What is TON Coin?

11 mins read October 25, 2024

TON Coin is the native cryptocurrency of The Open Network (TON), a decentralised blockchain initially developed by Telegram, one of the largest global messaging platforms. It was designed to enhance the user experience with speed, scalability, and user-friendliness. The goal was to simplify blockchains and allow customers to use TON for everyday transactions. The TON network powers various applications, from financial transactions and decentralised apps (dApps) to file storage. Its native cryptocurrency, TON Coin, plays a crucial role in the ecosystem by facilitating payments, staking, and securing the network.

Brief History of the Network

The story of TON began in 2018 when Telegram, led by its founder Pavel Durov, set out to create a blockchain network that could rival existing giants like Ethereum and Bitcoin in terms of speed, scalability, and user experience. The idea was to integrate it into the Telegram app, making it easy for anyone to use cryptocurrency. Telegram's large customer base gave the project immediate visibility and credibility, drawing massive interest from investors during its initial coin offering (ICO) phase.

However, in 2020, TON faced significant regulatory hurdles when the U.S. Securities and Exchange Commission (SEC) halted the project, labelling the ICO as an unregistered securities sale.

Despite the setback, Telegram made the project’s source code public, allowing developers to continue its evolution independently. This led to the formation of The Open Network (TON), a community-led initiative that has since carried the vision forward. The network has grown exponentially, supported by its efficient consensus mechanism and Telegram’s continued interest in decentralised technologies.

What is TON Coin?

TON Coin was introduced as part of the TON blockchain’s ecosystem. It serves as the native currency for transaction fees, staking, and governance. It was initially distributed during Telegram's ICO, but since then, it has been redistributed and reissued by the community developers who revived the project. Over time, TON Coin has expanded its utility beyond payments, staking, and decentralised finance (DeFi) to include cross-chain interoperability, decentralised identity services, and NFT minting.

The total supply of TON Coins was initially capped, with a portion distributed to early investors and community developers after the SEC halted Telegram's ICO. However, as the community took over the project, additional TON Coins were issued through staking rewards and validator incentives. Today, TON Coin plays a crucial role in the network’s governance, where holders can vote on protocol upgrades and changes.

How Does TON Work?

At its core, the TON blockchain uses a Proof-of-Stake (PoS) consensus algorithm to secure the network and validate transactions. Validators, also known as network participants who lock up their TON Coins, are responsible for adding new blocks to the blockchain. This energy-efficient approach makes TON an eco-friendly alternative to traditional Proof-of-Work (PoW) blockchains like Bitcoin.

As seen in older blockchains like Bitcoin, TON’s PoS consensus algorithm is more efficient than the PoW model. It allows for faster transaction times and lower energy consumption. In PoS, validators are chosen to create new blocks based on the number of coins they stake, thereby aligning their financial interests with the health and security of the network. Validators are then rewarded with newly minted TON Coins and transaction fees, incentivising them to act in the network's best interest.

The TON blockchain is also highly scalable. It uses sharding technology to split the network into smaller sub-blockchains, allowing for more transactions to be processed simultaneously. This ensures that the network can scale as demand grows without compromising speed or decentralisation.

What Makes TON Unique?

Speed and scalability: TON stands out because of its speed and scalability. Its use of sharding enables it to process millions of transactions per second, while the PoS consensus ensures that it's environmentally sustainable.

Accessibilty and Trust: TON is designed for mass adoption, aiming to bring decentralised finance and services to the general public, not just blockchain enthusiasts. Its seamless integration with messaging apps like Telegram allows for simplified user experiences, which could drive wider acceptance of cryptocurrencies in everyday use. The network’s close association with Telegram adds a layer of trust and accessibility, especially for users familiar with the platform.

Ease of Use: Another unique feature is its focus on being easy to use. TON aims to integrate into everyday apps like Telegram, which could make cryptocurrency accessible to people who are not familiar with blockchain technology.

Decentralised Finance: Unlike Bitcoin, TON offers smart contract capabilities, enabling developers to create dApps and other decentralised solutions which Bitcoin cannot support.

Interoperability: TON has built-in support for cross-chain transactions, enhancing its utility. It can also integrate with apps like Telegram, allowing for easy user adoption and widespread accessibility.

Low Transaction Costs: The network’s efficiency results in lower fees than blockchains like Bitcoin and Ethereum.

TON has carved out a place in the growing crypto ecosystem, but the SEC’s actions against the original project remain a point of discussion in the crypto world. It also faces tough competition from established blockchains like Ethereum. Additionally, while TON brings unique advantages and features, it's still a relatively new blockchain and widespread adoption beyond Telegram is just beginning.

Ton Vs Competitors ( Ethereum and Solana)

Consensus Mechanism:
TON uses Proof-of-Stake (PoS) with sharding to boost scalability by splitting the network into smaller chains. While Solana combines Proof of Stake (PoS) and Proof of History (PoH), Ethereum recently shifted to PoS for scalability and reduced energy use.

Transaction Speed and Scalability:
TON's sharding could support millions of transactions per second (TPS), while Solana handles up to 65,000 TPS in optimal conditions. Before the Ethereum 2.0 upgrade, Ethereum managed 15-30 TPS, but now, with layer 2 solutions, it can scale to thousands of TPS.

Decentralisation:
TON is working on expanding its validator network for greater decentralisation. Solana, though fast, is seen as less decentralised due to the high hardware requirements for validators, but Ethereum remains highly decentralised, with thousands of validators distributed worldwide.

Security:
TON’s PoS and sharding make it secure by distributing validation across chains, while Ethereum has one of the most secure blockchains because of its global decentralisation. Although Solana has faced network outages in the past, it is continuously working to improve its security.

Transaction Fees:
TON and Solana offer low fees, making them ideal for microtransactions and DeFi activities. Ethereum has historically had high gas fees, but these fees are expected to lower significantly with the Ethereum 2.0 upgrade and layer 2 solutions.

Tokenomics:
TON’s native TON Coin is used for staking, transaction fees, and governance. Solana’s SOL token has a fixed supply of 500 million, and some tokens are burned during transactions, making it slightly deflationary. Ethereum’s ETH became deflationary after EIP-1559, with gas fees partially burned, and is widely used for fees, staking, and DeFi.

Transaction Fees: TON can keep transaction fees low due to its sharding and scalability. Solana is famous for its nearly zero transaction fees (usually less than $0.01). At the same time, Ethereum has faced high fees because of network congestion, which is expected to decrease with the rollout of Ethereum 2.0.

Tokenomics: TON’s TON Coin powers the network through staking, transaction fees, and governance. Similarly, Solana’s SOL token is used for staking, governance, and fees. With a fixed supply of 500 million tokens, Solana becomes slightly deflationary as tokens are burned during transactions. Ethereum’s ETH also became deflationary after the introduction of EIP-1559, which burns a portion of gas fees.

How to Buy TON Coin

TON Coin can be purchased through various centralised exchanges such as Yellow Card. With Yellow Card, you can easily buy, sell, send, receive and hodl TON using your local currency.

The future of TON looks promising, given its consistent development since the mainnet launch in 2021. With significant milestones such as introducing TON DNS, TON Payments, and a growing DeFi ecosystem, TON is steadily expanding its capabilities. The network's entry into NFTs, decentralised storage, and increasing presence on major exchanges further solidify its potential for broader adoption. As more developers build on TON, continued growth in decentralised applications and services, positioning TON as a critical player in the blockchain space.

Disclaimer: This article is meant to provide general guidance and understanding of cryptocurrency and the Blockchain network. It’s not an exhaustive list and should not be taken as financial advice. Yellow Card Academy is not responsible for your investment decisions.