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Crypto 101: An Introduction to Tron

Crypto 101: An Introduction to Tron

Major acquisitions are still rare in the blockchain space, so when Tron bought the file-sharing pioneer BitTorrent, the news reverberated throughout the internet. An asking price of $126 million wasn’t enough to put the Beijing-based startup off, and founder Justin Sun later said the deal makes Tron the “largest decentralized Internet ecosystem in the world.”

As has become customary for Tron (TRX) however, controversy soon followed, with key BitTorrent employees leaving their posts in apparent acts of revolt against the new regime.

This has been far from the only controversy surrounding Justin Sun’s startup, as allegations of plagiarism, and pump and dumps have dogged the platform since its inception in 2017.

How much merit should be attributed to these accusations will be discussed in detail in the post below. Furthermore, this article will attempt to decipher the cryptic startup and provide some clarity on the technology’s key features.

Understanding Tron

Before we get into the details of this ambitious new platform, let’s first provide a basic definition of what it aims to be.

According to the whitepaper, Tron aims to become the world’s leading blockchain-based platform for the promotion and consumption of digital media. If the dev team manages to follow through on the full scope of the project, the Tron network will also be able to store and transfer files in a decentralized manner – similarly to Storj and Sia.

As such, Tron aims to become a decentralized, blockchain-powered platform, in direct competition with Ethereum, Lisk, Cardano and OmiseGO.

This is undoubtedly an ambitious task, but the BitTorrent acquisition shows that Justin Sun has the resources required to make a real go of it. The $70 million Tron raised in its ICO, in addition to a market cap just shy of $1.5 billion, give the project a financial clout only few can match.

Importantly, Tron has a much larger coin supply, currently totaling 65 billion, than most of its competitors. As a result, small increases in the TRX price can generate huge sums of capital for investors as well as the startup itself.

Keeping these resources in mind, it is surprising to see so little meaningful value being created on the platform. As of August 2018, the Tron website shows only nine active DAPPS running on the platform, the most popular of which seems to be a variation of the Ethereum-based game CryptoKitties.

Despite the rather poor optics, the technology stack behind the Tron network seems to have made real progress in recent months. Let’s look at the current state of play.

Understanding the status of the Tron network

As Justin Sun broadcasted on Twitter, Tron launched its testnet in March of 2018.

Only two months later, Tron’s mainnet, titled Odyssey 2.0, went live. This major milestone was surprisingly accompanied by a steep price decline as well as the burning of $50 million worth of TRX.

Importantly, Odyssey 2.0 gave a clear signal to investors that progress was being made and that the migration from ERC20 to Tron’s own blockchain could finally begin. Heralded as “Independence Day”, the migration was completed on June 25th 2018, and Tron now runs independently of the Ethereum blockchain.

More specifically, it’s worth noting that Tron uses a delegated proof-of-stake (dPoS) consensus model to establish a record of transactions on the blockchain. For this approach to work, the network votes for 27 Super Representatives as briefly discussed by Justin Sun in this medium post.

Interestingly, Super Representatives are not mentioned in the English version of the Tron whitepaper (Aug. 22, 2018), making it almost impossible to provide accurate information on the subject.

This is strange because the consensus model typically forms the basis of any blockchain. Using a dPoS system, Tron could potentially achieve a level of scalability far beyond most traditional PoW models.

In fact, Justin Sun alludes to this fact, but because there is no mention of it in Tron’s official documentation, the claims are hard to verify.

Understanding Tron’s key features

That being said, Sun clearly stated his perception of Tron’s key features.

In the tweet shown above, Sun claims that Tron:

  1. Has the ability to process 2,000 transactions per second
  2. Has surpassed 100 million users
  3. Does not charge any fees
  4. Regularly burns coins in order to limit supply and drive up prices
  5. Offers lucrative rewards to programmers

Unfortunately, it is extremely hard for English speakers to verify these claims because the whitepaper does not provide a technical explanation of any of the features mentioned above.

The word “fee” for example is never used in the publicly available document, and no explanation of Tron’s scalability is provided.

Luckily, we have reliable information on the other three. We can, for example, take Sun’s word for it that Tron now has over 100 million users. The impressive daily trading volume plus the recent acquisition of BitTorrent make this number believable.

Additionally, TronPG seems to show a list of programmers who have received impressive amounts of capital to help build up the Tron ecosystem.

The final point to be covered regards Tron’s coin burns. This is accurate because 1024 TRX is burnt in order to launch a new contract on the protocol, as well as when creating a new receiving address. On top of that, the Tron Foundation publically burns vast amounts of coins.

Interestingly, besides Tronix (TRX), Tron now also has Tron 20 tokens:

  1. TRX – the official Tron token which is required to become active on the network and the one that is regularly burnt.
  2. Tron 20 – the token which replaced the Ethereum ERC20 tokens after the network switched in June 2018. Importantly, the Tron 20 tokens aim to provide a similar functionality to the ERC20’s, allowing programmers to create custom tokens with special properties.

Exactly how popular Tron 20 tokens will be is hard to say, and perhaps unsurprisingly, the whitepaper does not mention it either.

Understanding criticisms around Tron

It’s very easy to get frustrated when researching Tron. An extremely thin whitepaper (more on that later), grandiose claims and very little concrete information are the hallmarks of the Beijing-based project.

When visiting the website, for example, you will be welcomed by this video. The video portraits Tron as a revolutionary new technology without actually explaining how it works or providing any technical insights whatsoever.

Additionally, the quantity and quality of resources provided for investors are lower than for almost any other crypto with a market cap north of $500 million.

Instead of a wiki, or an index of technical terms, the “Resources” tab on the Tron website navigates to the blog. Here knowledge hungry investors will essentially find a hagiography of Tron founder Justin Sun.

Although it makes complete sense to build the brands of both Tron and its founder, the lack of technical documentation in English is the Achilles heel of the network.

More importantly, claims that Tron’s whitepaper was largely plagiarised, first came to light in January of 2018. Sun’s claim that the English version was produced by volunteers, is hard to believe and does not bode well for a platform valued at over $1 billion.

With all that being said, it is important to realize that Tron is clearly aimed at the Asian markets. Looking at Coinmarketcap, it becomes clear that the vast majority of its nearly $100 million daily trading volume is done on Asian exchanges.

Nevertheless, there seems to be something slightly off about the Beijing-based blockchain startup. Besides the points raised above, the TronSR forum gives significant food for thought.

Although the level of activity seems high, the content being published on the TRX Migration thread for example, seems to come from Bots.

A typical post looks something like this.

Conclusion

Transparency is absolutely key for any asset class worthy of investment.

Unfortunately, Tron’s English whitepaper in addition to the general lack of resources makes it a very hard pitch for non-mandarin speakers.

But this is not to disparage the project completely.

The Mandarin version of the whitepaper is significantly longer and may offer a detailed description of how Tron plans to follow through on its promises. The acquisition of BitTorrent, as well as the launch of the mainnet, are strong signs that the project is moving in a good direction.

It’s a shame that investors apparently need to speak mandarin to be informed.

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