Toncoin Overview: How to Buy TON

General Overview

Toncoin (TON) is a layer-1 blockchain network that was originally developed in 2018 by Telegram and was called GRAM. The project was abandoned after a legal battle with the SEC. It was then taken over by the TON Foundation, and renamed from “Telegram Open Network” to “The Open Network” (TON).

It’s a proof of stake blockchain network that works within the Telegram messaging app, allowing you to send and receive funds in TON, along with stake the asset to earn passive income. There is a max supply of 5 billion TON tokens, with 3 billion already circulating.

History of Toncoin

TON was originally developed in 2018 by Telegram. The project raised $1.7 billion in funding before the SEC stepped in. The SEC forced Telegram to repay $1.2 billion to investors (which is still not completed). US investors had to take a 72% refund and exit the Gram token project, while non-US investors had the opportunity to receive 110% of their invested sum instead (by letting Telegram invest the money they owed the investor). This is a pretty sketchy repayment option, and it’s worth noting that the initial investors still haven’t fully been repaid despite the TON network seemingly flourishing in the meantime. Telegram was also ordered to inform the SEC of any future crypto projects.

TON Labs relaunched the project, thus avoiding the SEC’s mandate to inform them (as Telegram didn’t launch it). They started with 15 validators and have since grown, but it’s hard to say how genuine the project is with this odd background. It’s also hard to say whether the SEC will really allow Telegram to essentially have a crypto market on their app (as it currently does), without any proper registration. It wouldn’t be surprising to see the SEC try and step in again at some point in Toncoin’s future.

Advantages of Toncoin

Telegram Payments

Perhaps the best feature of TON is its integration with Telegram which allows you to send TON to any other Telegram user for free, as long as they have a TON wallet set up. This makes it easy for you to pay people back, or pay them for goods and services. The only drawback is you have to buy TON to do this. You can’t send fiat or any other digital asset through TON.

TON eSim

If you’re going to travel, TonMobile eSIM’s are extremely convenient. As long as your phone is eSim compatible (most newer phones are), you can buy an eSIM through the Telegram app. You can then install a SIM for whichever country you’re going to, and easily stay connected when you’re in a foreign country.

TON Domains

TON Domains is just like Ethereum Naming Service (ENS) or Unstoppable Domains. They’re domains you can purchase within the TON network, such as CryptoVantage.ton, that people can use to easily send you funds, rather than using your entire alphanumeric wallet address. This makes it easy to send and receive funds on the network.

Disadvantages of Toncoin

Availability

Though it is a top 10 crypto asset by market cap, TON isn’t available on many major exchanges, and is only tradeable for USDT unless using a decentralized exchange, in which case you can trade it for WETH or WBNB. This makes TON’s price more manipulatable, as there are only so many places to buy and sell the asset.

Poor Blockchain Explorer

TON does have a few blockchain explorers, including the official TON Stat explorer. However, there is no way to view transactions, wallet addresses and balances, validators, or how much is staked to each validator. This makes it difficult to assess the health of the project, as you can’t see what’s happening underneath the overlying data. Should a better explorer come around, this point will be mitigated.

Controversial Background

As mentioned in the History of Toncoin section, Toncoin has a somewhat controversial background. It was initially launched as Gram by Telegram and raised $1.7 billion before the SEC stepped in and made them pay a fine and shut down the project. They also told Telegram that if they were to launch any cryptocurrencies they had to inform the SEC.

Now, Toncoin was rebranded from Gram, but it was launched by TON Labs, rather than Telegram, though its sole function is to be used with Telegram. This sidesteps the SEC’s mandate to be informed, but should still be treated with some caution.

Though the network describes its initial launch as extremely fair, they cherry-picked 15 validators to start the network, and gave them 380,000 TON each. The minimum amount to be a validator is 300,000 TON, meaning no one else can be a validator unless they purchase 300,000 TON, as there is no other distribution other than staking rewards, which are between 4-5%. At current prices, you’d need to spend over half a million dollars to be a validator on the network, which is a ridiculously high barrier to entry.

For reference, you need 32 ETH to be an Ethereum validator, which would be under $50k to purchase, and that’s already a high barrier to entry. The project likes to claim it’s decentralized, but with such a high barrier to entry, and questionable initial distribution, it’s hard to agree.