Telegram vs Facebook: The fight over cryptocurrency's future
(Source: fastcompany.com)

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(Original link: fastcompany.com)

By Josh Nadeau 9 minute Read Cryptocurrency, and the blockchain technology that underlies it, has long promised to change the way we use money online. But after decades spent on the periphery, the revolution could finally come into the mainstream once and for all, thanks to tech company Telegram and its Gram token. Now all Telegram has to do is beat Facebook to the punch.
advertisement advertisement Telegram, the messenger app founded by underdog tech icon Pavel Durov, is in court this week over its commitment to revolutionize online transactions. His proposed blockchain platform, the Telegram Open Network (TON), was revealed in 2017 and promised to create a cryptocurrency wallet tied to the Telegram app itself. The tokens, known as Grams, would be an example of “social crypto,” a digital currency tied to a major social media platform and its user base. If successfully launched, Telegram’s 300,000 users will be able to send money to each other instantly, simplifying remittances, payments, and other transactions.
But TON caught the eye of the U.S. Securities and Exchange Commission, which successfully filed for a cease-and-desist order before TON’s launch last October pending a hearing—one that started this past Wednesday, over whether the company needed to have registered with the government body before release. The outcome will decide whether or not Durov will be able to move forward with his revolution at all.
While investors, banks, and crypto enthusiasts are keeping an eye on the proceedings, there’s another interested party involved: Facebook. The Silicon Valley giant has its own stake in social crypto as it’s seeking to launch its own token, Libra, as soon as possible. Given Facebook’s much larger user base, Libra could effectively reduce Durov’s platform to an afterthought if the SEC succeeds in delaying TON’s release.
Telegram Open Network caught the eye of the SEC.
In fact, Facebook’s approach to social crypto is diametrically opposed to Durov’s, with a focus on centralized and private (or “permissioned”) networks backed by assets controlled by the Libra Association, a Geneva-based consortium affiliated with the social network. This is in stark contrast with Telegram’s vision of a decentralized crypto ledger that exists in an ecosystem beholden only to its users, one that corresponds with how cryptocurrency has operated since its inception.
While the potential delays caused by the SEC case may seem, at least on the surface, to impact two major companies looking to beat each other to launch, it’s really about which vision will define the future of how we send and receive money online.
Trolls for freedom TON is merely the latest of Durov’s attempts to use technology to reshape our online horizons—most of which correspond to his controversial, libertarian understanding of freedom.
advertisement Before Telegram, he founded the Russian social network Vkontakte (Russian for “in contact”), or VK, with his mathematician brother Nikolay. Launched in 2006, the site set itself apart from the pack for its file-sharing capacities, turning it into a catalogue of media ranging from harmless memes to extreme pornography. Given how the site was effectively a Facebook clone , it served as a middle finger raised at the American company as well as at the niceties of Western copyright law. Nikolay took care of back-end coding while Pavel embraced the role of an enfant terrible entrepreneur—a troll in chief, if you will.
This was in the mid-2000s, an age before Russia’s president, Vladimir Putin, asserted himself as an authoritarian force pushing laws for a sovereign internet, government surveillance, and penalties for “homosexual propaganda.” Russia was coming out of the 1990s, a decade of violent deregulation that painted the region as a Wild Wild East, where horseback entrepreneurs (often oligarchs) engaged in winner-take-all competitions. While the economic toll on the country was immense, it was conducive to the rise of young, savvy techies like Durov well into the next decade.
Facebook’s approach to social crypto is diametrically opposed to Durov’s.
That all changed with Putin’s heel turn in 2011. Returning to the presidency after having switched places with prime minister Dmitry Medvedev (himself ousted last month), Putin abandoned rapprochement with the West and forged an increasingly authoritarian path. Durov, up until then content with poking fun at Western regulatory excess, found himself asserting his libertarian preferences for freedom once more, but this time against his own government.
For his efforts he was pushed out of VK, in what he claims was a move orchestrated by official bodies and, potentially, the Russian secret services. Since then, he and Nikolay have lived in luxurious exile, dividing time between Berlin and Dubai with the help of passports from St. Kitts and Nevis, a nation that combines authoritarian social tendencies with the opportunity for entrepreneurs to buy citizenship.
While abroad h...