TON Network and Toncoin - Why did Telegram create a blockchain just to abandon it later?

In the dynamic and often unpredictable industry of cryptocurrencies, a name that has stirred quite a bit of intrigue is Toncoin. Born from the ashes of Telegram's ambitious blockchain project, Toncoin has been a subject of fascination, confusion, and a fair bit of controversy. 

So, why did Telegram, a globally renowned messaging app, venture into the blockchain space only to abandon it later? Let's dive into the story of Toncoin and how the SEC banished Telegram's crypto project even before it was released.

The Birth of Toncoin

The Genesis: In 2018, Telegram, known for its commitment to privacy and encryption, embarked on a journey to create its own blockchain, the Telegram Open Network (TON). The network was to be supported by a token named "Gram." However, the project ran into regulatory hurdles when the U.S. Securities and Exchange Commission (SEC) deemed TON an unregistered security.

The Rise: Despite the setback, Telegram developers didn't want to abandon the idea of the project. They founded an open-source platform called Newton, which was later renamed "The Open Network" and officially launched in 2021. This new network was supported by a new cryptocurrency, Toncoin (TON).

How Toncoin Works

The Open Network operates on a Proof-of-Stake (PoS) consensus mechanism. This means that individuals can add blocks to the blockchain, verify transactions, and earn rewards based on the amount of TON they hold. The network promises transaction speeds of less than one second, potentially making it one of the fastest blockchains around.

Toncoin serves multiple purposes within the network. It is used to pay for transactions and data storage. Users who hold Toncoin have the ability to vote on any proposed changes to the network. Additionally, they can stake their Toncoin and receive rewards in return. Toncoin can also be bought, sold, and traded on various exchanges.

The Telegram-Toncoin Connection

The Telegram Legacy: While Toncoin and Telegram's original Gram token share a similar history, it's crucial to distinguish between the two. Toncoin is not Gram. Even though some may think of it as an evolution of Gram, the connection between Telegram and Toncoin is more historical than functional.

The CEO's Stake: In a surprising revelation in July 2023, Pavel Durov, the CEO of Telegram, announced that he held Toncoin. While this news might have offered some hope to the crypto's investors, it could not stop the coin from dropping to its lowest level in nearly 12 months.

The Abandonment of TON by Telegram

The Legal Battle: Telegram's TON crypto project was terminated because of the company's ongoing legal fight with the U.S. Securities and Exchange Commission (SEC). 

Telegram was forced to abandon its plans to launch TON and distribute Gram tokens due to a preliminary injunction won by the SEC in a US court. The injunction prohibited Telegram from distributing it's tokens, completely blocking the project.

The Aftermath: Telegram's decision to abandon the TON project was a significant shift for the company. Telegram has made an announcement that its investors may choose to receive 72% of their funds immediately or 110% back in a year after TON's launch. However, U.S. investors would not be able to take the latter option.

The Rise of Independent TON Networks: Despite Telegram's exit, the TON project didn't die. There have been attempts by third-party groups to launch their own versions of the TON blockchain. TON Labs, a startup that had been running a test network, launched its own version of the network, dubbed "Free TON." However, no Telegram employee is involved with these projects.

The Current State of Toncoin

Performance Analysis: Toncoin has been underperforming in 2023 so far. While the overall market has risen, Toncoin has dropped. It fell below $2 in May, and on July 30, it sank to $1.16, its lowest price in nearly a year. By August 1, 2023, it had recovered to around $1.18.

Market Cap and Circulation: As of August 1, 2023, there were 3.4 billion TON in circulation out of a total supply of just over five billion. This gave the coin a market cap of $4.06 billion, making it the 19th largest crypto by market capitalization.

Price predictions for Toncoin vary. Some sources predict that TON will drop to $1.11 by August 5, 2023, before recovering to $1.32 by August 30, 2023. Other predictions for 2023 range from $1.82 to $2.65. Long-term predictions for 2025 and 2030 suggest that TON could reach anywhere from $4.20 to $39.11.

While Toncoin has been performing poorly recently, losing 40% at a time when the market has risen by almost 50%, it's important to remember that The Open Network is one of the fastest blockchains out there and does have some genuine potential. Its native coin is also versatile, which might be of interest to those seeking long-term investments.

The story of Toncoin is a fascinating tale of ambition, innovation, regulatory hurdles, and resilience. While Telegram's initial attempt into the blockchain space was blocked by regulatory issues, the spirit of the project lives on in Toncoin. 

Despite its recent underperformance, Toncoin holds potential for the future, backed by one of the fastest blockchains around. However, as with any investment, potential investors should conduct thorough research and exercise caution.