Tron is a cryptocurrency and blockchain platform that aims to build a free global content entertainment system.
Tron’s cryptocurrency is called Tronix (ticker: TRX) and is currently ranked as the 15th most popular cryptocurrency in the world. Tron uses a delegated proof-of-stake consensus mechanism which allows for high scalability and fast transaction speeds. The platform allows users to publish, store, and own data, and to freely and autonomously create content on the blockchain.
TRX is used to facilitate transactions on the platform and can be bought and sold on popular cryptocurrency exchanges.
Most scholars hold Tron to be halal in and of itself, we share this view.
Read on to find out more.
What is Tron?
A Singaporean non-profit called the Tron foundation founded the Tron platform in 2017. The CEO of the Tron foundation is Justin Sun, who also founded the popular file-sharing software BitTorrent.
Sun is an established name in the space, having been a representative of the popular Ripple (XRP) before founding the Tron foundation.
The Tron network, in addition to being an open-source blockchain-based platform, also consists of a cryptocurrency called Tronix (TRX).
The goal of Tron is to build a global, free content entertainment system using blockchain and distributed storage technology. This means that Tron uses the decentralised prowess of blockchain to store and manage data and transactions, rather than relying on a central authority such as a bank or government.
Users can create and publish digital content, such as videos, music, or text, on the Tron platform. This content is stored on the Tron blockchain. The TRX cryptocurrency can be used to pay for transactions on the platform (to access content, for example) which furthers Tron’s goal of creating a decentralised content platform. Users can pay creators directly, cutting out any middleman that would otherwise be present on a centralised platform.
A positive of this is that the platform is not controlled by any one entity but is open-source. A creator cannot be censored and does not need to rely on the decisions of platform owners such as Apple or Google.
Overall, Tron uses blockchain technology to create a decentralised, secure, and efficient platform for the creation, sharing, and consumption of digital content. The use of the TRX cryptocurrency allows for fast, low-cost transactions within this platform.
How does Tron work technically?
Tron is a decentralised, open-source blockchain platform that uses a delegated proof-of-stake (DPoS) consensus mechanism to validate transactions and add new blocks to the blockchain.
In a DPoS system, a group of "validators" or "delegates" are elected by the community to validate transactions and create new blocks. These validators are chosen based on the number of TRX tokens they hold and their reputation within the community.
When a user wants to make a transaction on the Tron platform, they can create a transaction and broadcast it to the network. The validators will then receive the transaction and, if they agree that it is valid, will add it to a block of transactions that they are building. Once the block is full, the validators will reach consensus on its contents and then add it to the blockchain.
The Tron platform supports the creation of decentralised applications (DApps), which are applications that are built on top of the Tron blockchain and use its native cryptocurrency, TRX, to facilitate transactions. These DApps can be used for a wide range of purposes, including finance, gaming, and social media.
Users can buy and sell TRX on various cryptocurrency exchanges (such as Binance and Coinbase), and it can be stored in a cryptocurrency wallet. TRX can also be used to pay for fees on the Tron network and to participate in certain features of the platform, such as voting for validators or staking TRX to earn rewards.
One of the key features of the Tron platform is its focus on content creation and distribution. The platform aims to create a decentralised content entertainment system that allows users to publish, store, and own their data, and to freely and autonomously create content on the blockchain. This is made possible by the use of smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
Smart contracts on the Tron platform are used to facilitate the creation and distribution of content, allowing content creators to directly monetise their work without the need for intermediaries.
This creates a more efficient and transparent system for content creation and distribution, and gives content creators more control over their work without a central authority interfering in the process.
In addition to its focus on content creation, the Tron platform also aims to enable fast and low-cost transactions. It uses a DPoS consensus mechanism, which allows it to process a large number of transactions quickly and at a low cost. This makes it an attractive platform for developers and users looking to build and use decentralised applications.
The Tron platform and cryptocurrency offer a number of technical features that make it a popular choice for developers and users looking to build and use decentralised applications, as well as for content creators looking to monetise their work. Its focus on content creation and distribution, fast transaction speeds, and low costs make it a unique and compelling offering in the cryptocurrency space.
What are the use cases of Tron?
Store of value and medium of exchange
Like any other cryptocurrency, TRX can be used as a digital currency to buy and sell goods and services. This allows for fast, secure, and low-cost transactions without the need for intermediaries such as banks or credit card companies.
TRX can also be held as an investment. If investors believe in the Tron platform and believe TRX’s value will increase, they could hold on to it for ROI.
Crowdfunding and monetisation
TRX can be used to create and issue new digital tokens, which can be used to raise funds for a variety of projects. This is similar to how companies might issue stock to raise money, but with the added benefits of being decentralised and secure. This allows for more accessible and efficient crowdfunding on the Tron platform.
TRX can be used to incentivise the creation and sharing of high-quality content on the Tron platform. Content creators can earn TRX for their work, and users can use TRX to access and support the content they like.
Are people using Tron right now?
Tron started off with a transaction volume under $10m in 2018. This then quickly rose in 2019 to between $10-20m and between $50-100m in 2020. It saw a larger user adoption in the market boom during the covid pandemic.
Tron continued to skyrocket and saw transaction volumes in the $100m and above range regularly.
It’s only with the market downturn in 2022 has Tron lost some of its steam.
If the wider industry does turn towards a decentralised solution to content hosting, you can expect Tron to be one of the most popular platforms in the space given it’s already the 15th most popular cryptocurrency right now.
What are the strengths and weaknesses of Tron?
- Scalability: Tron uses a delegated proof-of-stake consensus mechanism, which allows it to process a large number of transactions quickly.
- Fast transaction speeds: Tron has fast transaction speeds, with the ability to process thousands of transactions per second.
- Decentralised applications (DApps): Tron has a large number of decentralised applications built on its platform, which allows users to access a wide range of services. DApps can be used to build an almost infinite number of use cases. These DApp functions could attract a lot of users and are a major perk in addition to content hosting.
- Strong partnerships: Tron has formed partnerships with a number of major companies and organizations, including Samsung and Alibaba.
- Competition: Tron faces strong competition from other blockchain platforms, such as Ethereum and EOS.
- Regulation: Cryptocurrencies and blockchain technology are still largely unregulated, which can create risks for investors and users. This is especially important with a platform that hosts content. Any user can upload anything, including hateful and immoral content.
- Volatility: The value of TRX and other cryptocurrencies can be volatile, which can make them risky investments. Unlike fiat and stablecoins, TRX is subject to speculators and traders and market sentiment.
- Security: Like all blockchain platforms, Tron is vulnerable to attacks and hacks. This is especially important when you want to use the platform to host content. It’s also important for users to have some level of technical know-how with decentralised platforms as opposed to centralised platforms.
- Limited adoption: Despite its popularity, Tron has not yet achieved widespread adoption, which could limit its growth potential. Content platforms work on network effects, which mean that creators and users only flock to the platform based on its popularity. If Tron does not achieve mass adoption, it will simmer out and remain a niche platform.
Is Tron a good investment?
Crypto has now become a staple of many investment portfolios. Even major institutional investors now hold a small percentage of crypto in their portfolios.
Putting a small percentage of your portfolio means that you can benefit from some of the potentially dazzling increases in crypto whilst also not going bankrupt if crypto were to take a really deep nosedive.
We’ve written a whole guide on how to invest in crypto the Islamic way, check that out for a good walkthrough on how to actually begin investing.
Because it is the 15th largest cryptocurrency, Tron is available to trade in all major crypto exchanges from Coinbase to Binance.
Tron can be a good investment with sufficient due diligence. You need to understand the market competition between Tron and other smart contract blockchains such as Ethereum and Cardano and base your investment allocation on solid research.
Tron currently sits at around 5 cents and has seen a downturn along with the rest of the crypto and financial markets. It’s noteworthy that in the last 4-5 years TRX hasn’t seen any real gains and was still around 4 or 5 cents.
The main questions to consider for any potential investor is:
- Do you think content creation will become more decentralised? Moving from big centralised tech platforms to more decentralised blockchain platforms.
- Do you think that Tron has the competitive advantages and moat that differentiate it from other smart contract and digital media blockchain platforms, such as Ethereum?
Alternatives to Tron
We can’t mention alternatives to Solana without mentioning Ethereum. Given how synonymous it is with the DeFi space and its 80% market dominance, Ethereum is the giant that Tron needs to wrestle with.
While Tron has some advantages such as its content platform, these are not enough to give it an edge over Ethereum.
Firstly, Ethereum has a level of trust in the community that Tron is a long way from achieving. Tron is still a niche platform compared to the colossal Ethereum ecosystem.
Ethereum is the original smart contract and digital media blockchain platform, and given its market dominance, users will face a tough barrier to begin using Tron instead of more established giants like Ethereum.
Ethereum is planning an upgrade soon which will allow it to increase its transactions per second and move it to a Proof-of-Stake system. This removes some of the competitive advantages that Tron holds in energy consumption and transaction speeds.
Cardano (ADA) has a market capitalisation of almost $20 billion and hence the number 7 spot in the crypto space. Cardano was founded based on peer-reviewed research and evidence-based methods, lending it technical credibility.
Cardano claims to be the most environmentally friendly blockchain network, using only the power of 600 homes annually, which is comparatively less compared to the colossal energy usage of other major cryptocurrencies. This makes it more sustainable in the long-term.
Coming in the 11th spot with a market capitalisation of $11 billion, Polkadot (DOT) is well-known in the crypto space for its ‘interoperability’ feature.
This allows several blockchains together to form one larger network, allowing data to be shared securely and efficiently. This cross-chain collaboration is so important for the future of Web 3.0 and the internet at large, that Polkadot can seriously be considered one of the core digital infrastructures of the future and slowly gain market dominance.
Polkadot shares similar functionality to Tron in the smart contract space.
Is Tron halal?
Most scholars hold Tron to be halal. We also share this view.
The essence of the debate on whether cryptocurrencies are halal comes down to whether they are ‘Māl’ as we have explained previously. Māl is something that can be acquired, whether it be an item or a service.
There are three stances on cryptocurrencies today:
- Cryptocurrency is not Māl, rather it is a speculative, non-Sharia-compliant investment.
- Cryptocurrency is a digital asset but not a currency.
- Cryptocurrency is a digital currency.
Proponents of view (1) argue that cryptocurrencies are not Sharia-compliant since they have no intrinsic value and are merely entries on a digital ledger.
Our view has always been that (1) does not seem right since cryptocurrencies have value as millions of people are willing to buy, hold, and trade them. They are just as real as fiat currency today which mostly exists in the spreadsheets of banks. Our monetary system became predominantly digital a while ago.
View (2) seems to be the most realistic view, as cryptocurrencies are a new and emerging technology that are yet to mature into fully fledged currencies used by economies at large. However, in practice, there is no real difference for casual users between (2) and (3) since they both consider trading cryptocurrencies to be permissible.
An important point to note is that users of the Tron platform should be careful of purchasing and accessing content that could be considered immoral and impermissible.
Tron has the technical infrastructure in place to be the decentralised platform for digital content and media. The only things stopping Tron from becoming a household name are:
- Whether the industry and people at large turn towards decentralised platforms for content creation and monetisation.
- Whether Tron can win the battle against countless other blockchain platforms that offer similar functionality, most notably the giant Ethereum.
If Tron can even carve out a niche for itself in what is undoubtedly a colossal market, it has the potential to really be something.