Tezos Blockchain Project Raises $232 Million With Initial Coin Offering

A blockchain project called Tezos just raised a little under $232 million worth of bitcoin and ether, a new record for initial coin offerings, to launch a cryptocurrency that nobody knows quite what it’s for. I can go shopping with bitcoin, but it’s still unclear if I would want to shop with these new Tez tokens someday. Even with so many unanswered questions, this project could completely transform blockchain networks as we know it.

Tez tokens, created by the Tezos project, will completely roll out by the end of 2017. Unlike Ripple’s XRP, which was made for enterprise money transfers and business transactions, or Ethereum, which basically provided a DIY-technology platform for making all kinds of blockchain experiments, the possibilities for Tezos are completely unshackled.

Tezos co-founder Kathleen Breitman told International Business Times she didn’t have a single use case in mind when she hunkered down with her co-conspirator and CTO husband to build a completely new type of blockchain network.

“There are so many directions the protocol can go in,” Breitman said. “Some people have proposed using it as a fintech platform, others think it could integrate well with online gaming communities. There's a world of possibility through the sort of open-ended structure we created.” A handful of innovators joined the cause, advised by Zooko Wilcox, creator of the cryptocurrency Zcash.

Why were people willing to give so much money to the nonprofit behind this mysterious technology? Because it offers a radical approach to solving one of bitcoin’s biggest problems.

The bitcoin network was built to operate independently. Nobody runs bitcoin. Users around the world create new tokens by contributing computing power while algorithms do all the heavy lifting. Every “block” in the blockchain holds huge amounts of data, so that the information is spread out across the network and there’s no central base vulnerable to hackers or institutional manipulation.

However, as more people flock to bitcoin, the system gets weighed down. It can only handle so many tasks at a time, no matter how much power people give it. How can the community boost the network’s potential and make subjective choices about its priorities without taking control away from the unequivocal and impartial reign of math?

This has sparked heated debate within the blockchain community. The Tezos team believes the solution is to give users voting power. “The key observation that we made, that I think resonates with people, is that the blockchain is a common even though the tokens are owned by individuals,” Breitman said.“We allow our token holders to come to consensus, not just on upgrades but also on, like, the governance model itself. So it’s a highly amendable, modular structure.”

The Tezos team imagines blockchain could create a sort of digital commonwealth, which takes the philosophical idea of democratizing technology to a whole new level. “No other token confers rights upon the token holders to participate in upgrades to the network and governance,” Breitman said.

Read : Fundraising With Initial Coin Offerings Hot New Trend Among Blockchain Startups

Plus, the Tezos project isn’t limited to cryptocurrency. It also uses this same principle to make smart contracts with blockchain. Breitman told IBT the team is talking with several companies around the world to create custom Tezos-style blockchain solutions.

“Tezos is a fresh implementation of a new blockchain, and it’s a smart contract platform,” Breitman said. “It [Tezos] is not really company, it’s a network that is being launched by our Swiss nonprofit.” Like Ethereum, the company that made Tezos software won’t control the network. Instead, the team is building up a nonprofit foundation to shepherd the technology’s future. Unlike Google or Facebook, Ethereum and Tezos don’t want to profit from user data. Even so, there are definitely differences of opinion within the community.

Ethereum creator Vitalik Buterin tweeted that he disagrees with the Tezos approach on Monday, during the ICO campaign.

Despite criticism from one of the most influential blockchain experts in the world, Tezos still raised millions and sparked excited frenzy throughout the cryptocurrency community. That’s huge, especially in social circles where Buterin is revered as a messianic figure. This wildly successful ICO shows true diversity and healthy debate within the blockchain ecosystem. Even among idealists, innovators have different approaches to the same technology.

“Hopefully, Tezos is a little bit more experimental and they can do more interesting things rather than just addressing problems as they come up, be a little bit more proactive,” Breitman said. “There’s maintenance, like who is going to patch a bug, and then there’s governance. ...for a park, let’s say a bunch of children move into a neighborhood. Should the park have a slide or a swing set? Who decides?”

In an interview with TechCrunch, Breitman described herself as an anarchist-capitalist with cypherpunk roots. She’s all about power to the people, yet not against leveraging profit as an effective motivator. The Tezos network doesn’t create tokens through mining like bitcoin does. Instead, it triggers the creation of new tokens when users vote to accept a new update or idea. Whoever contributed the improvement will receive the fresh batch of tokens.

“They make the tokens the same way stock is issued when one company acquires another,” she told IBT. “With Tezos, we want to start out with the whole idea of decentralized governance in a really robust way, which is why our structure is so modular.”

For businesses, Tezos smart contracts could theoretically automate escrow and different types of loans. “If you could both agree that a line of code that you can both inspect does a better job as a third party service without the overhead,” Breitman said. “Poof! Disintermediation.”

Because the Tezos system is built for continuous updates implemented by popular vote, these smart contracts will be able to keep updating to keep up with business trends and companies’ needs.

Think of Tezos smart contracts like an organism that keeps growing, learning and changing based on the whims of users, now emboldened with the power of digitized Greek gods. People who bought into the Tezos ICO will decide how this technology evolves. It’s risky and experimental by design. But that, in a nutshell, is why the Tezos model just might be crazy enough to work.