Similarly to Ethereum, Tezos is a proof-of-stake blockchain network that allows programs, or smart contracts, to be executed without the need for a trusted 3rd party.

XTZ, also known as tez, is the Tezos native cryptocurrency token that carries values and facilitates the execution of smart contracts on the Tezos network.

Transactions on the Tezos network are validated by XTZ stakeholders, who earn additional XTZ in return for validating transactions.

Tezos takes decentralization and upgradeability a step further than Ethereum and other smart contract networks by allowing upgrades and changes to be made to the network by stakeholder governance.

In other words, people who own XTZ vote on proposed changes and upgrades to the Tezos network.