supports smart contracts. It’s largest competitor in the crypto industry is Ethereum. Both Tezos and Ethereum have a similar value proposition: to decentralize financial services through the use of smart contracts

Smart contracts can be used across almost any industry, giving Tezos massive growth potential. Real estate, insurance, supply chains and retail lending are beginning to use smart contracts to improve their bottom line. Learn how you can be part of the movement with our step-by-step guide on how to buy Tezos (XTZ)

What is Tezos?

Tezos is a self-governed and amendable blockchain that supports smart contracts. Tezos raised $232 million from its initial coin offering (ICO) in 2017 and now has a market cap of $2.3 billion. Tezos growth is attributed to its competitive advantages over Ethereum. 

Both Tezos and Ethereum decentralize financial services through smart contracts. Smart contracts are sets of code used to replace terms of a real contract. Since these contracts are capable of holding value (cryptocurrencies), they are able to execute contracts based on the terms (code) uploaded to the blockchain. 

For example, you can get a loan through a smart contract by providing collateral to the smart contract. Once you pay your loan back, the smart contract will return your collateral. If you default, the contract seizes the collateral and sends it to the lender. 

While the 2 cryptocurrencies have a common goal, there are also stark differences. Here are some ways that Tezos and Ethereum differ:

  • Proof of work and proof of stake. Proof of work (PoW) and proof of stake (PoS) are the 2 most common ways to power a blockchain. Ethereum, similarly to Bitcoin, operates on a PoW model, which is costly and creates a barrier to entry PoS doesn’t have. Tezos uses PoS to solve these issues. 
  • Network size. Ethereum has many more users and a more robust network than Tezos. The amount of users affect both a cryptocurrencies utility and security. 
  • Self-amendment. Blockchains that use proof of work need to fork when there are disputes over network upgrades. When Bitcoin users disagreed on how many transactions should be processed on each block, Bitcoin forked into Bitcoin and Bitcoin Cash. Cryptocurrency forks often divide the users of the cryptocurrency, decreasing the network size. 

Brief History of Tezos

Tezos was founded in 2017 by Aurther and Kathleen Brietman. They released Tezos through an initial coin offering, selling each token for $0.47 (Tezos is currently trading for just under $3). This means that the Tezos protocol had an initial token sale to fund development. New tokens are minted at an inflation rate of 5.5% annually, a relatively high inflation rate for a cryptocurrency token. 

Tezos’ main advantage over Ethereum is its proof of stake model. A proof of stake model limits the overhead for miners and makes transaction times faster. Instead of using electricity-intensive cryptocurrency miners to validate transactions, users can stake their Tezos tokens to validate transactions on the blockchain. 

You need at least 8,000 Tezos (just under $24,000) to become a validator on the Tezos blockchain. However, you can delegate your Tezos to a validator to earn interest on your Tezos while having a say in the protocol’s governance. 

Using a PoS instead of PoW model also allows for cheaper transactions and less sell pressure on Tezos. In a PoW system, miners earn cryptocurrency based on the amount of computational power they provide to the network. Miners often sell their earnings daily to minimize the risk of price fluctuations of the token they are mining and create a constant sell pressure on the cryptocurrency.

Step 1: Open an online account.

You need to make an account with a cryptocurrency brokerage to buy Tezos. Coinbase is the No. 1 trading platform for cryptocurrency investors in the United States. It’s well-regulated and insured, so it’s a great option for any level of investor.

You must provide your legal name, address, email, phone number, photo ID and Social Security number in order to make a Coinbase account. 

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Step 2: Buy a wallet.

Storing your Tezos tokens securely is important to keep your investment safe. If you’re looking to actively trade your Tezos, then you should keep your funds on an accredited crypto exchange. 

If you’re buying Tezos to hold, choose a crypto wallet to keep your funds secure. Software wallets are a good choice because they’re free and easily accessible. However, look into a hardware wallet if you want to be as secure as possible. 

You can store your cryptocurrency offline with a hardware wallet. This is the equivalent to holding gold in a safe. Hardware wallets are physical devices that grant you access to your crypto when you connect the wallet to your computer via USB. 

Best Hardware Wallet: Ledger Nano S

If you’re looking for industry-leading security without breaking the bank, get a Ledger Nano S to secure your crypto. The Ledger Nano S supports hundreds of tokens, including Bitcoin, Ethereum, erc-20 tokens and Tezos. This hardware wallet comes in at an affordable price –– you can purchase one on Amazon for just over $50. 

Ledger also offers a mobile and PC user interface to manage your cryptocurrency that is simple and easy-to-navigate. And the Ledger Nano S is secured by an offline, encrypted chip as well as an 8-digit passcode to keep your investments secure.