What Is Toncoin?

Toncoin is the native coin of The Open Network (TON), a blockchain originally designed by the team behind Telegram. Telegram abandoned the project in 2020 after a fight with US regulators, and independent developers carried it on. Today TON is tied to Telegram again through built-in wallets, which drives both its growth and its main risk.

TON in short

From Telegram project to community chain

Telegram raised about $1.7 billion in 2018 to build the Telegram Open Network and its token. The US Securities and Exchange Commission took action against the sale, and in May 2020 Telegram suspended its support and refunded investors. Developers outside the company kept working on the open-source code, and the TON Foundation took over its stewardship in 2021 under the new name The Open Network.

Figure: From Telegram project to community chain and back into Telegram.

Telegram integration

TON’s main advantage is distribution. Telegram began rolling out TON-based wallets to its users in September 2023, and many Telegram mini apps and games use Toncoin for payments. In July 2024, Telegram reported 950 million users, a potential audience no other blockchain can reach through a single app.

What using TON inside Telegram looks like

For many users, TON is something they meet inside Telegram rather than on an exchange. A wallet can be opened within the app, Toncoin can be sent to contacts, and mini apps, small programs that run inside Telegram chats, use it for payments, rewards and in-game purchases. In 2024, simple “tap-to-earn” games built as mini apps drew millions of players, many of them new to crypto, with token rewards tied to TON. The result is a network whose user base looks very different from that of most blockchains: large, casual and acquired through a messaging app rather than through trading.

How the network works

TON is a proof-of-stake blockchain. Toncoin pays transaction fees, is staked by validators and is used inside Telegram’s ecosystem of apps and services.

A design built for scale

TON was designed from the start to split its work across many chains. A main chain coordinates the system, and work chains can divide into smaller shard chains when activity rises and merge again when it falls. The aim is to keep fees low and transactions fast as usage grows, which matters for a network meant to serve a messaging app’s audience. Users rarely see this structure, but it explains how TON handles bursts of activity from popular mini apps and games.

The Durov factor

TON shows how a network can depend on people who do not formally run it. When Telegram’s founder Pavel Durov was arrested in France on August 24, 2024, nothing changed in TON’s code or validators, yet Toncoin fell about 25% within days, and most holders were left at a loss. Markets priced the risk that problems for Telegram, its founder or its relationship with regulators could cut off the network’s main source of users. Anyone holding Toncoin is, in effect, also taking a view on Telegram’s future.

Buying and holding Toncoin

Toncoin can be bought on many exchanges and, in some regions, through wallets accessible inside Telegram. Those built-in options range from custodial wallets, where a provider holds the keys, to self-custody wallets, where you hold the recovery phrase yourself. When depositing Toncoin to an exchange, check whether a memo or comment is required to credit your account, and make sure you are using the TON network rather than a wrapped version on another chain. As with any asset, sending a small test amount first avoids costly mistakes. See custodial vs non-custodial wallets.

TON compared with other payment-focused networks

Most payment-focused blockchains compete on speed, fees and exchange support. TON competes mainly on distribution: it can reach people who already use Telegram every day, without asking them to install a separate wallet first. That is a powerful advantage for consumer apps and games, but it brings a concentration that networks such as Solana or Tron do not have. Their users arrive from many apps and exchanges; a large share of TON’s arrive through one.

Another consideration is how rewards in Telegram games and promotions affect the token. Many tap-to-earn players received tokens for free and sold them soon after they could, adding selling pressure when those programs paid out. That pattern is common to promotional token distributions across crypto, but TON’s reach magnified it. Activity that depends on giveaways can fade once the giveaways end, so it helps to separate users who pay for services with Toncoin from those who mainly collect rewards. Measures such as recurring payments inside mini apps, fees paid on the network and the number of wallets active over months rather than days show more about lasting use than headline sign-up figures do. Those are the numbers worth watching after any promotion ends.

Risks to know

Dependence on Telegram. TON is officially separate from the company, but much of its usage flows through the app. When Telegram founder Pavel Durov was arrested in France on August 24, 2024, Toncoin fell about 25% to a low near $5.11 within days.

Concentrated activity. Usage has centered on Telegram games and promotions, which can fade quickly.

Network reliability. TON experienced an outage in 2024, adding to doubts during the same period.

Regulation. Messaging-app distribution of crypto wallets attracts regulatory attention in many countries.

For how payments-focused networks differ, read Ethereum vs Solana. For the wider category, see what an altcoin is, and for the token-sale era TON came from, the 2017 ICO boom.

This article is educational content and does not constitute financial, investment, legal or tax advice. Digital assets are volatile and you may lose the amount you invest.

Frequently asked questions

Is TON owned by Telegram?

No. Telegram withdrew from the original project in 2020, and the network is developed by the TON Foundation and independent developers. Telegram integrates TON into its app, which ties the network’s fortunes closely to the company’s choices.

What happened to people who bought into Telegram’s 2018 sale?

After the SEC’s action, Telegram returned funds to investors and did not distribute its own token. Today’s Toncoin comes from the community-run relaunch of the network rather than from that sale.

Sources

• Telegram Troubles: The Ripple Effects on TON (Telegram suspended support May 2020; TON Foundation from 2021; ~25% fall to $5.11 after August 24, 2024 arrest) — 21Shares, August 2024
• Most TON holders in the red after Telegram CEO arrest (Durov brothers; SEC; community relaunch; outage; 950 million users) — Decrypt, September 2024
• TON se desploma tras arresto de Durov (Telegram began rolling out TON wallets the previous September) — Decrypt, September 2024
• What Was the ICO Boom? (Telegram raised about $1.7 billion in 2018; refunded after SEC action) — Banxa