Tron is a decentralized, smart contract-compatible Layer One blockchain. On it, developers can build decentralized apps, issue tokens, process transactions, and use decentralized financial instruments for staking, lending, and trading. Think of Tron like Ethereum, and TRX like the token Ether. In the words of Tron’s founder, Tron is to Ethereum what Android is to iPhone.
Tron aims to decentralize the web through smart contracts and decentralized applications. The idea is to create a net in which there are no middlemen or centralized powers. They call this vision ‘Web 4.0.’
What is Web 4.0?
Think of Web 4.0 like BitTorrent-The world’s ultimate file-sharing platform. BitTorrent was the largest peer-to-peer file-sharing hotspot on the internet. With over 100,000,000 active users. On the site, users could upload any file, and any user could access and download it. No restrictions.
Tron actually acquired BitTorrent in 2018.
Tron also purchased a decentralized social network called Steemit which possessed an active, raving user base that held independence and decentralization as core values. These users don’t need to worry about the platform taking their accounts down for expressing an unpopular opinion or belief.
The web as of today is incredible, and there is no doubt we are living in an incredible time, especially for content creators. However, the regulations, rules, and restrictions placed on these creators by large conglomerate corporations seem pretty far from a utopia.
The entertainment industry
To better understand the current state of the internet in comparison to Web 4.0 let’s look at the online video industry.
Right now, if you’re a creator who wants to produce videos and share them with the world in hopes of making money, no matter how independent you want to be, you are at the whims of companies such as YouTube, Instagram, and Vimeo. In fairness, uploading your content to these platforms is very easy, and the companies do have a very effective method for connecting advertisers and creators so money and promotion can be attained on both sides.
These platforms are great, but, the creator doesn’t have control over their work. At the snap of a finger, the platform can take the content down, can restrict it in select countries, and monetization of content largely falls into the platform’s hands. YouTube creators are estimated to make sub 1% of advert revenue generated on the videos of content creators.
The music industry
The same goes for the music industry. Artists are tied into strict contracts that leave the majority of money generated from the art in the hands of the record companies. We can see with Web 4.0, that artists are finally taking control back and getting their fair share. Just recently, Snoop Dogg sold 44 million dollars worth of NFTs connected to his latest album. No middlemen are involved. Web 4.0 allowed Snoop’s fans to buy directly from him.
Note, Tron isn’t solely focusing on file-sharing, content, and social platforms. Tron is also attempting to lead the change in the decentralized finance space, a sector very popular in the cryptocurrency world.
Tron launched its own decentralized exchange through which users can exchange tokens, provide liquidity and partake in staking. They also launched the JUST network.
The gaming industry
Last but not least. TRON is dabbling in the crypto gaming space which has been booming with games like Axie infinity and Star AtlasGames of the present typically ask players to pay to win. The more you put into a game, the more you get, and the easier it is to win. The beauty of the games being built on Web 4.0, is that instead of the pay-to win-model, a new play to earn model has begun to cement itself.
The wide variety of sectors TRON is targeting means the utility token associated with the TRON ecosystem, TRX, has rocketed in value. Like Ether for Ethereum, and BNB for Binance smart chain, think of TRX as the fuel that TRON runs on, like gas to power a car, or the electricity that powers a house.
TRX use cases
- Grants users of the TRON network voting rights and governance of the network.
- Allows developers to develop, build and issue decentralized apps and tokens in the TRON ecosystem.
- Make payments over the network from peer-to-peer transactions, and pay gas fees to keep the network operable.
Ethereum vs Tron
In the words of Tron founder and CEO— “Ethereum is like the iPhone, Tron is like Android. At the end of the day, everyone will have a smartphone, but everyone can not afford an iPhone. What matters most is affordability and scalability.”
“Tron will centrally have a greater market share than Ethereum like Android does.”
This being said, as of 2022 the projects are slowly diverging. TRON did hold many advantages over Ethereum when it came to the infamous issues of blockchain scalability. But Ethereum and many other blockchains including Solana, Cardono, and Avalanche are tackling scalability themselves.
So the question becomes if Tron is Ethereum’s Android, which Android is it? Are we looking at a powerhouse like Samsung or Google, or are we looking at cPhone, or telePhonie? We made the last two up, but you get the point. There are lots of blockchains out there looking to topple Ethereum, and Tron is a very cool project, but all things considered, The statement made by Tron’s Founder is very grand.
Solving Ethereum’s scalability issues
The mechanisms used by both are different. Ethereum currently uses the OG consensus mechanism of Proof of Work (PoW) in which validators compete to solve puzzles in order to earn a reward for completing the puzzles. This is not an effective method for fast, affordable transactions. Typical Ethereum transaction fees are around $20, compared to $0 on Tron which uses a different consensus mechanism.
Note, Ethereum is looking to move to a mechanism called proof of stake, in which users stake their Ether tokens and in return, operate a Validator’s node. In return for staking their tokens, they earn a piece of every transaction that’s processed. For effective measures on dealing with gas fees check out our crypto school piece on gas fees.
So what mechanism does Tron use? Tron uses a consensus mechanism called ‘delegated proof of stake’ (DPoS)
Delegated proof of stake.
Delegated proof of stake is similar to the proof of stake. However, to tackle issues of decentralization, if you don’t have enough tokens to stake and become a validator, you can borrow your coins from someone who can and still benefit from the validating
This is how Tron is able to achieve a transaction cost of $0.
Transactions per second:
Ethereum: 15
Tron: 2,000
Time to confirm a block
Ethereum: 1 block every 15 seconds
Tron: 3 blocks every second
Transaction fees
Ethereum: $20
Tron: Free
So, looking at the networks objectively, it’s clear that Tron offers a more scalable solution. It’s cheaper and faster. However, Tron falls short in comparison to Ethereum when it comes to relevancy. Ethereum has a much greater market cap and a lot more liquidity. There is more money, more users, more applications and more substance on Ethereum. Think of Ethereum as the coolest club in the world, and Tron as a great club, that unfortunately just doesn’t have the recognition.
