How to Buy and Trade Tezos in 2017

The Beginners Guide to Buying, Trading and Selling Tezos

What is Tezos?

Tezos is a decentralised blockchain that governs itself by establishing a true digital commonwealth. It has borrowed ideas from Ethereum but is not directly connected with it. Tezos uses smart contracts but they have adapted them to use their own way.

It started in 2014 under the pretence that the first generation blockchains gave too much power to the core development teams and miners. This subjects cryptocurrencies like Bitcoin and Ethereum to a form of centralisation, which is what Tezos wants to avoid.

Walkthrough Video that Explains When and How to Buy Tezos Online

Tezos was built to facilitate formal verification, "a technique that mathematically proves the correctness of the code governing transactions and boosts the security of the most sensitive or financially weighted smart contracts."

Tezos Tokens = Power

It gives stakeholders (anyone that owns a Tezos token) power, or a vote in protocol decisions. The idea is that this will enable trust within the network and ultimately help generate widespread adoption of the system.

Tezos's different approach "creates governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network".

Got an upgrade? Propose it to the network

Basically, any developer can propose an upgrade, they attach an invoice to be paid to their address once the upgrade is approved. This provides incentive to contribute to the core development of the Tezos blockchain and in turn helps to decentralise the network.

Unlike some of the new and upcoming cryptocurrencies on the market, this is actually intended to act as a currency rather than others that have been designed as token to digitise an asset.

What is so special about Tezos?

Tezos uses a proof of stake system compared to the proof of work system Bitcoin employs. This rewards users in proportion to the coins they hold, which means that anyone that holds a Tezos token can verify a transaction.

With Tezos's proof of stake system you designate one or several delegates of your choice to create blocks and validate transactions on your behalf. The higher the stake delegated to a given validator the more often they will be called upon to create blocks.

For delegates to attract more and higher stakes they can join forces, thus sharing the profits.

The proof of stake system is also used to create a normal state of inflation. It uses minting as its method of rewarding tokens. Minting rewards those who have a stake or own a token, creating fair distribution and creating a more secure and decentralised network.

Minting is only done per transaction rather than blocking lots together. This requires less strain on your computer and so makes it considerably more energy efficient than mining. You will need a high-speed internet connection but you won't need to shell out for the costly computer systems needed to generate coins through mining, not to mention the energy they require.

Tezos Initial Coin Offering (ICO)

On the 14th of July Tezos announced the largest ICO to date, raising $232 million worth of Bitcoin and Ether coins. It has been backed by the famous venture capitalist Tim Draper (whose dad invested in Skype before it sold for $4.4 billion) and have pledged $50 million to a new venture capital fund that is dedicated to financing companies building on its ledger platform.

Due to the size of the ICO and the instruments that were used to raise the cash, there were concerns about immediate sell offs of Bitcoin and especially Ethereum. Many thought that those controlling the Tezos ICO would dump the ETH onto the market immediately and in turn crush the Ethereum price. Converting that amount of Ethereum into fiat currency certainly could have caused a large sell off in Ethereum. 

However, Tezos confirmed in an announcement that it intended to use a forward thinking financial plan, which stabilised any concerns.

Why does Hitbtc appear to let you trade Tezos?

HitBTC has basically created its own database of IOUs regarding Tezos. This means there is no marketplace for Tezos on HitBTC. If you bought some Tezos during the ICO there is no way you can trade them on HitBTC, at the moment.

I would imagine that HitBTC will offer it as a cryptocurrency once it is launched but for the moment you would only be trading their own IOUs. This is essentially their own closed market. I would be weary because the IOUs may appear to be more valuable than they actually are.

Should I buy or trade Tezos?

Buy Tezos

Tezos is, let’s face it, attempting to compete with the big boys. So, what you must decide is whether Tezos will be able to take any of the market share from the likes of Bitcoin and Ethereum. 

Other smaller cryptocurrencies have different technologies that they use their tokens for. Their success may well depend on the quality of idea and technology they possess.

Tezos certainly has a few things over Bitcoin and Ethereum. Its tokens power smart contracts in the network and allow for votes on protocol. This makes it more decentralised than the likes of Bitcoin and Ethereum. 

Considering the size of its ICO and the kind of backing it has, I do think this is a cryptocurrency that will be around for the long haul. 

The company was quoted after its ICO as saying "We do not know what challenges lie in the future and therefore we are prudently managing the Foundation’s portfolio to last for decades and through volatile market conditions and deep social changes. Our spending plans will remain conservative and similar to the numbers outlined in the Tezos Overview document published prior to the fundraiser." This settled any uncertainty investors had regarding the long-term outlook of Tezos.

Trade Tezos

Again, until the launch of Tezos you cannot trade it. 

As with all cryptocurrencies, Tezos price movements are likely to be very volatile due to the nature of such a new phenomenon. Unlike traditional currencies that have been around for hundreds of years, the recent introduction of cryptocurrencies into the world of trading is very exciting. 

Seeking out the best places to buy and sell is certainly an opportunity to make some short-term cash but as with all trading, you will run the risk of losing your investment. Given the volatility we see in the cryptocurrency markets, caution is advised.

How to buy Tezos online - step by step guide

With all cryptocurrencies, you must open a wallet in order to store the cryptocurrency you decide to buy in. 

During the ICO, Tezos gave everyone who wanted one, a wallet so they could store their Tezos in. Now the ICO has ended, you cannot get a wallet until the Tezos network becomes active and changes in ownership can be recorded on the blockchain. As I write this, Tezos is still a project.

When and where can I buy Tezos?

So, right now you cannot buy Tezos, however the development team estimates that the time until completion is around 4 months, which like anything, can drag on depending on problems that may occur.

Once the blockchain is ready, Tezos will be rolled out to the exchanges that have expressed an interest. For the moment, you must wait before you can buy Tezos.

When tezos coins do become available, you will have to follow the same process as many other smaller cryptocurrencies.

You must first get a wallet that you can keep your Tezos in, which acts much the same as a cash wallet. This is like your email, you will be given a wallet address where people can send Tezos to you and a password that only you will know. Simply download from the Tezos website once it becomes available.

You can do step 1 to prepare for the Tezos launch

Before Tezos becomes available, there are steps you can take to be completely ready for its launch. Because buying Tezos will be a two-step process, you can do the first step to get the ball rolling.

- Firstly, you must buy another cryptocurrency to exchange it for Tezos. I will use Bitcoin because it is the largest cryptocurrency. The easiest way to buy Bitcoin is through Coinbase, which is one of the largest and most trusted exchanges. You must set up and account, filling in your details. 

Coinbase Sign Up

- Once you set up an account, you must add a payment method. You can either directly link your bank account to the Coinbase account or use a credit / debit card. Click 'add payment' and select the method you wish to use. You will then have to wait for this to be verified by Coinbase, this may take a little time because of the huge upswing in popularity for Bitcoin and other cryptocurrencies. 

Coinbase Payment Method

- Once verification is complete, you will be able to fund your account with USD, EUR or GBP. Once you have funded your account, you can then buy as much Bitcoin as you choose.

Now you have funded your Coinbase account, it will be a case of identifying which exchanges will launch Tezos and then once it's launched you can open the wallet and buy using Bitcoin.

How to buy Tezos with a credit card

Although its not been confirmed, I imagine given how the ICO was conducted that you will not have the option to buy Tezos using credit cards directly. I would suggest the safest method to buying Tezos with a credit card, is to go through the process mentioned above and buy Bitcoin using a credit card and exchange for Tezos. 

How to buy Tezos with Paypal

PayPal once embraced digital currencies and made it possible to buy things like Bitcoin through its payment platform, but recently it has withdrawn somewhat and only offers users of cryptocurrency the option of depositing money from the sale of Bitcoin into their PayPal accounts. This is again done through Coinbase, and because of that, only works with Bitcoin, Ethereum and Litecoin.

To use PayPal with Tezos, there is not much opportunity, but it once again is linked back to Bitcoin, and is only useful when depositing money. A Tezos holder could sell their Tezos for Bitcoin, send it to Coinbase, and then withdraw that money into PayPal for fiat currency such as Dollars.

How to trade Tezos

There are various exchanges that have expressed an interest in hosting Tezos once it’s launched. Given the huge price swings cryptocurrencies are experiencing there is no surprise at the increase of people wanting to trade these markets. 

Brokers are now getting in on the act and allowing you to trade cryptocurrencies using CFDs, this opens a huge market for speculators who want to profit from the price movement of markets like Bitcoin, Ethereum and Ripple.

A popular broker that offers you access to trading cryptocurrencies is AVA Trade. Creating an account with AVA Trade is just as quick and easy as setting up an account with Coinbase.

- Go to AVATrade.com and sign up by providing basic details. Alternatively, you can sign up using Facebook or Google+. 

AVA Trade Sign Up

- You will be asked to provide information on various topics, so AVA Trade can gage your experience and in turn the level of support they can offer you.

- When asked to select a trading platform, I would recommend selecting 'Floating Spread Account' with MetaTrader4 (MT4). MT4 is a hugely popular trading platform thousands of people use across the world. This will give you access to all the cryptocurrencies they offer.

- You then must fund your account. Decide the method you with to do so with and similar to Coinbase you can make a direct deposit into your newly created account. Click web-trading or download MT4 and you can begin trading.

AVA Trade Platform

The future of Tezos trading

Considering we have just had the ICO and the actual launch of the coin hasn't happened yet, it is hard to say what the future holds. But considering that at the time they raised the largest amount for its ICO in history, certainly investors see this as an asset for the future.

The way in which the company have remained grounded through the exciting ICO leads me to believe that the management team are strong and sees longevity in the project. They focus on security and future growth, which again is appealing.

They can give other options to complicated transactions and should be able to reduce time whilst also reducing cost.

The possibilities are endless, you could check into a hotel whilst unlocking the door to your room!

The ability to upgrade the platform is also an exciting project, the fact that anyone can suggest an upgrade and it must be approved by the market allows for continued growth. The actual process of upgrading is also very simple, all you need to do is take out an old layer and replace it with a new one. Again, the ease of it means scalability should, in theory, be simple.

If it does manage to take off, then I would not be surprised to see this in the top 10 of cryptocurrencies in terms of market share.

I think Tezos's scalability and its decentralisation are two of many reasons we can see this blossom into a top 10 market share cryptocurrency.

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Disclaimer: None of this is intended as advice, these are merely my thoughts

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