Tezos: Another Strong Day on the Books
XTZ is making another run at it.
To think about why, let’s take an extreme success case:
Say you hold ~1000XTZ currently, and the price goes to $100. Not only have you made almost 500x your initial investment of ~$2200, you’re also pulling down dividends of about 2XTZ/week, or 104XTZ/year. At a price of $1000 each, you’re making $104,000 per year in dividends on an initial investment of $2200.
If you were to sell your dividend XTZ tokens, or transfer them to something like BlockCard you would make enough money from your initial staking investment to live a reasonably comfortable life almost anywhere in the world!
Now, this sort of return as a stable gain may sound ridiculous. That’s because it is ridiculous. The odds of that happening are likely approaching zero. But, and here’s the thing, that sort of dream scenario does not need to play out for an investor to make some cash by buying and staking Tezos.
Most retail investors probably are aware of this gigantic potential upside, as well as the limited downside made possible by smartphone alerts. The risks can be managed, you just have to be willing to keep an eye on the price. From my observations over the past few weeks, I’d argue that this is exactly why XTZ is moving up so rapidly and holding its ground between upswings rather than selling back down to 0% growth as these altcoins are sometimes wont to do.
How Staking Works:
For one thing, staking is not what Tezos does, which is technically called “baking” — but not to split hairs. If you own XTZ on a site such as Coinbase.com, you do not have to do anything else to begin earning your rewards. Coinbase earns more than their estimated payout of 5.44%, but 5.44% is enough to convince plenty of retail investors to buy in and so it doesn’t make a ton of difference to the end users at this point.
It’s reasonably likely that other companies will be founded just to provide users with options for higher returns on their staked XTZ, but as of yet there seem to be relatively few options. In any case, the gist of staking (or, in this case, baking) is that a user owns a certain amount of a cryptocurrency, which enables that user to vote on matters of governance within that cryptocurrency’s network, and in exchange for this responsibility the user is paid out a certain rate of compound interest.
ETH2.0 is also going to offer staking, which may cut into the margins achievable by XTZ, unless XTZ actually ends up outperforming ETH in terms of practical use. However, the big question has little or nothing to do with the long-term.
My unique and original (not really much of either, though I did come up with it all by myself) XTZ strategy is to buy when the price goes down, and hold. It’s a long-term bull strategy, and I could lose a significant (to me) amount of money this way, but in my opinion the price is almost guaranteed to continue to increase as more companies adopt XTZ technology. If the bull thesis continues holding up, and the XTZ price continues to increase, one thing is for certain: current XTZ owners will own a digital asset worth far more than they paid for it.
Conclusion
The overall trend is beyond clear at this point: retail investors see the value in an appreciating asset that pays compound interest, so they’re buying and holding. People want to hold this crypto. It makes them money. I didn’t get in as early as some people did, but as the calls come in and people are targeting $5 by April and $25 by the end of the year, it certainly feels good to have a bit of XTZ in my wallet.
Long XTZ!
