When Telegram first announced its partnership with the TON Foundation, there was undoubtedly a collective surge of excitement for the future of Web3 and its mainstream adoption. That's because Telegram has given The Open Network (TON) and Toncoin a stamp of approval by choosing to adopt it as the preferred blockchain to work with for Web3 infrastructure foundations.
Upon the announcement, TON prices surged 42% during the following week, as the idea of TON becoming a mainstream coin potentially kickstarted the rally. If you're new to crypto, you might be wondering what Toncoin is and how it's grown since arriving in 2020.
From grasping the scalability of the TON blockchain to highlighting Toncoin's explosive path to mainstream adoption, our guide will inform you of everything you'll need to know about TON and its inner workings.
What is Toncoin?
For beginners stepping into the world of digital assets, Toncoin is like a streamlined highway that prioritizes swift transactions with minimal tolls. Launched by the TON Foundation, Toncoin is a utility coin that supercharges the TON blockchain. As a layer-1 coin, Toncoin is designed to revolutionize the way we perceive and interact with digital assets.
Toncoin's goal is to ultimately put crypto in every wallet. Unlike competing layer-1 coins with a monolithic blockchain, Toncoin is laser-focused on addressing the scalability and speed limitations that have hindered the broader adoption of cryptocurrencies.
Why did TON rally on news of the Telegram partnership?
Wondering why Telegram's TON integration sparked such a rally? It's important to first understand how significant this partnership is and how it feeds into the narrative that TON is primed for mainstream adoption.
While messaging apps like Whatsapp and WeChat have slowly established themselves as leaders in their regions, up-and-coming messaging apps have been working in the background to improve their product offerings and boost their mass appeal.
This is certainly the case with Telegram, a cloud-based, cross-platform instant messaging service that's been achieving double-digit growth in its userbase through 2023. According to an October 2023 study from DataReportal, Telegram has just reached a significant milestone with 800 million monthly active users, and is planning to achieve 1 billion active users by 2024. Although this is still behind the towering numbers of Facebook and YouTube, Telegram's growth figures have impressed many, especially as the platform has grown from 700 million active users in around one year. With an average rate of 2.7 additional users per second, Telegram's rapid growth sets the stage for mass TON exposure as the TON Space wallet and ecosystem get fully integrated with the Telegram messaging app.
Alongside the potential for mass adoption thanks to TON's exposure to millions of active users, TON gains the complementary benefit of developers wanting to contribute to the TON blockchain and build products because of this sizable active userbase. With the prospect of a fast-growing userbase, many believe blockchain developers are likely to jump ship to the TON ecosystem and develop for the TON blockchain. Doing so would expose more users to their decentralized apps (DApps).
Is Toncoin linked to Telegram?
Before the recent Telegram partnership, the answer to the question above would have been 'no'. Although Telegram was originally in charge of developing the GRAM token and wanted to streamline crypto payments on their app, the plans fell through. Due to outside intervention, Telegram was forced to cease work on GRAM despite already gaining a dedicated following. Rather than let Telegram's work go to waste, the open-source project was picked up by the community-led TON Foundation. Nikolai and Pavel Durov transferred project ownership thereafter as GRAM was renamed to Toncoin. TON kept its acronym but got rebranded from Telegram Open Network to The Open Network.
With the recent Telegram partnership announcement, Telegram seems to be one of Toncoin's biggest backers — a link that's never been clearer since GRAM's original 2017 announcement. According to Telegram's chief investment officer, Telegram is keen on leveraging TON Space to achieve its mission of lowering the barrier to entry for crypto. By giving TON projects and partners priority access to the Telegram Ads global advertising platform and slowly easing its userbase into the TON ecosystem, Telegram is opening the door to further progress.
In an age where establishing a path to mass adoption is crucial for a coin's future, TON certainly has this area covered as it seeks to set up more opportunities for integration with the Telegram app soon.
How does TON work?
Now you understand the supercharged highway that is the TON blockchain, you might also want to know what makes Toncoin such a force to be reckoned with in the crypto space. Simply put, TON makes use of a sharded variant of the proof-of-stake (PoS) consensus mechanism while relying on the TON Virtual Machine (TVM) to control and change network states.
By managing its masterchain, workchains, and separate shardchains, TON can process transactions in parallel without being impeded by processing bottlenecks. Unlike some competing layer-1 blockchains that rely on monolithic architectures, TON prides itself on efficiency. That's because sharding allows shardchains to work autonomously without the need for network nodes to process every transaction.
TON's approach to network consensus
Originally, TON used a proof-of-work consensus algorithm. However, resource constraints soon led to TON favoring a PoS consensus instead. Today, the TON blockchain runs a variant of PoS. Named the Block-Proof-of-Stake (BPoS), it's essentially a Byzantine Fault-Tolerant (BFT) version of the PoS algorithm.
To summarize, a consensus protocol that's BFT can still come to a consensus despite disagreements among the network's nodes. This is vital for blockchains which claim to be decentralized, since any blockchain is prone to being overwhelmed by malicious cyberattacks. According to TON Stat, the TON network currently has 300-odd validator nodes across 25 countries. Even if a third of these validators aren't available to participate in the consensus, the TON network can still operate thanks to its BPoS consensus algorithm.
TON's leading scalability
This lightweight consensus mechanism unshackles the TON blockchain platform and lets it achieve unmatched transactions per second (TPS). To demonstrate this high throughput, the TON Foundation led a performance test audited by CertiK and managed to set a world record of 104,715 TPS. Although already impressive, the TON Foundation claims this is just the beginning and theoretically, the TON blockchain can achieve a scalability that's magnitudes above this experimental record-setting TPS.
Can Telegram become a super app with TON?
Thanks to Telegram's integration with the TON blockchain, Telegram now has the infrastructure to set its sights on its next big milestone: becoming a superapp. While previously thought of as unrealistic by naysayers, the Telegram superapp dream might become a reality, as Telegram now has the resources to create all kinds of DApps for the convenience of its users. As shown with Telegram's Mini Apps, developers can use the TON blockchain to create limitless DApps with flexible interfaces that can be natively interacted with inside Telegram.
With integrated payments and seamless authorization, the sky's the limit when it comes to the types of upcoming DApps to be launched as Telegram looks beyond NFT marketplaces and payment services. In the coming years, we might even see Mini Apps that allow food ordering and movie ticket reservations to go live. It's certainly not unreasonable to imagine Telegram Food and Telegram Tickets appealing to Telegram's userbase.
What can TON be used for?
As the native utility coin of the TON blockchain, Toncoin is mainly used for interacting with the TON ecosystem and its various TON DApps. These include TON Proxy (a VPN service that safeguards users' IP addresses), TON Storage (a decentralized file storage service), and TON Space (a self-custody TON blockchain wallet users can access via Telegram). To summarize, TON's use cases include the following:
Gas fees for payments and transfers.
Toncoin staking.
Interaction with TON DApps.
On-chain governance and voting for proposals.
TON tokenomics
Curious about Toncoin's tokenomics? According to the TON white paper, TON has a maximum supply of around 5 billion and, at the end of 2023, an annual inflation rate of 0.6%. This supply will gradually increase, as rewards to validators for mining new masterchain and shardchain blocks accumulate. Digging deeper, the TON Foundation states that this annual inflation rate might increase to 2% in the future if 10% of TON's maximum supply is bound in validator stakes. This might be something to keep in mind if you're intending to trade TON for the long haul.
What is the future of Toncoin: TON roadmap
From forming strategic partnerships with MEXC Ventures to launching its Web3 wallet on Telegram, Toncoin has had an eventful 2023. Looking ahead, the TON Foundation's roadmap is one of interoperability and cooperation with other layer-1 blockchains. Some of the priorities among these plans are to introduce other cryptocurrencies within the TON ecosystem and build bridges with Ethereum and BNB smart chain for easy crosschain transfers. Additionally, on the infrastructure front, the TON Foundation seeks to separate its current validator nodes into collators and validators. This will help to lighten the load on the transaction processing end and help with sustained scalability down the line.
Risks of trading TON
We've mentioned a lot about Toncoin's future prospects and catalysts for growth but we should also make it clear that trading TON comes with its own set of risks. Ultimately, crypto traders need to decide on whether the rewards outweigh the risks surrounding Toncoin.
For starters, there are numerous crypto skeptics that mention how TON Space isn't a true non-custodial wallet. This is because it abstracts the need for users to store their wallet's private keys. While TON fans may claim this is in line with Ethereum's Account Abstraction, which makes mass adoption easier for non-crypto natives, it begs the question — is it really your crypto if you don't have the keys to it?
Also, because the TON blockchain makes use of TVM, Ethereum developers may find it difficult to integrate and port their DApps over to TON because solidity contracts can't be easily integrated. This might make DApp creation a headache in the future as the TON blockchain seeks to expand its DeFi ecosystem by populating it with more DApps.
Final words and next steps
From achieving mass scalability to its numerous partnerships, the future is certainly bright for the TON Foundation and Toncoin. With news of Telegram app integration, Toncoin seems to be just getting started in establishing the TON network as the go-to layer-1 blockchain for any Web2 platform looking to transition to Web3.
As TON continues to gain popularity among avid Telegram users, we'll likely see more developments to Toncoin's utility and growing use cases for the TON ecosystem. However, crypto traders interested in trading TON will be wise to keep the project's risks and challenges in mind while trading Toncoin.
Curious to learn more about Toncoin and its possible future price? Check out our TON price prediction guide for guidance on where Toncoin could be headed. And, you can learn more about TON on our Toncoin price page.
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