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How does Tron work?

How does Tron work?

Harry Atkins
19th December 2019
Updated: 11th February 2020

2a – How is tron transferred?

Imagine sending someone (e.g. your friend Nicole) an email that reads ‘1 tron’. You would:

  1. Log into your email account
  2. Enter Nicole’s email address
  3. Type ‘1 tron’ into the body of the email
  4. Hit send
  5. Nicole would receive a message reading ‘1 tron’

A tron transfer works in a similar way, but instead of email accounts you and Nicole each have ‘wallets’. If you were sending 1 tron to Nicole, she would receive 1 tron in her wallet, rather than an email in her inbox.

From a user’s perspective, wallets function like email accounts, but they are much more secure. Each wallet has a public address used to send and receive tron (like your email address), and a ‘private key’ used to access your funds (like your password).

A tron wallet public address (also known as a ‘public key’ or ‘wallet address’) is comprised of a string of 34 letters (uppercase and lowercase) and numbers (0-9), which always start with the character ‘T’. Public addresses are case-sensitive. Here’s an example of a tron wallet address:

TH9TbNRxnLV6yqAmiE4zFAfTQL2Yw9xSFk

Users of the blockchain can transfer funds to your wallet by entering your public address, and if you transfer tron to somewhere else it will be recorded on the blockchain as having been sent from your wallet address.

Private keys are comparable to your password. They are what enable you to access the tron you have received, and send tron to other wallets. But private keys are much, much more secure than email passwords. Private keys take the form of a 64 character long string of letters (A-F) and numbers (0-9). Here’s an example of one:

3B6971F9235AB945CCF10B90A13D558027167C07AEABAF444888EE403FB51F02

So, if you wanted to make a payment to Nicole, you would first need to have your wallet’s private key to gain access to your tron wallet and the funds held within it. You can then choose to send funds from your wallet to Nicole’s through entering her wallet’s public address.

The transaction will then be publicly recorded on the blockchain as a transfer of one tron from your wallet to Nicole’s.

2b – Can you have less than one tron?

Yes you can. Tron is divisible, and can be broken up into fractions of up to 6 decimal places. The smallest fraction of a tron that you can store on a wallet, or to transfer to others is 0.000001TRX (one hundred-thousandth of a tron).

The divisibility of tron works just the same as regular currency. In the UK, the currency is pounds, but you can get 50p, 20p, 10p, 5p, 2p, and 1p pieces.

2c – What are ‘smart contracts’?

On a fundamental level, ‘smart contracts are virtual ‘if-then’ contracts: a set of code that automatically executes an action when certain conditions are met. Think of a vending machine; a vending machine is programmed to give you a bag of sweets that costs £1 automatically once you have inserted £1 and selected the bag of sweets. This is what is meant by an ‘if-then’ contract: if you pay the right amount and select what you want, then the machine will give it to you. If you don’t, it won’t.

Smart contracts are what we referred to in section 2b as the ‘decentralised applications’ supported by the Tron blockchain. The possibilities for what can be created are virtually endless, as the functionality of a smart contract is only limited by the complexity of the code it was written with. Anything can be coded as a smart contract, from the creation of a democratic voting network for shareholders of a company, to decentralised gambling and casino games, to simple exchanges of goods and services.

Let’s consider an exchange that’s a little more complicated than a vending machine. In the physical world, if I wanted to sell my used PS4 to Bob for £180, I would tell Bob ‘If you give me £180, then my PS4 is yours’. If Bob followed up on my offer, and gave me £180, I would be personally responsible for handing my physical PS4 over.

Two scenarios are now possible: one where I hand over the PS4 and the deal is complete, and another where I refuse, and Bob chases me up for his money and possibly seeks legal action. The only way to avoid the latter situation is to employ a middleman who would hold the PS4 on escrow for Bob if he pays the £180 on time, or returns it back to me if he does not. However, just like how the banks can act fraudulently with your funds, the middleman can’t necessarily be fully trusted with Bob’s funds here, even if Bob makes the payment on time.

Smart contracts on the Tron blockchain get rid of the need for middlemen. Here is a simplified version of how a smart contract might work: a contract can be created where John will agree to put £180 worth of tron into escrow. The contract will operate on the basis that If I give the PS4 by a specifically agreed time, then the tron in escrow will go to me, and if I don’t, then the tron in escrow is refunded to John. All of this happens instantaneously.

Ultimately, smart contracts ensure that no two parties can be in the possession of both sides of the transaction (in this case, the PS4 and the £180) at the same time. The transaction happens instantly and without the need to place trust in a third party.

The Tron blockchain removes the possibility for smart contracts to be fraudulently manipulated. Just like how it records the history of tron transactions, the blockchain records the ‘state’ of all smart contracts, and makes the information publicly available. In other words, the blockchain records whether smart contracts have been executed or are yet to execute, so that there can be no disagreements about what has happened.

To give one further example of how smart contracts can be useful, have you ever seen a Kickstarter campaign that promised a great idea, but you never felt like you could invest into it because you had no idea who was behind the project and whether they would actually carry it out? A smart contract could address this issue.

For instance, a contract could operate by keeping all donated funds in escrow, and the money can only be used on the condition that a certain goal of a project is reached by a specific deadline. If the goal is reached, then the funds held in escrow can go towards the project, and if it doesn’t, everyone automatically gets their money back immediately.

2d – How are transactions verified?

Transactions on the Tron blockchain network are verified through a process known as Delegated Proof of Stake (DPoS). This is what makes Tron work a little different to other cryptocurrencies.

Effectively, holders of tron tokens get to elect ‘Super Representatives’, who are put in charge of verifying entire block’s worth of transactions for the Tron blockchain. Because verifying transactions on the Tron blockchain is a computationally intensive process that costs a substantial amount of money, Super Representatives are rewarded with tron for their efforts.

The electing of Super Representatives is a democratic process by which users of tron vote for people they trust to run the network, very similar to how you would vote for a MP in a UK General Election. To revert back to the football team analogy, it is the equivalent of voting for a captain who would be responsible for keeping track of the score of the game.

If Super Representatives do not do a good job, then tron holders can opt to vote for a different candidate and remove them from their post. There can only be 27 Super Representatives at any one time, creating a further incentive for currently instated Super Representatives to carry out their job effectively.

2e – How do I mine tron?

You can’t mine tron. Unlike other cryptocurrencies such as bitcoin or ether, the entire supply of tron tokens were already in existence before the Tron blockchain network was publicly launched.

By Harry Atkins
Harry joined us in 2019 to lead our Editorial Team. Drawing on more than a decade writing, editing and managing high-profile content for blue chip companies, Harry’s considerable experience in the finance sector encompasses work for high street and investment banks, insurance companies and trading platforms.
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