The complete guide to buying TRON (TRX)
TRON states in its whitepaper that it is “dedicated to the establishment of a truly decentralized Internet and its infrastructure.” In trying to achieve this, TRON and its polarizing founder Justin Sun have attracted plenty of criticism.
However, the TRON platform still harbors a legion of supporters, while the market cap of the TRX token is still valued billions of dollars higher than other supposedly more advanced projects. Let’s see if TRON is a worthwhile investment.
What is TRON?
TRON was founded in July 2017 by Chinese entrepreneur Justin Sun, who also established the TRON Foundation, a non-profit to oversee the project.
An ICO (Initial Coin Offering) was held in August that year, where TRON billed itself as a “blockchain-based, open-source protocol for the global digital entertainment industry”. This clearly caught the imagination of the cryptocurrency-buying public, and TRON raised $70 million.
TRON started out on the Ethereum blockchain while building its own blockchain, which it migrated to in May 2018. Just two months later, TRON underlined its ambitions by purchasing popular filesharing network BitTorrent for $140 million, with the aim of turning it into a kind of decentralized Netflix-meets-Spotify for original content.
Since launching, TRON has grown to become one of the best known blockchains in the space, often being one of the first to pick up on the latest concept in the crypto space.
For example, in August 2020 it launched its decentralized exchange (DEX) JustSwap (now SunSwap) at the height of the DeFi boom, and four months later launched its NFT standard just as the NFT boom was starting.
Its promise to “decentralize the Internet” has translated to a platform where a large number of decentralized applications (dApps), such as games, gambling, and visual entertainment, are enjoyed on the blockchain, while the blockchain’s native token, Tronics (TRX), sees more daily usage than older, more established coins.
How can I buy TRON?
TRX is a very popular cryptocurrency, and as such there are several ways in which to buy it. In this section we will cover the most common ways to buy TRX.
TRX is available on hundreds of centralized cryptocurrency exchanges (CEXs), including several large ones such as Binance, Huobi and Kraken. CEXs are those controlled by a single entity – the organization that developed the exchange – and require you to register with a government-approved ID before accessing features that allow you to buy TRX.
CEXs tend to offer multiple different purchasing and payment options, which we will look at in the next section.
Because of its design, you won’t find TRON’s TRX token on any of the major DEXs, although you can buy it from a number of TRON-powered DEXs.
To do this you will need to already own one of the other cryptocurrencies the exchange accepts for TRX swaps on its platform. Simply connect your wallet to the exchange, submit the swap and wait for it to be executed on the TRON blockchain.
Bear in mind that unless you have sufficient energy in the bank, the exchange will charge you a transaction fee in TRX tokens – the same ones you’re trying to buy. This may make it a non-starter for some.
Some platforms such as Binance allow you to buy TRX peer-to-peer, which means they connect buyers and sellers to trade with each other.
Sellers will list TRX for sale and buyers can simply buy as much as they want directly from the seller, with the platform taking a small facilitation fee and also usually providing escrow services.
Sellers normally accept a variety of cryptocurrencies and fiat currencies for their TRX tokens, with the buying process carried out in a transparent and fair manner.
How can I pay for TRX?
There are a few ways you can pay for your TRX tokens, but we’ll cover the most common ones here.
The easiest way for most people who already have some cryptocurrencies is to swap them for TRX on a CEX. To do this you will either need to have some cryptocurrencies on the exchange already or send them over, making sure that you end up holding the other side of one of the TRX trading pairs (e.g. USDT, BTC).
This done, you can either swap your existing cryptocurrency for TRX at the current price or place a ‘buy’ order at your preferred price and wait for it to hit.
Credit card/debit card
Many CEXs allow users to buy TRX with a credit card or debit card, assuming your bank supports crypto purchases. Buying TRX tokens using this method is as easy as any other online purchase, although be prepared to verify the purchase through your banking app before it is processed.
To do this, simply choose the ‘buy’ option which is typically located on the exchange’s home screen. Next, enter the fiat value of the TRX you want to buy and complete the payment (beware of the processing fees). Once you have your TRX, withdraw it from the exchange to a wallet where you control the private key (optional).
If your bank doesn’t support card purchases, some exchanges allow you to fund your account through a bank transfer. The process involves sending the funds over to the exchange through a regular bank transfer and buying the coins that way.
If you plan to use this method, perform a test transfer of a small amount to make sure it goes through without a hitch before sending the full amount across. If you want to withdraw fiat from the exchange you will be able to send it back to this account again.
How does TRON work?
The TRON blockchain uses a Delegated Proof-of-Stake (DPoS) consensus mechanism that allows for fast transactions and uses very little energy compared to proof-of-work mechanisms like Bitcoin.
Anyone can assist in securing the network and processing transactions by ‘staking’ their TRX tokens, which involves locking them up in the network as collateral.
This can be done on most exchanges and wallets supporting TRON, and allows you to earn TRX as well as energy units to put towards transactions. The more you freeze the more energy and rewards you obtain.
Once staked, a wallet can act as a ‘node’, helping to confirm transactions that take place on the TRON network and earning you TRX tokens as a reward.
The TRON blockchain factors in two types of network resources when it comes to transferring assets – bandwidth and energy:
- Bandwidth is needed to transfer assets on the TRON blockchain. Every 24 hours, the network grants each account (i.e. active address) 5,000 Bandwidth points for free.
- Energy is needed to transfer assets managed by smart contracts, such as TRON’s native TRC20 tokens. This can be earned by ‘freezing’ or staking TRX tokens.
Accounts with sufficient bandwidth and energy are able to transfer assets on the TRON network without being charged any network fees. However, those who don’t have sufficient amounts of these resources must pay a network fee.
The current energy unit price is 0.00028 TRX, which sounds cheap when you consider that the price of a TRX token is typically less than $0.10.
However, there’s a catch. Using the USDT stablecoin as an example, one USDT transaction on the TRON blockchain requires 29,364 of these energy units, equating to 8.2 TRX per transaction. Suddenly, it doesn’t seem so cheap to transact on the TRON blockchain.
The key to cheap transactions is to freeze TRX tokens, which can be done via the staking process, which we will explain in more detail later.
Why should I buy TRX?
Given its decentralized nature and use of alphanumeric addresses instead of identities, there is a great deal of privacy afforded when transacting with TRX tokens. This, combined with its fast transaction speed and relatively cheap fees, makes it a popular choice among many cryptocurrency enthusiasts.
TRON’s TRX token is designed as a utility token, with every action you take in all the applications on the network paid for in TRX. This makes it suitable for the following activities within the TRON ecosystem:
TRX tokens are a great option for gambling, both on TRON-based crypto casinos and any other casinos that accept TRX. This is because, as we have learnt, TRX transactions are very quick and in some cases can be free, which is perfect for placing micro bets.
There aren’t many online retailers who accept TRX tokens, but some gift card providers such as Coinsbee allow you to buy gift cards for world-leading online merchants with TRX. You simply choose the gift card you want to buy to your chosen dollar value and send the TRX over to cover it. Once it arrives your gift card is released to you.
TRON has a thriving DeFi lending ecosystem, with plenty of dApps catering for those looking to borrow crypto or lend it out in return for a portion of the interest. Some of these platforms require you to lock up your TRX for a period to get these rewards, to make sure you check the small print before you decide to go down this route.
You can also use TRX tokens when playing games on the TRON blockchain. TRX tokens can typically be used to buy add-ons for games or even buy in-game accessories in the form of NFTs.
What is a TRON wallet?
A TRON wallet is the place where you will store your TRX tokens once you’ve bought them. There are different ways to store TRX tokens, each of which has a different balance of security vs practicality. TRON wallets come in two primary forms:
- Software wallet – the kind of cryptocurrency wallet you find on your phone, on a web browser/add-on or on a desktop computer. These types of wallets are connected to the internet whenever the host device is, making them less secure, although you can access the wallet and send coins in a matter of seconds.
- Hardware wallet – this kind of wallet stores your TRX in a physical device (usually similar in design to a USB stick), which is only connected to the internet when coins are being sent or received. The addresses connected to the wallet cannot be accessed without the device itself, a process which takes longer than with a software wallet but is much more secure.
Every kind of cryptocurrency wallet has something called a ‘private key’ which is like a master password – anyone who has it can use it to access the addresses tied to your wallet and remove the coins.
Some wallets, including all hardware wallets, allow you to keep the private key for yourself, meaning that you have full control over your funds. Others, typically software wallets, retain the public key on their own servers, which presents certain security concerns. This is where the balance of security versus practicality comes in, and is a decision only you can make.
How does a TRON transaction work?
When you send a TRX token, an instruction is sent to the blockchain to include your transaction in the next block, which typically takes place every three seconds. When a block of transactions needs to be processed, the network automatically selects a ‘Super Representative’ to carry out the task.
These are real people from somewhere in the world who have locked up TRX tokens in the hope of being picked to validate the next block. This is because Super Representatives get rewarded for processing blocks with fresh TRX tokens, which they do by simply running a computer program 24/7.
The network chooses the next Super Representative by looking at the amount of TRX tokens the various Super Representatives have locked up in the ‘pool’ and the length of time each submission has been there. This process ensures that the most invested participants are rewarded more often.
The winning Super Representative then confirms the block of transactions, with other Super Representatives attesting that the data in the block is correct. If there are errors found, for example if the Super Representative has tried to defraud the network, they are penalized by losing some of their frozen TX and will face a period where they are unable to validate blocks.
When the threshold for the number of attestations has been reached, the network updates the blockchain and your TRX gets sent on its way. This whole process normally takes just a couple of minutes.
Are there any risks with TRON?
Like any blockchain, Tron is not perfect. Below are some of the things you should consider before buying TRX.
TRON has a history of doing things in a somewhat shady way. For example, it was revealed in January 2018 that large parts of the TRON whitepaper had been lifted wholesale from those of other projects – IPFS and Filecoin. This was put down to a translation error, but this is one of many such accusations of copying, both in text form and in terms of ideas, laid at TRON’s door.
Justin Sun controversies
Founder Justin Sun has been a controversial figure in the crypto space ever since TRON launched, and many people will not touch TRON or TRX because of it, despite him stepping aside as CEO in December 2021. He has been accused of TRX price manipulation, improper business dealings, and illegally selling securities among other misdemeanors and, while Sun denies all these charges, the impression left has been a bad one.
Tron has a total supply of TRX tokens in excess of 100 billion, which has the impact of massive price dilution. Therefore, anyone looking to buy TRX for an increase in price might not achieve what they want with this coin.
As we have discussed, while TRON may boast free transaction fees, this disguises the fact that only those with enough energy in the bank can benefit from them. The energy unit fees were doubled in November 2021 to 0.00028 TRX, and further jumps cannot be ruled out in the future.
Is TRON a good investment?
TRX has in the past been a good investment if you timed your purchase right, but the same can be said for many cryptocurrencies. TRX hit $0.23 at the peak of the 2017/18 bull run, and while other cryptocurrencies surpassed their prior highs during the 2020/21 bull run, TRX only managed to hit $0.16, marking a 30% reduced return.
This could be nothing, but with Sun having left the project he founded and drove for four and a half years, and with no roadmap saying where it is headed next, it may be that TRON is about to go from a crypto pioneer to a crypto has been.
How is TRON shaping the future?
It is difficult to know what the future holds for TRON, because it doesn’t have a publicly available roadmap. This has been a source of frustration for the community, especially when TRON dApps are publicizing their own roadmaps.
With the project’s driving force Justin Sun having left, there is a concern that TRON is going to stagnate. It is fair to say that its aim of displacing traditional entertainment avenues with a decentralized version has not taken off, and with no way of knowing how it intends to expand from here it’s hard to say how its future will pan out.