Toncoin

What is Toncoin (TON)?

Toncoin is the native cryptocurrency of The Open Network, a storied network that used to be a part of the Telegram social media platform.

TON’s architecture is designed to enable and be interoperable, with the goal of merging all existing blockchains into a single, decentralized network. Powering this is a suite of tools backed by the TON network, a scalable multi-blockchain. This network is designed to process millions of transactions per second and can contain up to 292 accompanying blockchains.

TON is very much in development, though. While the TON network itself and TON Services are live, they have an entire roadmap’s worth of features on the way. These range from TON Payments and TON Storage to the likes of TON Proxy and TON DNS.

TON’s key principles are speed and scalability, intuitive user interfaces, and decentralization. One of the project’s goals is that “exchanging value should be as easy as exchanging information.”

When Was Toncoin Launched?

TON has an especially interesting history, even though it only dates back to 2018.

Telegram founders Pavel and Nikolai Durov, who had also founded the Russian social media platform VK, wanted a blockchain to accommodate their Telegram ecosystem plans. When they couldn’t find a suitable blockchain on the market at the time, they decided to create one themselves.

The Telegram team raised a startling $1.7 billion through a private initial coin offering (ICO) for their “Telegram Open Network.” This sale saw the then-native GRAM token being sold to investors to raise capital.

In 2019, the Telegram team completed the design and development of the core components of TON and drafted documentation. They launched the first TON testnet in the spring of 2019, following which the code was open-sourced. Testnet2 went live in November 2019.

Less than a month before the launch of testnet2, the US Securities and Exchange Commission announced an emergency action against GRAM. The SEC obtained a temporary restraining order against Telegram, alleging that its ICO was unregistered.

Telegram argued that the SEC’s claims were unfounded but agreed to postpone the network and coin launch until all legal matters were resolved.

However, the proceedings did not go well for Telegram, and by March 2020, resistance appeared to be futile. Two months later, they settled with the SEC for $18.5 million and shut the project, including Testnet2, down.

Who are the Founders of Toncoin?

As mentioned, the founders of TON are the Telegram team and company founders Pavel and Nikolai Durov.

Yet, amidst the failure of their legal battle with the SEC and controversy surrounding the repayment of investors, Telegram washed its hands of TON.

Immediately, the TON community stepped in. Led by developers Anatoliy Makosov and “EmelyanenkoK,” the Newton open-source community took over. Members of the open developer community, validators, winners of public TON Blockchain Contests, and crypto enthusiasts joined them in May 2020.

Over the following year, Newton resumed the development of TON in compliance with the original whitepaper and ideas. Testnet2 remained stable the entire time, so the community voted for it to be renamed TON Mainnet. The Newton team was renamed the TON Foundation and became a non-profit focused on the development of the network.

How Does Toncoin Work?

TON is a uniquely scalable blockchain with an architecture consisting of a masterchain and up to 292 accompanying blockchains. There are several technologies at play that enable this structure.

Foremost among them is Instant Hypercube Routing. These smart routing mechanisms ensure swift exchange between any two blockchains, regardless of network size. There is a logarithmic relation between data transfer time and the number of blockchains in TON. Because of this, scaling to millions of chains is possible without affecting speed.

TON achieves scale through its Infinite Sharding Paradigm. Blockchains within TON can automatically split and merge to accommodate load changes. Thus, block generation speeds remain unaffected by transaction volume. This keeps costs low irrespective of demand and ensures no queues build up on the network.

TON can also grow new valid blocks atop any invalidated blocks. This is a self-healing mechanism that saves resources and guarantees that valid transactions don’t get discarded due to unrelated errors.

What Makes Toncoin Unique?

TON’s upcoming Workchains are a key component of TON’s vision of making all blockchains a unified, decentralized network. TON itself consists of the masterchain and up to 232 workchains with different protocols, different formats, different virtual machines, etc.

However, workchains can still interact using consistent basic rules. TON aims to pool all existing blockchains into a unified decentralized network using this concept, which is still in development.

Toncoin is also unique because it is a proof-of-stake blockchain with the addition of proof-of-work mining. Still, this isn’t by design. When testnet2 launched under the control of Telegram, 5 billion coins were generated, with 1.45% of them being distributed to testers and developers.

Yet, when the SEC and courts stepped in, the Telegram team gave up on TON development. The remaining 98.55% of the testnet2 coin supply was transferred to proof-of-work Giver smart contracts.

So, mining coins is possible via calling these smart contracts, which takes quite a bit of computation capacity. The process works very much like mining Bitcoin, with the PoW Giver contracts offering puzzles of increasing difficulty that miners try to brute-force their way through.

How is the Toncoin Network Secured?

Toncoin and its network are secured by proof-of-stake consensus (PoS). The most important components of a PoS network are validators, which are typically network nodes with specific software that stay connected to the network 24/7.

These network validators are required to “stake” or bond a certain amount of TON coins to the protocol for the privilege of being a validator. There’s an incentive at play here because these validators are rewarded in TON for doing their job properly.

However, misbehavior according to the protocol, including cheating or idling, is punished. This mechanism is called slashing, and it entails the confiscation of the validator’s stake. This system of token-based incentives and disincentives is central to proof-of-stake.

PoS validators verify user transactions, and if they come to an agreement on the validity of a transaction, it is included in the next block of the blockchain. This is called consensus. If validators do this job quickly and well, they are rewarded. Each block releases a small amount of Toncoin, and this goes to the validators.

Additionally, TON’s PoS consensus mechanism is Byzantine Fault Tolerant. Called Catchain, this protocol was designed to ensure that stakeholders can even achieve consensus even if up to a third of them misbehave.

What is the Use of TON?

The Toncoin cryptocurrency is used as a means of payment on TON but is also key to governance and network security by means of staking. Validators stake Toncoins and are incentivized with them, and their voting power on network changes depends on the size of their TON stake.

TON is also used as gas on the network, paid to validators with every transaction initiated by users.

Who Controls Toncoin?

Toncoin and TON are stewarded by the TON Foundation, formerly known as Newton. The Non-profit TON Foundation is funded by donations and comprises 40 independent, non-incorporated developers from various countries.

Network modifications, however, are subject to validator voting via TON’s proof-of-stake consensus. Upgrades go through if the majority of validators approve, and there is no way to change network software, configuration, or state by bypassing the vote.

How Much TON Is In Circulation?

TON has a maximum supply of 5 billion Toncoins, with just over 1.2 billion Toncoins currently in circulation. These Toncoins are being mined out of proof-of-work smart contracts at regular intervals.

Toncoins are native to TON but can also be found on Ethereum in the form of ERC-20 tokens. Smart contracts and bridge technology allow Toncoins to exist in this manner.

How Do You Buy TON?

You can buy Toncoins on a handful of major cryptocurrency exchange platforms, with a majority of liquidity being found in USDT pairs. You can also buy Toncoin with fiat currencies such as the US dollar on select exchanges.

Toncoins are available on decentralized exchanges as well since they can come in ERC-20 form. Uniswap V3 is one of the best options for ERC-20 TON.

Is It Possible to Buy Toncoin Instantly?

You can buy Toncoin instantly on most centralized cryptocurrency exchanges, and Uniswap V3 tends to be quite fast as well.

How Do You Store TON?

Storing TON on a cryptocurrency exchange account is a popular option for many. Still, one downside of this is that you can’t stake your Toncoins and take part in network security and governance via an exchange account.

To do so, you’ll need a TON wallet. The TON Foundation has a section dedicated to wallets, which goes over some of the main options for storing Toncoin, as well as the differences between custodial and non-custodial storage.

TON Energy Consumption

TON is a proof-of-stake network and therefore, by definition, isn't a very big consumer of power. In most PoS chains, it’s just the validating nodes that require lots of power while operating 24/7.

However, TON does feature a proof-of-work element when it comes to mining its smart contracts. There’s no suggestion that the number of computers performing this task is anywhere near the number of miners on major PoW blockchains, though. Furthermore, once these contracts are drained, TON will no longer have a PoW element.

Is TON a Good Investment?

TON is an ambitious project with extremely big goals, from deploying Web3 networks to dApps and, in fact, the envelopment of other blockchains under its umbrella.

This wide-reaching aim is lofty but not inconceivable. One of the major themes in cryptocurrency today is interoperability. Tribalism often damages industries, especially those that are still extremely early in their adoption phase, such as blockchain.

If TON can take steps to grow its network, then it’s very likely that utility will continue to grow for the Toncoin cryptocurrency as well. While it began as a corporate project, its current form is that of an open-source underdog that ma