Tezos vs Ethereum: The Differences, Comparison and More | OWNR Wallet
Tezos vs Ethereum: The Battle of the Blockchains
The world of blockchain technology continues to expand with the development of multiple innovative solutions. Two particular contenders, Tezos and Ethereum, have emerged as major players in this space. Both platforms offer users various options for developing decentralized applications (dApps), creating smart contracts, tokenizing assets, or even launching their own blockchain-based business ventures.
In this article, we will compare these two different systems in terms of their usage, features, scalability, security, cost-efficiency, and more so you can make an informed decision about which platform best suits your needs. Let’s dive in and take a closer look at Tezos vs. Ethereum!
What is Ethereum (ETH)?
Ethereum is an open-source, public distributed ledger platform based on blockchain technology that provides users with smart contract functionality. It was created by Russian programmer Vitalik Buterin in 2015 and enabled the development of decentralized applications that run without single points of failure or third parties involved.
Ethereum uses its own cryptocurrency - Ether (ETH), to facilitate financial transactions between two peers, eliminate middlemen fees, and allow for a high degree of trust among users. The underlying concept behind Ethereum is known as "smart contracts," which are used to validate digital assets such as cryptocurrencies.
Ethereum: Main Features
Ethereum is an open-source, blockchain-based distributed computing platform and operating system featuring smart contract functionality. Ethereum features the ability to create and deploy decentralized applications (dApps) and a built-in cryptocurrency called ether. It also offers other unique features such as proof of stake consensus, sharding for scalability, Domain Name System support, light client integration, and more.
These features give developers powerful tools to create complex protocols that enable them to build custom blockchains tailored for their own purposes.
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What is Tezos (XTZ)?
Tezos (XTZ) is a blockchain-based smart contract platform with an on-chain governance process that allows stakeholders to vote for protocol upgrades. It also uses a delegated proof of stake and has Turing complete smart contracts, which would enable developers to build dApps, DeFi platforms, games, and more.
The Tezos network also features Bake, which enables individuals to participate as validators on the network by executing their transactions using nodes that they maintain in exchange for rewards from transaction fees sent through Baking activities.
Tezos: Main Features
The key benefit of Tezos’s architecture lies in the ability to upgrade itself without any forks or other destabilizing events. This allows for consistent improvements over time with flexibility in its code base to respond quickly to changing environments or security vulnerabilities. On top of that, Tezos also provides flexible token economics with increased control over projects’ monetary policy decisions and network monetization via fees/rewards collection based on user contributions to the project.
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Tezos vs Ethereum: What makes them different?
Creation: Tezos was founded in 2018 by venture capitalist Arthur Breitman who proposed an on-chain governance system that would enable network protocol upgrades through consensus between stakeholders within the ecosystem instead of relying on developers or miners from outside the system. On the other hand, Vitalik Buterin developed Ethereum as an open-source, public project built upon Bitcoin's principles but included enhanced development features such as smart contracts and distributed apps (DApps).
Consensus: Tezos and Ethereum both employ PoS-based consensus. However, the two networks are different in many ways. Tezo’s consensus is secured by stakeholders who delegate to validators that secure blocks. On the other hand, Ethereum uses a variant of PoS called Casper FFG, where stakeholders have actual control over their delegated funds and voting rights on network upgrades, ensuring better decentralization and security of its blockchain network.
Value: Tezos (XTZ) currently has a market cap of just under $1 billion and is the 49th largest cryptocurrency in terms of market cap, according to CoinMarketCap. The value proposition behind Tezos lies in its ability to facilitate secure and seamless transactions between users worldwide. Ethereum (ETH), meanwhile, is another leading cryptocurrency platform with an even larger market cap of over $189B. Like Tezos, it offers an open-source platform for creating decentralized applications utilizing smart contracts and boasts one of crypto's most reliable mining protocols.
Growth: Tezos is one of the most disruptive blockchains in this space due to its fast-growing decentralized applications (dApps). An estimated 6 million users currently hold the native cryptocurrency, XTZ. In addition, it recently secured $460 million via two rounds of funding from top venture capital firms like Polychain Capital and Blockchain Capital LLCs. On the other hand, Ethereum has established itself as one of the leading smart contract platforms and continues to gain traction through updates such as ETH2 staking or Layer 2 scaling solutions. It also boasts around 100 million wallets holding Ether tokens globally, which makes it alluring for investors who favor long-term projects.
How it works: Both Tezos and Ethereum use Proof of stake consensus mechanism. It works by having validators "stake" their tokens on specific network transactions. A validator is then randomly selected from this pool of stakers. The nodes with more 'stakes' are more likely to be chosen as validators or signatories for new blocks. As an incentive, these validators receive rewards when they successfully validate a transaction and add it to the chain.
Purpose: Tezos was created as a fully self-governing network, meaning it is designed to be decentralized, with no single party controlling the network or its funds. This autonomy allows users to participate in the platform's governance by voting on changes to rulesets and protocols. In contrast, Ethereum was initially proposed as an open-source project which uses smart contracts for different use cases on its blockchain protocol. Smart contracts enable developers worldwide to contribute their development efforts through ether (ETH) incentivized rewards for building new dapps and services.
Mining and Blockchain validation processes: Tezos and Ethereum blockchains use a unique consensus mechanism known as Proof of Stake. Proof-of-stake alters the way blocks are confirmed, requiring less computing labor. Owners stake their currencies in exchange for the opportunity to validate blocks and become validators.
Ethereum staking is the process of providing 32 ETH to the Ethereum blockchain in order to enable validator software. You would be in charge of data storage, transaction processing, and the insertion of new blocks after activating the validator node. As a consequence, Ethereum can continue providing security while rewarding validators with fresh ETH.
Tezos staking works very similarly to Ethereum's. By having one roll or 8,000 Tez, the validator can run a network node that earns a proportionate share of Tez rewards for verifying blockchain transactions. Smaller Tez sums can be delegated to a network node called a baker in Tezos' vocabulary.
Transaction speed: Ethereum can process transactions much faster than other similar platforms, with a TPS (transactions per second) rate of around 30. This makes it an ideal choice for applications requiring frequent user interactions. Tezos, on the other hand, has an even higher TPS of approximately 40 and can be upgraded to 1 million once the "Lima" upgrade is in full effect.
Transaction fees: Tezos transaction fees are commonly designated in tez (XTZ) or nanoTez (nano XTZ). These fees range from 0.0025 to 1 XTZ depending on several factors, such as network congestion, transaction size, type of operation being performed, etc. On Ethereum, gas prices can be quite volatile since they depend on network congestion levels; they usually range between 10-50 gwei per gas unit (1gwei = 1e-9 ETH) but sometimes even go up to 400+.
Block time: Tezos and Ethereum block times vary depending on network conditions but usually remain within a certain range. Tezos has a default block time of around thirty seconds, while Ethereum commonly averages between fifteen to twenty-second blocks. However, it can reach up to twelve seconds at peak times due to its faster consensus mechanism.
Supply: As of 2023, The circulating supply of Tezos is 945 Million coins with no limit on its total supply. In comparison, Ethereum has a total supply of ~122 million coins currently in circulation from its genesis block creation back on July 30th, 2015. Just like Tezos, Ethereum has no limit on its maximum supply.
Ethereum (ETH) or Tezos (XTZ): Check out the comparison table
Number of Coins
Maximum Number of Coins
Ethereum is a blockchain platform that enables developers to create and deploy decentralized applications (dApps) and smart contracts. These dApps operate autonomously on the Ethereum network, allowing users to securely send value, manage digital assets, or create crowdfunding campaigns using its native programming language, Solidity.
This technology can be used in various industries, such as healthcare, finance, banking, insurance services, supply chain management, cloud storage, or data trading platforms. Ethereum also serves as a secure store of value and allows users to trade tokens through smart contracts.
Tezos is a public blockchain network that can securely store, transfer and manage digital assets. This makes it attractive for developers who need to build secure and reliable applications. Developers can build their own tokens within the Tezos environment with relative ease - thanks to SmartPy's developer toolkit, which makes it easy to create custom tokens.
This allows users to interact more easily with contracts while also taking advantage of new features available in the network, like liquid proof-of-stake protocol that adds an extra layer of account protection.
Ethereum (ETH): Pros and Cons
Advantages of Ethereum
- Security:Ethereum has robust security, with a decentralized consensus mechanism preventing fraud and double-spending attempts. All transactions are immutable and secure, providing users with peace of mind when it comes to their data.
- Flexibility & Programmability: Developers can build decentralized applications (DApps) on top of Ethereum, which offers them extreme flexibility compared with traditional software solutions. Its programmable nature enables developers to customize their applications according to their needs instead of having one-size-fits-all features common with prebuilt systems such as web hosting platforms.
- Open Source Network: The entirety of the Ethereum network is completely open source providing transparency into its system operations that everyone may use freely if they wish to do so.
Disadvantages of Ethereum
- Scalability: While it’s true that Ethereum has some unique features that make scaling easier than Bitcoin, many people still consider scalability a disadvantage. This could lead to slower transaction times and higher fees in certain conditions.
- Risky: One of the drawbacks of investing in Ethereum is potential investment loss. The prices for cryptocurrencies can fluctuate rapidly, making it difficult to predict how much your money will be worth when you purchase a certain amount of coins.
Understanding how Ethereum works requires significantly greater technical knowledge than other cryptocurrencies. For those without coding experience—or at least a basic understanding of software engineering principles—Ethereum might be difficult to use or may require assistance from professionals
Tezos (XTZ): Pros and Cons
Advantages of Tezos
- Self-amendment: The self-amending protocol of Tezos is one of its most unique and powerful features. It enables the network to upgrade itself without requiring a hard fork. This allows for developing and deploying new features and functionality without disrupting the existing network.
- Decentralized Governance: With Tezos, there is no central authority to govern the network. Instead, the network is governed by a decentralized network of stakeholders who are able to decide on how best to upgrade and evolve the network. This ensures that the network remains secure and reliable.
- Flexible Token System:Tezos has a flexible token system that allows for the developing of various token types, such as security tokens and asset-backed tokens. This makes it easier for developers to build applications and services that can utilize these tokens for multiple purposes.
Disadvantages of Tezos
- High Entry Cost: One of the main disadvantages of Tezos is the high entry cost associated with participating in the network. It requires a large initial investment to become a validator or delegate, which can be prohibitively expensive for some users. The cost of running a node on the Tezos network is much higher than that of other networks.
- Lack of Liquidity: Another disadvantage of Tezos is its lack of liquidity. The Tezos platform has yet to gain widespread adoption, meaning there is limited market liquidity. This makes it difficult to trade Tezos tokens, as there are fewer buyers and sellers than on other blockchain platforms.
- Vulnerability to Attacks:Tezos is also vulnerable to attacks from malicious actors. Due to its decentralized nature, it is difficult to prevent malicious actors from taking control of the network. The Tezos protocol is also relatively new and untested, making it vulnerable to bugs and glitches that malicious actors could exploit.
Tezos vs Ethereum: Do they share any similarities?
Tezos and Ethereum share many similarities, starting with their underlying blockchain technology. Tezos and Ethereum use distributed ledger technology (DLT) to record and secure transactions. This means that the data stored on the blockchain is shared across a wide network of computers, ensuring data integrity and security.
Another similarity between Tezos and Ethereum is their consensus algorithm. Both coins use a proof-of-stake algorithm, which is more energy-efficient than the proof-of-work algorithm used by Bitcoin. It also encourages users to stake their coins to receive rewards for verifying transactions.
What should I buy: Tezos or Ethereum?
Deciding which coin to buy between Ethereum and Tezos should be based on your individual goals and risk tolerance. Ethereum is the world's largest open-source blockchain platform and has been around for longer, so its network is more established, making it a reliable investment.
On the other hand, if you're looking for an exciting and high-reward investment, Tezos is definitely worth considering. Tezos could offer great opportunities for those willing to take the plunge. So, if you're ready to take the leap, why not give Tezos a try?
Tezos vs Ethereum: What is better in the end?
Ethereum and Tezos have a lot to offer, and it's hard to say which one is better. Ethereum is a great platform for creating decentralized applications and hosting smart contracts, whereas Tezos has more advanced features, such as a secure consensus protocol and a self-amending governance model.
Ultimately, Ethereum and Tezos both have their own advantages and disadvantages, and the best platform for any particular project or application will depend on its specific requirements. Ethereum and Tezos have a lot to offer, and it is up to the user to decide which platform is the better choice.
Which one is better: Tezos or Ethereum?
Choosing between Ethereum and Tezos depends on what you are looking for. Ethereum is a well-established platform with an active developer community, and it is good for creating large-scale DApps. Tezos is a newer platform, but it is more efficient, cost-effective, and better for creating faster and more agile DApps. It’s up to you to decide which platform is better for your needs.
Should I invest in ETH or XTZ?
Investing in cryptocurrency can be a daunting and risky task, especially when trying to decide between two of the most popular coins: Ethereum and Tezos. Ethereum has a strong track record and is great for those who want to invest in a well-established coin. Tezos, on the other hand, is a newer coin quickly gaining popularity, so it's an attractive option for those who want to get involved in the blockchain space.
Both Ethereum and Tezos have the potential to be lucrative investments, so it's important to do your research and make an informed decision.
What is the main difference between Ethereum and Tezos ?
The main difference between Tezos and Ethereum is the programming language used to create smart contracts and decentralized applications. Tezos uses a programming language called Michelson, while Ethereum uses the more popular Solidity language. Michelson is designed to be more secure and reliable than Solidity, which can lead to fewer bugs and fewer issues with scalability.
Will Tezos replace Ethereum?
Will Tezos replace Ethereum? This question has been on the minds of many cryptocurrency enthusiasts. Tezos has been touted as the next big thing in the world of blockchain-based smart contracts and decentralized applications, and many believe that it has the potential to overtake Ethereum as the leader in this space.
Whether it will be able to do it or not is yet to be seen. However, it is clear that Tezos has several advantages over Ethereum, and if it can capitalize on these advantages, it could become a major player in the space.
DISCLAIMER: None of the authors, contributors, administrators, or editors connected to OWNR Wallet encourage readers to invest in Ethereum or Tezos without proper research. This article is purely for educational purposes only.