Encrypted messaging startup Telegram plans to launch its own blockchain platform and native cryptocurrency, powering payments on its chat app and beyond. According to multiple sources which have spoken to TechCrunch, the “Telegram Open Network”( TON) will be a new,’ third generation’ blockchain with superior abilities, after Bitcoin and, subsequently, Ethereum paved the way.
The launch will be funded with an enormous Initial Coin Offering, with forthcoming private pre-sales ranging into the hundreds of millions, potentially constructing it one of the largest ICOs to date. Demand is driven by the fact that rather than the ICO coming from a fresh startup, Telegram is a well-established messaging platform employed around the world.
Adopting a homegrown cryptocurrency could devote Telegram’s payment system enormous independence from both governments or bank — something Co-founder and CEO Pavel Durov is known to covet after investors took over his last company, Russian social network VK. Durov has not responded to TechCrunch’s several attempts to contact him regarding this story.
The potential for a cryptocurrency inside a widely adopted messaging app is enormous.
With cryptocurrency powered pays inside Telegram, users could bypass remittance fees when sending monies across international borders, move sums of money privately thanks to the app’s encryption, deliver micropayments that would incur too high of charge card fees, and more. Telegram is already the de facto communication channel for the global cryptocurrency community, making a natural home to its own coin and Blockchain.
Selling a TON of cryptocurrency
Telegram is understood to be considering creating as much as $500 million in the pre-ICO sale at a potential total token value in the range of$ 3 billion to$ 5 billion. However, those figures could change before the ICO, which could come as soon as March. Those figures would make it possibly the biggest private crypto raise to date after Tezos, which raised over $230 million in July.
A pre-sale in an ICO is a minimum cap on investments( sometimes with discounts) to attract big investors (‘ whales’) before a wider token sale to retail investors. The populace, retail stage of an ICO tends to raise less because there is a long tail of people investing small sums. But front-loading the ICO with institutional investment inspires confidence for retail investors.
Those pre-sale investors may be required to place a minimum buy-in of $20 million if they’re outside of Durov’s inner circle. Sources say that the ICO will require real fiat currency like US dollars for buy-in , not Bitcoin or Ether as others ICOs have to date.
Top-tier institutional investment firms have expressed interest, but Durov is said to be wary of accepting their cash. One firm rumored to have pushed for a pre-sale apportioning is Mail.Ru Group( formerly DST ), founded by Russian emigre Yuri Milner. A spokesman for DST did not reply to our investigation about this story. Interestingly, Mail.Ru Group is the fund that objective up buying Durov’s last company VK.
Understanding Telegram Open Network
Durov’s idea is to launching an entirely new blockchain, utilizing the Telegram’s 180 million users as rocket fuel to power forward into mainstream adoption off cryptocurrency and attaining Telegram, effectively, a kingmaker of other cryptocurrencies, because of its existing scale.
According to Telegram’s white paper that TechCrunch has review portions of, its cryptocurrency will be called “Gram” and could potentially gain immediate mainstream adoption by being tied to Telegram’s chat app.
Sources say Durov has decided to combine both a centralized and decentralized infrastructure, since a entirely decentralized network doesn’t scale as fast as one which has some elements of centralization, hence why Telegram needs to own its own blockchain.
Moving to a decentralized blockchain platform could kill two birds with one stone for Telegram. As well as creating a full-blown cryptocurrency economy inside the app, it would also insulate it against the two attacks and accusations of nation-states such as Iran, where it now accounts for 40% of Iran’s internet traffic but was temporarily blocked amongst nationwide protests against the government.
Telegram has played a delicate political balancing act to try and retain its users in the country, shutting down some channels for calling for the downfall of the governmental forces, while keeping others open.
WeChat But With Crypto
With TON, Telegram aims to develop cryptocurrency-based utility akin to WeChat, which has blossomed into much more than a chat app and acts as default pay mechanism for many in China.
While payments can be made very quickly in WeChat for a variety of services, the system remains very centralized. A decentralized platform such as TON could offer more security and resilience.
Sources say that Telegram plans to allow users to hold both Telegram’s currency and fiat currency in a forthcoming wallet.
There’s also the existing developer ecosystem Telegram has built up around it, where bots and services are offered by third-party developers. Again, here TON could, in theory, underly everything a developer brings to Telegram.
In a 132 page white paper, Telegram has outlined a four-stage scheme 😛 TAGEND
“TON Services” will be a platform for third-party services of any kind that enables smartphone like friendly interfaces for decentralized apps and smart contracts.
“TON DNS” is a service for designating human-readable names to accounts, smart contracts services and network nodes. With TON DNS, accessing decentralized services could be like “viewing a website on the World Wide Web.”
“TON Payments” is a platform for micropayments and a micropayment channel network. It aims to be used for “instant off-chain value transfers between users bots and other services”. Safeguards built into the system are designed to ensure that these transfers “are as secure as on-chain transactions”.
The “TON Blockchain” will consist of a master chain and 2-to-the-power-of-92 accompany blockchains. Its most notable aspect is that it will have an “Infinite Sharding Paradigm” to attain scalability. Thus, TON blockchains aim to be able to “automatically split and merge to accommodate changes in load”. This would entail new blocks are made quickly and “the absence of long queues helps keep transaction costs low, even if some of the services employing the platform become massively popular”.
It will also consist of “Instant Hypercube Routing” designed so the blockchain can maintain top speed even as it grows. Its proof of stake approach will reach consensus through a variant of the’ Byzantine Fault Tolerant’ protocol, again increasing speed and efficiency. And it will also use 2-D Distributed Ledgers. This entails the TON can grow new valid blocks on top of any blocks that were proven to be incorrect to avoid any unnecessary forks. In other terms, TON aims to be’ self-healing’.
TON’s third generation blockchain will be based on a dynamic’ proof of stake’ secured by multiple parties with a high degree of faulting tolerance. It will also manage storage of ID, pays and smart contracts. So, instead of relying on proof of work to create its currency, Telegram will rely on a new, less energy-hogging route of mining cryptocurrency than the original Bitcoin method.
The claim is that it will be capable of a vastly superior number of transactions, around 1 million per second. In other words, similar to the ambitions of the Polkadot project out of Berlin — but with an installed base of 180 million people. This stimulates it an’ interchain’ with so-called’ dynamic sharding’.
The white paper also makes clear that four percent of the supply of Grams( 200 million Grams) will be set aside for Telegram’s development team with a four-year vesting period. Telegram also plans to retain “at least 52 percent” of the entire render of the Grams cryptocurrency to protect it from speculative trading and maintain flexibility. The remaining 44 percentage will be sold in both the public and private sale.
The currency will be listed on external exchanges and used inside the Telegram app.
Timing-wise, the first quarter of this year will see the launch of the Telegram External Secure ID, followed by an MVP of TON. The launch of the Telegram Wallet is slated for Q4 2018, and the creation of the TON-based economy could launch in Q1 2019. The remainder of the TON Services would follow in Q2 2019.
Some in the crypto community remain skeptical of TON. “I just think this is the CEO’s way of monetizing Telegram, basically, ” says Jackson Palmer, the founder of early cryptocurrency Dogecoin.
The Brothers Durov
Durov and his brother Nikolai Durov, a mathematical genius, were behind the process of developing VK, “Russia’s Facebook”, worth an estimated$ 3 billion, but were effectively forced to sell their stake in the company by oligarch stockholders deeply connected to the Putin-led government. Although Pavel managed to negotiate an exit with a large payoff, he’s known to have harbored a resentment against outside investors ever since.
Pavel reportedly left Russia with $300 million and 2,000 Bitcoins and, after buying a citizenship in St. Kitts and Nevis, divides his time between London, Dubai and, where possible, Russia. Telegram’s move into crypto could give him another shot at a massive luck, while potentially turning the chat app into a vast pay network protected from government interference.
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