Tezos is an advanced blockchain platform that supports smart contracts. In many ways, it resembles Ethereum, however its infrastructure is quite advanced, allowing it to evolve and improve over time without ever being in danger of going through a hard fork. The platform is governed by its community, where holders of XTZ tokens can vote on proposals to upgrade the protocol.
Tezos prides itself on being a secure, upgradable, and built-to-last open-source platform with its smart contract language providing the accuracy necessary for high-value use cases. This has seen the platform embraced by large institutions such as Société Générale, a French banking giant that is using the blockchain platform to experiment with its own central bank digital currency. This guide will go through ways and strategies you can use to invest in Tezos.
Before you start buying Tezos on a crypto exchange, you need to invest in a cryptocurrency wallet. This way, you will be able to safeguard your investment. Wallets hold private keys that allow you to stake a claim on a quantity of tokens. Two types of wallets exist: software wallets and hardware wallets.
Software wallets come in the shape of websites, mobile apps, and desktop applications. They are easily accessible since they are mostly online, and are convenient for investors who regularly need access to their tokens to conduct transactions, or for trading Tezos. Examples of such wallets include Trust Wallet, Atomic Wallet, Exodus, and Guarda.
Hardware wallets are more secure compared to software wallets since they store your private keys offline. They resemble USB flash drives and are convenient for long-term investors and people who hold large amounts of Tezos. Examples of these include wallets from Ledger, Trezor, KeepKey, and Corazon.
After acquiring a Tezos wallet, it's time to join a reputable exchange and buy Tezos (XTZ). Register an account and complete the KYC process by uploading a photo of your ID/passport, proof of residence, and a selfie for verification. Fund the account using any supported payment modes and make your purchase. Then move your tokens to a private wallet.
Currently, the price of Tezos tokens is around $6. The good thing is you can buy fractions of the token, and many Tezos exchanges will allow you to buy small fractions of XTZ. For coins that don't cost too much, buying fractions doesn't make much sense, but it's possible. There are network fees involved when purchasing Tezos, and most exchanges will stipulate that you buy at least XTZ worth about $10 to ensure you cover the fees. For that amount, you would get almost two full Tezos coins at the time of writing, since the fees are minimal.
Brokers are great for short-term traders and for individuals that love convenience, and are great for investors who don't want to deal with the actual asset and the risks of safekeeping the tokens - these will be stored in your brokerage account.
Crypto brokers also allow you to trade financial instruments attached to Tezos, such as contracts for differences (CFDs). These allow users to speculate on slight price movements, whether positive or negative, with potentially higher profit margins, since they have access to leverage. By using leverage, your capital is boosted, which increases your exposure to a trade. All you need to do is join a reputable trading platform like the ones listed below, register an account, fund it, and you are good to go.
An exchange-traded fund (ETF) allows users to gain exposure to Tezos through the traditional stock market. They are highly regulated and scrutinised, and this inspires confidence among investors who can engage with these products knowing their investments are safe.
Many of the cryptocurrency ETFs that exist today are composed of multiple different coins, allowing users to spread their investment across a managed portfolio. In contrast, others are made up of a single coin, such as Tezos, and will offer more direct exposure to a single asset. Either of these forms of ETF are a good choice for the cautious investor who values regulation and security above all else.
So far, you know of four ways of buying Tezos, and five strategies to maximise your profits. The following section will highlight three key things you need to pay attention to since they have the potential to impact your XTZ investing journey significantly.
Fees are common among investing and trading platforms, as this is how they make their money. These fees vary from one platform to another. They may seem tiny when taken on their own, but they can accumulate, especially for regular users such as traders. This can end up eating a chunk of your profits.
Therefore, it does help to analyse the kind of costs on various platforms, and to choose the one with the most favorable fee structure without compromising the quality of service you receive. As you invest in Tezos, you will also come across network fees associated with buying and selling the tokens. In the case of XTZ, these shouldn't worry you much as there are only a few cents per transaction.
Another type of fee you are likely to encounter is from your payment processor, such as credit card charges. These fees will also vary. When dealing with brokers, you won't pay any network fees, but you will be charged commissions for trades conducted on the platform. Also, most brokers will charge an inactivity fee if you go for long periods without using your account.
As a digital asset, there are a few risks associated with Tezos. The crypto market is highly volatile, and it's not surprising to see prices change by 10% or more overnight. This can significantly impact your investment, especially if you are a short-term investor and you close a trade at the wrong time. To cover this volatility, you should consider hedging, or diversifying your investment with other digital assets, helping you mitigate the downside.
Another risk associated with Tezos stems from the lack of regulations within the cryptocurrency space. It's a loophole that has greatly been exploited by bad actors who have ended up scamming unsuspecting investors using investment schemes attached to assets such as Tezos. To avoid falling for such scams, you need to extensively research any and all cryptocurrency investments. Investing in regulated instruments such as ETFs provides substantial protection against scammers.
You can also lose your investment through hacks of your brokerage account or private wallet. This is why it's necessary to take adequate security measures, such as setting a strong password, activating two-factor authentication (2FA), and investing in hardware wallets. This will limit the chances of hackers accessing your account.
With research, you will realise different platforms that allow you to invest in Tezos will support different payment modes. Some will have limited ways to fund and withdraw funds from your account, which can be very inconvenient. An ideal investment or trading platform should support multiple payment modes such as bank transfers, credit/debit cards, e-wallets, other cryptocurrencies, and third-party payment processors.
As stated earlier, over its short lifespan, XTZ has managed to register an ROI of over 1000%. This is quite modest compared to some digital assets, but spectacular compared to traditional investment assets such as stocks. Tezos offers a superior smart contract platform compared to the likes of Ethereum and should see greater use cases in the future as more users embrace its blockchain. This should have a direct effect on its tokens, leading to an increase in value.
The growing acceptance of cryptocurrencies within our society is another reason you should consider investing in Tezos. As things stand, only a tiny fraction of the population is conversant with cryptocurrencies, which means an investment today will put you among an exclusive small percentage of early adopters that will benefit greatly when these digital assets see mass adoption.
Investing in Tezos has never been easier, thanks to the many ways of gaining exposure mentioned in this guide. Tezos is a promising project that has begun to receive the kind of recognition it deserves, and this should be reflected in the price of its tokens. This guide offers you several ways to enter into a Tezos investment safely, without having to worry about losing your hard earned money.