tron-logoIs Tron A Good Investment – TRX Analysis

This article will examine whether Tron is a good investment from the speculative side of things and provide you with an objective conclusion based on the fundamentals as to whether it’s a good bet or not.

If you don’t know what Tron is about, you can read our in-depth guide here. In short, Tron’s mission is to build a truly decentralized Internet and infrastructure for the entertainment industry.

Now, let’s dissect Tron’s fundamentals and see if we can put any money into it.


Tron’s New Mission

Tron is a completely different project from when it was launched in September 2017. The significant turn in Tron’s ideology took place in June 2018 when Tron broke off of Ethereum and launched its own mainnet to become an independent cryptocurrency.

Just a couple of months ago, Justin Sun (founder and CEO of Tron Foundation) tweeted that Tron was getting into the smart contract arena and would be 200 times faster than Ethereum and 100 times cheaper than EOS.

Is it true? At this moment in time, it’s a promise yet to be delivered. But so far, most promises that came directly from Justin Sun had been honoured — more or less in a timely fashion, too.

Before you read any further, I want you to know that I’m not ranting about Ethereum to promote Tron. I have no business in doing that — instead, I’m taking an objective standpoint where I compare the two coins to draw conclusions since they’re becoming close competitors.


Scaling Drives Global Adoption

The make or break for Tron could be its ambitious plans to scale the main chain without extending to protocol layers built on top of the blockchain.

In comparison, Ethereum wants to scale by sharding and implementation of side chains because the main chain is overpopulated and slow. It’s also becoming too large to be installed on one’s computer to run a node. And even after downloading the Ethereum blockchain that weights over 1TB, it’s extremely difficult and time consuming to make it run properly.

Nonetheless, that is a necessary step for developers to undertake if they want to develop on the core platform without having to escape to Infura — a new layer which runs an Ethereum node for developers to connect to and use that instead, but at the cost of making the ecosystem rather centralized.

ethereum-sidechains

Speaking of centralization, Tron isn’t exactly vastly decentralized itself. The Tron Foundation holds a large amount of tokens which could be used to vote within the platform to steer the direction of the coin — the principle is similar to the governance issues in EOS, but that’s a subject for another article.

Going back to Ethereum, the side chains might also sound like a good idea at first glance, but in reality, they impose some trust issues as opposed to the main chain.

The majority of hashing power is focused on the main blockchain, and only a portion of it would be dedicated to side chains. If something was to happen, ie. a bad actor that attempts the 51% attack on a side chain because the chain doesn’t get to reap the benefits of the main chain’s proof-of-work security, the idea is to use the Plasma Exit protocol which allows to rollback the threat onto the main Ethereum blockchain to be dealt with over there. 

At this moment in time, neither sharding nor Plasma and Plasma Exits are complete and are still in development.

The reason I’m going in-depth on this is to illustrate how confusing and complicated the Ethereum world is becoming. Not just for the investors to see where this is headed, but for the developers themselves.

That makes an ugly user experience a reality not just for you, me or the developers, but for the whole crypto community as well.


That’s Where Tron Comes In

Tron, on the other hand, is trying to make the main chain more scalable without going to the lengths of creating additional layers. At least, that was the idea at the very beginning. It’s worth noting that if it was that easy to scale a smart contract-oriented platform within the main chain, then the Ethereum developers would have probably stumbled upon it already.

This means that there’s a trade-off that Tron is willing to take or that’s exactly where the BitTorrent protocol comes in.

Justin Sun bought BitTorrent for alleged $140 million in June 2018. BitTorrent is an early mover in the decentralized world and the source of inspiration for Bitcoin to be created because it’s based on the decentralized P2P protocol as well.

The Tron-native project Atlas, which aims to incentivize the file-sharing seeders by offering TRX tokens for doing so, could be THE solution to scaling Tron. As of today, if you’re using BitTorrent, you don’t get anything for sharing the files. It doesn’t matter whether your download to upload ratio is 10, you get nada.

Tron’s idea is to pay you for sharing which in turn will make the whole network faster. Since a good chunk of BitTorrent’s content is entertainment-focused, it makes a lot of sense for Tron to expand in that direction because it aligns with the Tron’s initial concept. 

The fact that Justin Sun was willing to invest that kind of sum of his own money to buy BitTorrent demonstrates great conviction in the project. That’s a good sign from the investor’s standpoint, especially that the BT deal could lead to the long-term growth of Tron.

Another thing that goes for Tron is that the Ethereum developers won’t have to learn a new programming language if they wanted to migrate to Tron. This might have a positive impact on the future development of Tron.  


The Community: Tron vs Ethereum vs EOS

Before I decide on an investment, I like to check a few metrics such as Google Trends, number of transactions on the blockchain vs competitors, social support of the coin I’m analysing as well as GitHub to see how the development is progressing.


google-trends-ethereum-tron-eos-comparison

Whilst this might be inaccurate due to the fact that Tron is also a Disney movie and a computer game, I doubt that there’s a lot of people searching for a film from over 30 years ago that could move the chart in favour of Tron long-term.

Above you can see that Tron had overtaken Ethereum around May 2018. EOS remains above both since March 2018. This doesn’t tell us a lot, but sort of indicates that there’s a good number of people looking up Google on larger scale for Tron than Ethereum, but both coins remain in the shadow of EOS that enjoys a lot of traction generated from the good marketing practice.

google-trends-price-comparison-ethereum-vs-tron-vs-eos

However, when it comes to the phrase “coin + price”, Ethereum performs the best out of the three. This is probably driven by the fact that ETH was approaching $100 in November to eventually drop below it in December. Nonetheless, Ethereum takes the top spot in that department in front of EOS and Tron.


tron-vs-ethereum-number-of-transactions-since-june

This is a good illustration of what I was discussing earlier — due to the gigantic size of Ethereum, it was just a matter of time before Tron took the lead in the number of transactions per day. I like to look at this metric because it shows the potential of a network in terms of adoption.


Reddit-trend-ethereum-vs-tronix

Let’s take a look at the Reddit trends. This is by no means an analysis based on the number of Reddit users, but the growth of each subreddit. Whilst Tron might enjoy a higher number of transactions per day, this is not reflected in the chart above.

Surprisingly, despite the strong announcement from Justin Sun that Tron is directly competing with Ethereum in October, it had no impact whatsoever on Reddit. This is something to keep in mind as the trend line for Tron has been flat with a slight upside for the whole year.

Ethereum triumphs in this metric and the community traction doesn’t seem to be slowing down.


tron-development-progress-vs-time

This is a commit graph from the main repository of Tron. A commit is a revision, addition or removal of the code. Ever since March, Tron’s development took a downturn and seems to be worked on in a lesser capacity for some reason.

This is contradictory to the new ambitious plans that Tron had proposed earlier in October and it’s something to keep a note of. It’s also important to understand that this metric could be inaccurate because not everything has to be recorded on GitHub. The decrease in line of code is most likely associated with the bear market, but it’s worth taking a note of.

Ethereum chart isn’t included in this article because the number of repositories that’s being currently worked on simply doesn’t compare to Tron — which could be a good metric to judge the future of both coins.


So is Tron A Good Investment or Not?

Considering all of the above, there could be a merit to investing in Tron. Tron has surely gained both the attention of crypto-enthusiasts and the traction that’s much needed to develop a successful concept.

The acquisition of BitTorrent is another major sign of strength. And that’s not only because of the possibility to incorporating the already established BitTorrent’s P2P protocol and combine it together with Tron, but the sheer fact of the Tron’s CEO to spend such a large sum on it. This shows a long-term commitment and Justin Sun put his money where his mouth is which could make one at ease when it comes to Tron’s future.

The governance antics, the lack of growth of the Reddit community and the crippled pace of the development on GitHub outweigh most positives about Tron for me.

At this moment in time, personally speaking, it’s too early to invest in Tron. The project is too fresh and the current situation in Tron takes more of an experimental approach which could go either way.

However, Tron has definitely won over a lot of fans, because the idea behind it is in fact very interesting and could change  the world of entertainment as we know it today. It’s a great initiative, but it’s too soon to bet on the execution of it — at least from my conservative point of view.


Final word

Investing in new coins is like investing in tech start-ups. You can do your due diligence, research the leaders and the team behind the company, verify the business plan, praise the idea and conclude it all sounds great. But that’s not enough.

There’s an element of execution, luck, discipline and drive that play a big role in how things develop. Whilst Justin Sun and Tron don’t seem to be lacking any of these attributes, it’s still too early to make a decision.

Because this article isn’t a financial advice or recommendation, please let me know what you think about it and what makes you think Tron is a good investment.

And lastly, this article isn’t to rant about Ethereum, as I believe that Ethereum is here to stay and has a bright future ahead upon successful implementation of some of the ideas that are being currently worked on.


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Disclaimer: You should do your own due diligence, research and analysis before you invest any money in cryptocurrencies. Cryptocurrencies are highly volatile and classed as high-risk investments. You should never invest any money unless you’re prepared to lose your capital. The author of this article holds the said assets and might be biased towards them.

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