Where & How to Invest in Tezos (XTZ) in 2023
Tezos is an open-source blockchain platform that supports smart contracts and decentralised applications (dApps). The project started with a $232 million ICO in 2017 and currently ranks as one of the biggest blockchain ecosystems in the cryptocurrency space.
Investors who participated in the token sale received XTZ, the native token of the Tezos blockchain. If you are new to the crypto investment space and wonder just how or where to start, this tutorial details everything you need to know about how to invest in Tezos.
1. Trade Tezos
Tezos is a tradable asset, which means you can speculate on its price movements and earn passive income on your investment.
To trade Tezos, you need a cryptocurrency broker, a platform that allows you to place a bet on whether the Tezos price will go up or down over a given period. When you invest in the cryptocurrency in this manner, the broker provides you with an account for Contract for Differences (CFDs), futures and options.
This investment strategy is preferred by those seeking short-term investment opportunities. Such investors mostly don't wish to acquire the physical XTZ, which means there's no need to set up a hardware or software wallet.
As the price of Tezos fluctuates multiple times during any given trading session, traders can receive regular income whenever the price moves as per their prediction.
Note that you can incur losses if the price moves in the opposite direction to your bet. It is therefore important that you get to understand the cryptocurrency market and how trading works before venturing into it.
Some countries and jurisdictions categorise CFDs as illegal, which means you need to find out whether trading Tezos contracts is legal in your current location.
Where to trade Tezos
The question of where to trade XTZ, or any other digital asset, is key to your investment decisions. As mentioned, you need a broker to access trading and several top platforms have sprung up across the globe for this purpose.
A little research and due diligence will help you pick the best broker to trade Tezos. You can choose any platform but factors you must consider include regulatory compliance, security, reputation, ease of use, customer service and trading costs. Also, note the payment methods supported for payouts and withdrawals as that can directly impact your investment.
We have reviewed top broker services, paying attention to each of the above factors. Here is the recommended crypto broker for investors seeking to trade XTZ.
2. Buy and HODL
Buying and hodling is the other investment strategy you can use to profit from Tezos.
"Hodling" is a popular term used within the crypto space to refer to the strategy of acquiring the actual XTZ coins and holding them long-term.
If you choose this method of investing in XTZ, it is advisable to use a reputable online broker that allows for the purchase of underlying crypto assets. You can also get the digital asset through a cryptocurrency exchange, with your coins stored in hot wallets on the platform or in external wallets.
Purchasing Tezos is easy once you understand that you need somewhere to store your cryptocurrency. If you are all set up and are wondering where to start, look no further. We have dedicated pages with in-depth reviews of various ways of purchasing XTZ.
You can access the comprehensive guides via the links below:
- Buy Tezos
- Buy Tezos with PayPal
- Buy Tezos with Credit Card
- Buy Tezos with Debit Card
3. Invest in Cryptocurrency and Blockchain Companies
You may not want to invest in Tezos by trading it or purchasing it for hodling. If this is the case, then you can still reap benefits from the cryptocurrency by investing in crypto start-ups and other blockchain-based companies that have invested in the Tezos ecosystem. These companies may either be using the blockchain for their applications or the native token in their business.
This strategy means you will be investing in the shares of the said company and can therefore benefit from the success of both the Tezos ecosystem and the crypto-focused company.
Note that you need to be cautious about the company you choose to invest in and established companies are a better choice. You also need to remember that you need the services of a licensed broker to invest in these blockchain-based companies.
Where to invest in Tezos shares
The first thing to note about investing in Tezos shares is that you will be acquiring positions in a blockchain-based company's stock and not the XTZ price.
The cryptocurrency broker facilitates access to the shares as would a traditional platform, with an investor likely to hold the actual stock or open trading positions depending on their investment strategy.
You need the services of a reputable broker to get the crypto shares, and this calls for due diligence from investors.
As mentioned above, one of the main factors to consider when choosing the brokerage is its legal and regulatory status—is it registered with top-tier regulatory bodies like the FCA and SEC? Other considerations are as earlier stated—user-friendliness, security, trading costs and fees.
To help you navigate this aspect, we have undertaken a comprehensive review of leading brokers. Get the details about each below.
4. Become a Staker
Staking, also called "baking" on the Tezos blockchain, is another way of investing in this cryptocurrency. The simple definition of staking is that you will be participating in the processing of transactions and creation of new blocks using your coins.
Tezos allows for baking via its unique Liquid Proof of Stake (PoS) consensus mechanism, which makes it possible for anyone to validate blocks and earn rewards in proportion to the staked coins.
You can also earn rewards by delegating your XTZ. When you delegate, you are staking Tezos by offering them to a validator or "baker". In this arrangement, you don't need to run the node. The validator will receive the staking rewards, take the commission fees, and then share with delegators proportional to each of their stake.
If you don't have the required amount of Tezos coins to become a validator, you can easily delegate via your cryptocurrency wallet. All you need to do is to open the wallet, choose your preferred baker and proceed to get your share of rewards.
Tezos rewards get distributed after 7 cycles of staking, which translates to about three days or 4,096 blocks per cycle. This means you can earn from your frozen XTZ coins every 21 days.
The validator will deduct their staking commission then share the remaining percentage with all those who delegated their coins.
The beauty of staking on the Tezos network is that you do not transfer ownership of your tokens when you delegate to a validator.
As the consensus protocol is "Liquid", you are free to withdraw your XTZ tokens at any given time. The thing to note is that when you delegate, it's all the coins in your wallet that go towards the validator.
Where to store Tezos
We have mentioned above that to participate in the Tezos network, you need to have the native tokens and then either be a validator or delegator. But your tokens need to be secured in a wallet for the main reason that unsafe storage will compromise your ownership of the coins.
Most wallets support Tezos, which means you have several options for storing your funds. But it is important to note that factors like a user-friendly interface, convenience, and security features should guide you when choosing a wallet.
Remember that you stake directly from your wallet and how easy that is should be a key factor to consider.
You can choose between hardware or software wallets. To help you, we have listed our top recommendation below:
5. Become a Tezos Developer to Make Money
Another way of investing in Tezos is to become a developer in the cryptocurrency's growing ecosystem. As Tezos comprises many organisations and projects across the world, you can become one of the developers and earn crypto as part of your investment.
Tezos is the product of many organisations and individuals across the globe working together on an open-source project. If you want to work as a developer in the XTZ ecosystem, reach out to the team via their mailbox.
Note that to become a Tezos developer you need advanced coding skills and be able to work with various programming languages, including Python, Java and C++. You can help create blockchain applications for companies or individuals, for which the reward can be very handsome.
When you choose this method of investing, you are not only helping build projects on the platform but also aiding in the growing adoption of the network. That way, you are increasing the chances of your investment performing well in the future.
Expert Tip on When and How to Invest in Tezos“ You can invest in Tezos in any of the ways discussed in this tutorial. However, one expert tip you are likely to find invaluable is that no investment offers a smooth experience. Just like the volatile nature of the market, investing comes with ups and downs. There is also no right or wrong time to invest. However, investors can get the most out of your investment by learning the market and what drives the Tezos price. Look at factors like price history and development roadmap to gauge future performances. ”- Benson Toti