Key takeaways
- Tron is a blockchain network built to host decentralized applications with high speed, scalability and low fees.
- The Tron Virtual Machine delivers a powerful environment for the efficient execution of smart contracts and migration of DApps from Ethereum to Tron.
- Use cases span gaming, multimedia, art and finance, with the TRX token powering the network.
- It’s become a leading blockchain, with the TRX coin regularly sitting in the top 10 by market cap.
The Tron network has grown to become one of the most notable blockchains and cryptocurrencies since its launch by Justin Sun in 2017. In just a few months, it made big moves, migrating away from Ethereum to its own blockchain and famously acquiring BitTorrent.
If you’re looking to delve deep into Tron, then keep reading to find out how it works, its benefits, comparisons against rivals and use cases of Tron (TRX).
What is Tron (TRX)?
Tron is a blockchain enabling developers to create decentralized applications (DApps) based on smart contracts. Originally, it was designed to change the way digital media was shared and monetized. The concept was to eliminate intermediaries for content creators to interact directly with their audience.
Tron’s history starts its story on the Ethereum blockchain before migrating to a dedicated blockchain. The original vision for content creators didn’t gain as much traction as planned, so Tron shifted and redeveloped as a decentralized application blockchain to create a decentralized internet. It now puts a strong emphasis on user experience, speed, and scalability.
Tron (TRX) cryptocurrency, explained
TRX is the native token used to power the network. It is used within the DApps and Tron smart contracts. Plus, it’s possible to create other TRC-20 tokens, very similar to Ethereum ERC-20 tokens. Interestingly, TRX is used to cover transaction fees when bandwidth points are insufficient, allowing the Tron network to process thousands of transactions per second at minimal cost.
The way the Tron (TRX) tokenomics operates is unique to the network; for those curious, let’s explore how it all works.
How does Tron (TRX) work?
The Tron blockchain works using smart contracts, which are automatic, self-executing contracts based on predetermined protocols. On Tron, this enables developers to build and deploy DApps on the network.
For example, game developers can create play-to-earn games that run automatically on the platform. Or content creators can freely publish and store media while being rewarded directly by their audience.
TRX is the native token used to power the network. The TRON network generally doesn’t charge fees for most transactions, though bandwidth and energy costs may apply. Users can purchase or stake TRX to acquire bandwidth points. Adding to this, users have a free daily bandwidth allowance of 5000 points. When a user doesn’t have enough bandwidth points, TRX is then used to supplement the transaction fee.
Fixed fees include 9999 TRX for creating a witness node, 1024 TRX for issuing a TRC-10 token, and 0.1 TRX for creating a new account..
The technology behind Tron
Tron is built on the core principles of blockchain and runs a delegated proof-of-stake (DPoS) consensus mechanism to verify transactions. On top of this, the technology behind Tron has several sophisticated layers. The main architecture is split into three distinct layers:
- Storage: Distributed block and state storage
- Core: Smart contracts, account, management and consensus
- Application: DApps, interfaces and wallets.
To run the Tron ecosystem, the Tron Virtual Machine (TVM) was developed. It’s a “virtual computer” that runs smart contract execution with efficiency, fast transactions and low costs. This helps create an effective, practical and scalable blockchain. The TVM technology is compatible with other blockchains, including Ethereum, so developers can easily move DApps to Tron.
Key features of Tron (TRX)
Tron has been criticized in the past for its lack of innovation, but it does hold several key advantages built into the network:
- High throughput: It’s capable of handling 2,000 transactions per second.
- Scalability: Efficient execution of smart contracts makes them almost limitless in growth.
- Low transaction fees: Remarkably cheap to transact at as low as $0.000005.
Did you know? In 2018, the Tron Foundation acquired BitTorrent, a peer-to-peer file-sharing service, for $140 million.
Tron vs. Ethereum comparison
Tron started life on Ethereum before migrating to its own blockchain. So, it’s only natural for people to think of them as competitors, but how do they actually compare?
- Consensus mechanism: Ethereum now uses PoS, similar to Tron, which runs delegated proof-of-stake (DPoS), a modified version of the algorithm that aims for more efficiency and reduces centralization risks.
- Transaction speed: For a few years, Tron has had an advantage of 2,000 transactions per second, while Ethereum has been stuck at 15 per second — although upgrades to Ethereum aim to increase this up to 100,000 transactions per second.
- Smart contract and DApps: Both blockchains support smart contracts and DApps with Tron, aiming for easier scalability, a better user interface and lower costs.
- DApp token format: Ethereum uses ERC-20 tokens in smart contracts, while Tron uses TR-20 tokens. The ERC-20 has wider adoption in the crypto ecosystem, but TRC-20 offers speed, no transaction fees and speed.
Did you know? The Tron Foundation raised $70 million through an initial coin offering (ICO) just in time before China outlawed the practice of ICOs.
Tron use cases
Use case is always a question when analyzing a blockchain. This is one of the areas where the project excels with the prospect of exciting Tron partnerships in the future.
- Gaming: Tron has had a big impact on the gaming world, especially enabling developers to build play-to-earn (P2E) games. Games are growing and scaling to give players a seamless gameplay experience and the ability to earn crypto along the way.
- Multimedia: There is still a digital media aspect to the network. It offers a free peer-to-peer decentralized content ecosystem. So, creators can publish, store and monetize their content directly with an audience.
- Art: Through Tron, artists can retain control of their intellectual property and be fairly compensated with decentralized solutions for commerce and fan communities.
- Finance: Developers have the tools they require to build next-gen decentralized finance (DeFi) apps. With scaleable and cheap transactions, it’s a place paving the way for a transparent, decentralized financial future.
- Governance: The DPoS consensus protocol gives governance power to the tokenholders so that decisions are made on the will of the community.
Did you know? In 2023, Justin Sun and Tron were sued by the United States Securities and Exchange Commission for the sale of TRX and BitTorrent (BBT) tokens.
How to buy TRX (TRX)
Trusted crypto exchanges like Kraken are the best places to buy TRX. They let you deposit funds using bank transfer, credit or debit card. Plus, they offer live market exchange rates.
Here’s a step-by-step guide:
- Download and set up a Tron crypto wallet (if you don’t already have one). For example Trust Wallet can send and receive TRX.
- Select a centralized exchange, like Kraken, create an account, and verify your identity. You’ll need proof of identity using government documents or IDs.
- Deposit funds to your exchange account via bank transfer or credit or debit card. You can also fund your account with crypto by creating a deposit address in your exchange wallet.
- Select “Buy Crypto” and choose “Tron (TRX)” as the asset you’d like to buy. Enter the amount you’d like to purchase, review and confirm the payment.
- Withdraw your new TRX from your exchange account into your self-custody crypto wallet. Congratulations! You now own TRX.
Tron in the DeFi space
Tron is becoming a major player in the DeFi space as an alternative to Ethereum. It’s already home to several major platforms, including JustSwap and JustLend.
Adding to DApps, there are other DeFi-friendly features, including TRX staking and yield farming for users to earn rewards. The fact that Tron aims to connect with other DeFi ecosystems should further help enhance liquidity, functionality and adoption.
Is Tron (TRX) a good investment?
Thinking of a Tron (TRX) investment? Whether it makes a good purchase comes down to your investment strategy. It boasts many features of a robust cryptocurrency and blockchain with speed, low fees and decentralization. Plus, it has strong use cases for the development of Tron DApps and DeFi projects — all along with a loyal community, including 130,000+ Tron Reddit members.
It’s a competitive landscape and plenty of other blockchains offer smart contract capabilities, including Ethereum, which could make Tron obsolete in the future.
Tron in 2024 is a contender in the crypto world, with TRX regularly hitting a $10-billion market cap. It is often among the top 10 biggest players in the market and subject to eye-catching Tron (TRX) price predictions.
Written by Marcel Deer