Tron (CRYPTO: TRX) has always been a polarizing crypto, primarily due to its associations with controversial cryptocurrency entrepreneur Justin Sun, who launched Tron back in 2017. But it's getting increasingly difficult to ignore the fact that Tron has gained users and posted new transaction activity at an impressive rate throughout 2022. Could Tron finally be ready to stake its claim as a worthy Ethereum (CRYPTO: ETH) rival?

The most recent news that has investors buzzing is the announcement that Tron is now the official blockchain of the Caribbean island nation of Dominica. As a result of this, Tron will be issuing the first-ever government-backed crypto fan token. And Tron will also officially become legal tender in Dominica. There are also suggestions in the crypto community that Tron might leverage this deal to make similar deals around the Caribbean and in Latin America. If so, that would be huge in terms of Tron gaining worldwide market acceptance. So is this controversial crypto finally a buy?

Tron by the numbers

Analyzing Tron is like peeling back the layers of an onion. If you only look at the surface numbers, everything seems fantastic. Tron now has an impressive 115 million users worldwide, and has processed more than 4 billion transactions since it was founded back in 2017. Total Value Locked (TVL), which is a measure of how much activity is taking place on the blockchain, is an impressive $5.5 billion. That ranks Tron No. 2 among all blockchains, trailing only Ethereum.

In terms of overall market capitalization, Tron now ranks No. 15 in the world. It is now bigger than Avalanche (CRYPTO: AVAX), for example, which was once considered to be one of Ethereum's major rivals. Add in the fact that the price of Tron has been surprisingly resilient in 2022, and it might appear that Tron has finally emerged as a worthy rival to Ethereum, which is down nearly 70% for the year.

Red flags?

But there are definitely some red flags about Tron. For example, there have been persistent concerns about the new Tron algorithmic stablecoin ever since it launched in May. At the time, the new stablecoin was being favorably compared to the algorithmic stablecoin for the Terra (CRYPTO: LUNA) ecosystem. A stablecoin is supposed to avoid crypto market volatility, usually via a peg to a currency like the U.S. dollar. But Terra proved to be anything but stable and it collapsed, wiping out investors. In June, the Tron algorithmic stablecoin briefly lost its peg to the U.S. dollar, causing alarm bells to go off in the heads of crypto investors everywhere. What if Tron was the new Terra? 

And then there are all the opaque, behind-the-scenes dealings involving Justin Sun, who continues to be a major influence on Tron. You don't have to dig very deep to find some very salacious (and potentially defamatory) allegations about Justin Sun that involve the FBI, IRS, and Securities and Exchange Commission. Even if you ignore these claims, there are very real concerns that Tron might be a "security" and not a "cryptocurrency." As a result, Tron is not available for trading on every major cryptocurrency exchange. 

Sun left Tron at the end of 2021 to become Grenada's ambassador to the World Trade Organization (WTO). This, apparently, is what has led to Tron's sudden prominence in the Caribbean region in 2022. Sun is continuing to give interviews about Tron and promote it on social media, even while fulfilling his diplomatic duties. 

Is Tron a buy?

That's why I'm discounting the value of the news surrounding Tron's expansion into the Caribbean and Latin America. I love the idea of creating "fan tokens" for tourism destinations, and it's exciting that sovereign states around the world are experimenting with cryptocurrencies as legal tender. But somehow, deep down, something just doesn't add up when it comes to Tron. Maybe it has to do with the fact that Tron seems to be facing an enormous amount of legal and regulatory uncertainty in both the U.S. and China, where it conducted its initial coin offering (ICO).

For now, I cannot recommend Tron as a buy. While the recent price of  $0.06 may seem enticing, I think that there are several other Layer 1 blockchain projects that are much better set up to become "Ethereum-killers" in the future. Investing in cryptocurrencies always involves risk and volatility, and investing in Tron -- even at a bargain-basement price -- seems to come with an extra measure of both. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What was once just a market of one is now flooded with other options for cryptocurrency investors. The arrival of meme coins that seem to create millionaires overnight makes it easy to believe that cryptocurrency investments are meant only for the short term. But despite a crowded field, there is one cryptocurrency investors should count on never selling -- Ethereum (CRYPTO: ETH). 

Like Bitcoin (CRYPTO: BTC), Ethereum is a cryptocurrency that changed our thinking about finance in the digital age, but for different reasons. Ethereum is unique from Bitcoin in myriad ways. But one, in particular, is responsible for what is possibly the greatest innovation to result from blockchain and cryptocurrency technologies -- decentralized finance, better known as DeFi.

The new age of finance

The traditional financial world relies on centralized authorities like banks, notaries, brokers, exchanges, and other middlemen who manage and process financial services. Traditional financial processes, such as applying for a loan or purchasing a stock, require some sort of intermediary to conduct the transaction. 

But because of Ethereum and its innovative smart-contract technology, these traditional financial processes are becoming increasingly obsolete. Smart contracts are the backbone of DeFi and are what make Ethereum so unique. Before its creation in 2014, no other cryptocurrency had smart-contract capabilities. The creation of smart contracts allows blockchain developers to customize conditions and criteria for executing particular actions. 

For example, smart contracts could oversee loan agreements and release collateral upon full repayment. Since smart contracts can integrate with other data, they could also regulate agricultural drought insurance policies by automatically paying out if agreed amounts of rainfall occur. 

In addition to their seemingly infinite customization and potential, smart contracts and DeFi could completely upend what we believe traditional institutions' roles are in the financial world. 

One of the most appealing aspects of DeFi is its inclusivity. If you want to utilize a DeFi financial product, all you need is an internet connection. There are no credit bureaus, no brokers, and no loan officers. As long as a crypto wallet is set up, users can trade and move assets anytime and anywhere. 

In addition, all transactions are in real-time and completely transparent. There is no need for banks or brokers to process transactions since they occur near instantaneously on the blockchain. The other perk of the blockchain is that once a transaction is added, anyone with an internet connection can view activity on the network. It doesn't hurt that just about any possibility of tampering or malfeasance is eliminated due to the blockchain's high level of security.

Arguably, the greatest benefit of DeFi is that it is constantly evolving. Applications and projects built on Ethereum are all open-source. That means developers can integrate multiple DeFi apps to create financial products to meet new user demands as they arise. 

The first-mover advantage

Since Ethereum was the first blockchain to possess smart-contract functionality, it holds most of the market share that makes up the DeFi sector. Despite new competitors like Tron (CRYPTO: TRX), Binance Coin (CRYPTO: BNB), and Avalanche (CRYPTO: AVAX) arriving to grab some of the market, they face an uphill battle because Ethereum's grasp on the DeFi economy is unbelievably disproportionate.

We can look at a statistic called Total Value Locked (TVL) to compare the collective value of a blockchain's DeFi ecosystem. Think of it like the market cap of a company. 

Out of the $62.5 billion invested across DeFi as of this writing, nearly $36 billion is on Ethereum's blockchain. The next-closest competitor is Tron, and this blockchain only supports about $9 billion of value. It's not even close. 

The potential long-term value DeFi presents should be heavily weighed by investors, especially considering it's only in its infancy. Those who are optimistic that DeFi can usurp traditional finance should count on Ethereum continuing to dominate for the foreseeable future. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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