"Bitcoin Pizza Day" commemorates one of the first transactions using Bitcoin, when on May 22, 2010, someone paid 10,000 bitcoins (BTC) to buy two pizzas.
But for crypto investors, that day also reminds us just how quickly prices can climb.
Today, one bitcoin trades for over $50,000. The bitcoins used to buy the pizzas would be worth over half a billion dollars today. You have to wonder what the could-have-been millionaire is thinking now (turns out, Laszlo Hanyecz is doing just fine).
While Bitcoin shoots to the moon, many "altcoins" are still in their early stages, some even trading for pennies on the dollar. Getting in on the right altcoin at the right time could potentially earn you gains similar to what BTC saw in the last decade.
Tezos (XTZ) may very well be that coin.
And once you understand why, it's hard to look at it any other way. There's a reason Money Morning's Tom Gentile recently encouraged readers to put this coin on their radar.
Of course, remember that crypto is still risky business. You don't want to allocate too much of your portfolio to it just yet.
But if you believe cryptocurrency is the future, you are going to want to know this...
What Are Altcoins?
Altcoins are simply alternative cryptocurrencies to Bitcoin. There are hundreds, but a few examples are:
- Ethereum (ETH)
- Ripple (XRP)
- Cardano (ADA)
- Tezos (XTZ)
- Chainlink (LINK)
Ethereum is the "most popular" altcoin. It has the most developers of all altcoins, the second-biggest market cap at $210 billion, and its price has seen steep increases with the rise of Bitcoin.
One of the biggest drivers of the ETH price and other altcoins, in fact, is the BTC price. Crypto traders have seemed to use Bitcoin as a barometer for overall crypto adoption. But that's not the only reason a cryptocurrency becomes more valuable.
For example, Ethereum's blockchain is an open-source software platform that can act as much more than merely a "store of value" like Bitcoin. It's likewise with Tezos and many other altcoins as well.
The reason there are different cryptocurrencies at all is that they have different "protocols."
The simple way to say it is that every blockchain has a different agreed-upon function among its developers. Bitcoin's protocol is designed to program increased scarcity into its blockchain, which is part of what helps the Bitcoin gain value over time (digital gold, as they say).
On the other hand, there is no limit to the supply of Ethereum or Tezos. They can mine to infinity. What drives their prices, then, along with Bitcoin adoption, is not the supply but the usefulness of their protocols.
Non-fungible tokens (NFTs) are an example of a technology enabled by the Ethereum protocol. Because the blockchain is both an irreversible ledger and a software platform, digital art can be created and identified on the blockchain as "unique," making its potential value limitless. (If this sounds confusing, you're not alone. Check out our complete NFT guide right here.)
Another thing Ethereum offers is smart contracts.
Rather than any outside entity enforcing and executing the contract, a "smart contract" does all of this on its own. All it requires is a buyer, seller, and the specific conditions to be written into the deal.
Once two people enter a deal, it is permanently stored on a decentralized blockchain network. The blockchain is decentralized and programmed to be unchangeable once a "block" is added to the chain.
Imagine never needing a lawyer or any kind of broker to make a trade, buy or sell anything again. That's the potential with smart contracts on a blockchain. It's quite literally a machine stealing the job of a man - and it's more effective.
NFTs and smart contracts are only a couple of possible uses for the Ethereum blockchain, and there will be plenty of similar, probably more baffling trends in the years to come.
Here's the deal, though. Tezos is an altcoin that is both a "coin" and an open-source software platform like Ethereum. Ethereum also trades close to $2,000 now, while Tezos goes for under $5.
Remember what we said about "usefulness"? Well, Tezos can do pretty much everything Ethereum does, but better.
You can create smart contracts, NFTs, and more on the Tezos blockchain. But there is one thing separating the two coins that gives Tezos a leg up.
Here's why the Tezos price could soar down the line.
Why Tezos Is Better Than Ethereum
While Bitcoin and Ethereum might be popular now, people long on crypto are looking for the coin that's going to stand the test of time.
There's no telling what the future holds, but when you sit and compare protocols, Tezos is the only one that looks like it was literally built to last.
In fact, some have even called Tezos the "Ethereum Killer."
Believe it or not, standing the test of time has posed a magnificent challenge for cryptocurrencies in general. Several cryptos have gone through updates, some more drastic than others, called "hard forks."
A "hard fork" happens when a cryptocurrency developer decides to change a protocol (which is to change the utility of the coin) and gets a bunch of developer friends to join in. This essentially "splits" the coin into two different blockchains, and you end up getting things like Bitcoin Cash (BCH) and Bitcoin SV (BSV) splitting directly from the original Bitcoin.
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With Ethereum, you had one group wanting to keep the same code forever, and another group wanting to change it. So, you ended up with today's Ethereum and Ethereum Classic (the original code).
Cryptocurrencies can also go through changes that don't fundamentally impact the protocol, called "soft forks." Something called a "sidechain" can also enhance the functionality of a blockchain without affecting the existing network.
The problem with soft forks and sidechains is that neither can support enhanced functionality after a certain point without creating an entirely new coin.
Hard forks are inevitable over time for nearly every coin.
But not Tezos.
And that's what makes it so unique.
You see, with most other cryptocurrencies, a team of developers that wants to drastically change the protocol has to do it outside of the blockchain. They have to talk about it together, maybe write their own special version of the code, brand it, and offer it to the exchange as something "new."
That's a hard fork.
Tezos avoids this by building an entire amendment process into the blockchain itself. There is a formal interface allowing developers to propose, select, test, and activate upgrades without a hard fork. Stakers of Tezos then vote on whether or not to execute the update.
It all stays on one blockchain.
Developers call this an "internal adaptability mechanism." It is possibly the most decentralized governance method on any blockchain around, which means it has a chance of outlasting even Bitcoin and Ethereum in the long run.
Large institutions like the Bank of France and BTG Pactual (Latin America's largest investment bank) got involved with Tezos because it is much more secure proof-of-stake currency, given that the protocol can be sustained on the blockchain many years down the line.
Now, you're probably wondering what you can make in profits from investing in Tezos.
How High the Tezos Price Can Get
Bitcoin is up 1,412% for the year now. While we're not seeing altcoins up to $50,000 in value, we're seeing similar gains from coins like Ethereum, which added 2,167% in the last year.
The difference between Bitcoin and Ethereum, however, is that the Bitcoin supply is capped at 21 million BTC. Ethereum only has an annual max supply of 18 million - it resets every year.
BTC was programmed to be scarce, which makes it increase in value. ETH was not. The value of ETH increases with its relevant functionality.
Tezos is more like ETH.
Even if the supply of both Ethereum and Tezos is designed to increase every year, their value rests in their use as well as the popular adoption of cryptocurrency. The other thing driving the value of these cryptocurrencies is inflation. The faster the value of the dollar declines, the greater interest people will find in Bitcoin and other cryptocurrencies.
Once crypto is popularly accepted as a standard unit of exchange, the market will start to actually look more closely at the functional value of different coins. This is what will ultimately determine the value of any coin you're holding.
Because of its extremely unique, useful protocol, Tezos stands to be the most widely used altcoin. Once people learn that Tezos can do everything Ethereum can and more, they will flock to Tezos. And if this happens early enough, you might see a similar dollar-price gain to Ethereum.
Eventually, the dollar may be gone, and society will have adopted a several coins for various purposes. One could be the agreed universal unit of exchange, another could be exclusively for trading art, another could be exclusively for insurance.
Who knows?
Only one thing is certain: Tezos is the coin most likely to preserve its identity over time, which prevents the necessity of creating a separate, pseudo-Tezos after it.
That makes it the most valuable altcoin, the most likely to stick around through the ages.
The Digital Gold Rush of the 21st Century
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