In 2014, the uncertainties of Russia’s business environment took away Pavel Durov’s then greatest creation. Investors close to the Putin government had gradually bought and bullied him out of his company, VKontakte, dubbed the Russian Facebook. This month, the convinced libertarian Durov is launching his biggest strike back: Telegram, the messaging app he built after VKontakte, is going public, on the blockchain.
Telegram’s move could signify the first major mainstream adoption of blockchain services, or it could be a big warning sign for overambitious technology integration and put a halt to dreams of rapid, widespread implementation. In any case, it is a milestone for the blockchain community.
The company has presented grand ambitions, and these are commanding a phenomenal hype. While Telegram’s ideas have outstanding potential, execution is another question. We will discuss what you need to know, and what are likely ways forward for Durov and his team.
Big Name, Big Money
Telegram is already the biggest ICO yet. According to a filing with the U.S. Securities Exchange Commission (SEC), Telegram raised US$850 million in the first round of the pre-sale. Rumors have it that it will raise another $850 million in a second pre-sale before the public sale even starts. Many crypto outsiders, including Silicon Valley giants Sequoia and Benchmark Capital, are jumping onboard lured by the tech company’s big name.
Bloomberg expects that Telegram may raise up to $1.15 billion in its public ICO later this March. The sales currently give investors a Simple Agreement for Future Tokens (SAFT), a contract that secures token rights once they are listed. According to the white paper, this may not happen until late 2018 or early 2019.
Technology of the Future
The white paper presents a wide array of services that Durov’s team plans to build over the next year. The central concepts are TON, the Telegram Open Network, which will be the blockchain-based infrastructure for all services inside the Telegram ecosystem, and Gram, the token for online payments within TON. Telegram users will have their own Gram wallets inside the app.
The TON Blockchain supposed to underlie the system is designed to be a highly advanced multi-chain system with an ‘Infinite Sharding Paradigm’. Sharding is a system of interconnected chains that allows many more transactions at the same time than having only one working chain at a time. Ethereum also plans to use this technology to scale.
Dr. Nikolai Durov, the CEO’s brother and a mathematical genius who drafted the white paper, promises that this should allow 2 to-the-power-of 92 parallel chains to split and merge dynamically (that’s a number with 27 zeroes behind for which we do not have a name). Authorization of payments will be based on a dynamic proof of stake consensus system. Along with further concepts (Instant Hypercube Routing, 2D distributed ledgers, explanations here and in the white paper), the team promises to be able to process one million transactions per second, at a five-second transaction speed!
Bitcoin currently can only process seven per second, Ethereum about double, 15. TON would be in another universe regarding speed and scale of payments and other services.
A range of services for public adoption
On top of the powerful blockchain, Telegram aims to offer a range of applications. First, off-chain data storage and payments between users, bots, and services that will be secured through connections to the TON blockchain. Second, TON DNS, which will give human-readable names to people’s accounts, smart contracts, and addresses inside the ecosystem and make for a smoother user interface. Third, the ability for decentralized applications to run on top of the basic Telegram services and vastly expand the TON ecosystem and its use cases.
All this sounds very promising, and the Durovs have previously shown their ability to execute and succeed, like after leaving VKontakte to build Telegram. However, many in the crypto community remain skeptical.
Vinni Lingham, from crypto investor Multichain Capital, criticizes the large amount of cash and the tight deadlines, and questions whether the team will be able to deliver on its big promises. Although the hype is large and some pre-sale investors are already selling their token contracts for double the sale price, success is uncertain.
The technological side of TON aims to pull off a lot of complicated advances at the same time, and it may lack focus. However, if it can make the technology work, widespread adoption could bring the online world back to its early promise: decentralizing services and power. Once the protocol runs smoothly, many different applications beyond the now conceptualized payments and storage services could be built.
This project is the biggest blockchain adventure yet. It may be an indicator of the future, in that a major tech company tries out crypto and paves the way for how these will go in future: successful decentralization and wide adoption, or gruesome struggles that influence the establishment to stay with more centralized systems for the time being.
Meanwhile, keep an eye out for the successful ICOs Zerion is launching to make sure you are part of the most promising projects powering the blockchain revolution.
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