TON is a Turing-complete and high-performance blockchain that boasts the ability to accommodate just about any transaction complexity on its master blockchain and all of its "workchains". TON is a proof-of-stake (PoS) network with a total supply of 5,069,712,801 Toncoin assets - its native token. Furthermore, Toncoin has an annual inflation rate of .6%, and the network operates by validators who are required to hold a significant number of the native Toncoin asset. Moreover, there are over 1,301,904 accounts on the TON network, a 343% increase in just the last six months. So far, validators stake approximately 151,257,361 Toncoin to maintain the blockchain network. Additionally, TON's on-chain governance program integrates Toncoin.
We'll discuss more on the TON network and its native token, Toncoin, in the following paragraphs. Now, let's dig more into the topic of "what is Toncoin?".
What is Toncoin (TON)?
As mentioned, TON is a layer-1 blockchain network, initially launched in 2018. Furthermore, TON is an acronym for "The Open Network", and Toncoin is the native cryptocurrency of The Open Network blockchain network. Also, TON utilizes the PoS model, making it a scalable and secure network for potentially billions of users.
At first, TON hit a few roadblocks and challenges in its early stages. Initially, the network's primary goal was to facilitate crypto payments via Telegram. However, the SEC intervened when Telegram failed to report the sale of its $1.7 billion worth of GRAM tokens. Telegram eventually lost the initial court case and, thus, decided to part ways with TON.
After Toncoin parted ways with Telegram, software developers continued to work on the TON network. In 2020, they launched again as "NewTon". With its new and improved operability and scalability, TON boasts a fast and secure network for all of its users. It facilitates transactions with minimal transaction fees and easy-to-use apps, and it's environmentally friendly. Toncoin also allows users to buy goods and services via the applications on its network.
Make sure you stay up to date with the latest lingo in the blockchain industry. Check out our crypto terminology article at Moralis Academy. Also, we have a wide selection of courses and guides on all things Web3 and blockchain.
What is Proof-of-Stake?
Now that we've discussed "what is Toncoin?", let's move on to PoS. Proof-of-stake is the energy-efficient protocol of blockchain networks. While many networks have ditched proof-of-work (PoW), proof-of-stake provides the same scalability and security but with only a fraction of the costs and energy consumption of PoW. Proof-of-stake protocols validate transactions and confirm new blocks by selecting random validators. While proof-of-work uses a competitive validation method to confirm transactions, PoS incentivizes staking. In order to be a validator in a PoS blockchain network, participants must hold a certain number of native tokens from that network. Then, the blockchain selects validators at random to confirm the transaction. This process is more efficient and less costly than proof-of-work.
After successfully ending its PoW protocol, TON now utilizes the PoS consensus. It is allegedly ultra-fast, secure, and cost-efficient compared to other networks. Furthermore, Developers of the TON network have taken note of the rising costs of transactions across blockchain networks and have designed Toncoin so that it costs minimal in transaction fees. Toncoin fees are roughly between $.01 and $.05. These costs are minuscule compared to other blockchains, mostly due to its PoS algorithm.
Now that we can successfully answer the question, "what is Toncoin?" and know more about consensus mechanisms, let's move on to Toncoin's use cases.
TON Use Cases
As we've addressed the initial question of "what is Toncoin?", one must wonder what its use cases are. As the blockchain ecosystem evolves, Toncoin's impact on the new economy and Web3 could become more prominent. Already, Toncoin provides commission payments for processing on-chain transactions with smart contracts. It allows payment for services that apps built on the network provide. TON also lends out capital to nominators in exchange for a share of its rewards. Soon, TON will also allow payment for TON proxy and data storage payments.
The TON network also has a sharding feature. The sharding feature, in this case, is essentially a blockchain within a blockchain. This unique feature allows for multiple transactions to take place in a sub-blockchain if the main one is already clogged. Furthermore, "sharding" means a smaller part of a whole. In the case of the TON network, a shard chain would be a sub-chain of the master blockchain.
TON also features a variety of wallet options. Wallets can be custodial or non-custodial. Furthermore, the wallet feature will be built into applications so users can seamlessly transfer funds and interact with other services on the TON network. The kind of wallet that users utilize will depend on their individual needs. If you prefer to use a service to take care of your storage needs, it may be better to use a custodial option. If you prefer complete control over your wallet and funds, a non-custodial wallet may be ideal for you. Users should always practice precaution with either wallet and keep encryption keys private.
Proxy and Services of the TON Network
TON proxy is a layer in the network that adds anonymity to the validator nodes. This proxy can be used to create a decentralized VPN service and blockchain alternative to browser privacy. In this way, the TON proxy can make censorship virtually impossible. TON also provides a platform for third-party services to build decentralized applications through the network. Third parties can build easy-to-use apps and browsers similar to Web2 but have the privacy and security features of Web3.
TON also allows for quick, secure, and transparent payment services between users, bots, and third-party applications.
Comparing TON with Other Layer-1 Blockchain Networks
According to the TON network website, TON's technology is well ahead of other layer-1 blockchain networks. TON allegedly has a faster block validation time, coming in at five seconds, while Ethereum takes about twelve seconds. Also, the most noticeable difference between the TON network and Ethereum and Solana is the sharding support. Cross-shard communication within the TON network is at an impressive, near-instant speed. Moreover, sharding support for the TON network is at 260 shards maximum per work chain. On the other hand, Ethereum's sharding support is 26 shards maximum. Meanwhile, Solana does not have sharding support at all.
Now that we know all about TON and Toncoin, let’s discuss where we can buy it, how to make passive income off of it, and what the future of Toncoin looks like.
If you love learning about Web3 and blockchain, check out our course on how to make a Web3 website. We've got all the tools you need to create your Web3 website from the ground up.
Where to Buy Toncoin
Most global cryptocurrency exchange platforms, such as Binance, sell Toncoin, but it can also be bought directly through a wallet. While exchanges can facilitate trades, they can sometimes come with hefty trading fees. Moreover, Toncoin can be swapped peer-to-peer and earned by becoming a validator for the network. How and where you buy Toncoin will be up to you and your preferences. Toncoin is sitting at $1.26 at the time of writing.
Toncoin also provides an opportunity to earn passive income by becoming a nominator. We'll discuss Toncoin and potential earning benefits later on in this article.
The Future of Toncoin
Like all cryptocurrencies, nobody can say for sure what the future will bring. Toncoin is currently a promising blockchain network, but is there a chance that another network could debunk it with a newer, more advanced technology? Of course. That can happen with any blockchain network. As always, it is best to invest only what you are willing to lose.
At this phase in its development, Toncoin does seem to be a promising technology. With its energy efficiency, minimal transaction fees, and lightspeed transaction time, Toncoin is sure to be a promising blockchain network.
TON and its native token, Toncoin, are still in the development phase. With some trial and error over the years, it may change some of its features, but only time will tell. Meanwhile, participants can earn passive income through staking and other incentives in the TON network. Read on to learn more about how to earn passive income with Toncoin.
How to Earn Passive Income with Toncoin
In our "what is Toncoin?" journey, we've mentioned "passive income" but haven't addressed it further. So, let's dive into that topic briefly. At the time of writing, Toncoin is at $1.26. Now, there are a few ways to earn Toncoin through the TON network. One way is through becoming a validator. Anyone can become a validator on the TON network and earn Toncoin as a reward. However, in order to become a validator, participants must stake a significant amount of Toncoin. At the moment, that amount is 600 thousand Toncoin. They'll also need access to high-performance hardware and a highly available network. Once a user checks all prerequisites, a validator can stake their Toncoin for a specified amount of time, and their stake is rewarded with interest after validation. For those who are interested in becoming validators, open-source software is available.
The requirements may seem like a lot, but they may also hinder any potential hackers from manipulating the system. Should a participant choose to cheat, their stake will be fully or partially forfeited.
Another way to earn passive income through Toncoin is by becoming a nominator. This system is a little different from the validator system. Nominators lend their assets to validators. Then, the rewards are distributed to those that lent their assets once the validations are complete. This system guarantees that the borrowed tokens will be used solely for validation purposes and that the rewards will be distributed honestly.
If you're feeling nervous about the current state of the cryptocurrency market, make sure to check out how to invest during a crypto bear market. We'll teach you how to read the charts, dollar cost averaging, diversification, short selling, and much more.
Summary: What is Toncoin?
The TON network boasts the speed, security, and ability to host thousands, even millions of transactions in a matter of seconds. TON claims to be lightyears ahead of its competitors, such as Ethereum and Solana. While it is still in development and has a lot of room to grow, Toncoin could prove to be a valuable asset for the cryptocurrency market. Only time will tell which projects will take off in the future. As most crypto enthusiasts know, the fundamentals of a project are just one factor in its success. Popularity is another leading factor in determining how well a blockchain network does.
So, what is Toncoin? Toncoin provides the potential to earn passive income. The network incentivizes staking and becoming a nominator or validator by rewarding them with Toncoin. Depending on the preferences of the participants, there are options to lend assets to validators in the case that participants do not want to deal with the machinery and maintenance involved in validation.
Furthermore, TON supports "workchains" and sharding, a feature that some of its competitors don't have yet. The network's system could accommodate 260 shard chains with almost instantaneous cross-chain communication, resulting in millions of completed transactions a second. In comparison, Ethereum would take 10-15 minutes to accomplish the same.
As of now, TON remains one of the only blockchain networks to truly provide complete scalability. As such, it claims to be one of the most advanced blockchain projects. Read the white paper to learn more about The Open Network! Or, dive deeper into other DeFi projects on our blog.
