Telegram is the eighth most popular global mobile messaging application, with more than 200 million active users. Telegram’s main functional competitive advantage is its focus on privacy, as all messages are encrypted end-to-end, ensuring that user chats are not vulnerable to privacy violations. Given Telegram’s status and position, its announcement that it was conducting an initial coin offering (ICO) in 2018 shocked the world, since it is rare for an established company to venture into the cryptocurrency market, let alone issue a native cryptocurrency. It was therefore no surprise that Telegram’s ICO was the most anticipated token sale ever seen by the community. It actually became the largest ICO ever conducted, amassing over $1.7 billion from private investors over a two-phase span (February and March 2018). Interestingly, Telegram’s ICO was not open to retail investors; rather it opted for a private crowdsale to accredited and private investors.
Unlike many cryptocurrency projects, which embarked on an ICO to raise funds in order to execute their mission, at the time of its ICO, Telegram was already an established company with more than 200 million users, meaning that their technological infrastructure was already developed, as were their products and services, and they had a strong user base within their ecosystem. The only element missing was the creation of a payment infrastructure to galvanize their entire ecosystem. To develop this, Telegram embarked on ‘VKontakte’, a Russian-based online social media and networking project, but repeatedly encountered barriers in the form of local regulatory pressure. Telegram constantly clashed with Russian authorities over censorship and control rights, with predictable results. Pavel Durov, founder of Telegram, devised the idea to execute their plans independent of any regulators, resulting in Telegram Open Network (TON), an instant messaging platform fuelled by blockchain technology, that enabled full anonymity and secure communications between users. To fully execute this vision, a native coin was required. As they embarked upon this journey, Telegram were diligent in lodging all the necessary filings with the Securities and Exchange Commission (SEC) in the USA, so that it could begin its private fundraising round in February 2018.
What is Gram?
Gram is the native cryptocurrency of Telegram, used on the TON blockchain network. TON aims to decentralize numerous vectors of digital communication, including browsing, file-sharing, and transactions. Gram aims to be synonymous with virtual payments that are as fast as Visa, Mastercard and its other traditional, centralized counterparts.
One of the known limitations of blockchain technology is scalability, and the difficulty often faced processing huge amounts of transactions. Telegram’s blockchain solution aims to provide high transaction processing, with speeds of up to a million transactions per second, far beyond the capabilities of most current blockchains. Rather than the traditional mining process of normal blockchains, Telegram uses validators to provide consensus on the validity of transactions, who in turn receive a reward for their services. To facilitate greater payments speed using Gram, there is also a micropayment speed mode functionality, where smaller payments are conducted off-chain in private channels. Gram coins are the official and only currency to be used in Telegram’s ecosystem.
Telegram’s blockchain is centered around three core objectives:
1. Speed and Scalability – Gram will be widely used as the currency for TON, and must therefore be able to support a tremendous amount of transactions.
2. Simplicity – To foster mass adoption, the user interface and processes must be simple and intuitive. Users must be able to easily buy, store and trade Gram.
3. Active User Base – The most important element of a successful platform is an active and engaged user base that will utilize the services on the platform and facilitate the growth of the ecosystem.
The result of these objectives are Telegram’s native cryptocurrency, Gram, and TON, its specialized blockchain platform.
TON is an extremely fast and scalable multi-blockchain architecture, with user-friendly interfaces for its suite of offerings. These include digital wallets, exchanges and a robust identification service for user onboarding. More significantly, Telegram will leverage its large database of existing users, communities, developers, merchants, publishers and payment providers to drive the adoption and traction of Gram, to establish a ready infrastructure for its native coin.
Components of TON Blockchain
Under the hood of Telegram’s blockchain lie numerous cutting-edge components that warrant a deep dive. TON’s speedy and scalable blockchain consists of a master chain and a flexible architecture that entails up to 2^92 accompanying blockchains.
Sharding is a solution that addresses blockchain scalability, by cutting a blockchain into mutually exclusive parts, enabling it to process a far larger total number of transactions. TON has inherent sharding support that enables partitioning (splitting and merging of the blockchain) to accommodate changes in transaction loads within the system. As a result, the blocks in the chain are always created quickly, ensuring that there are no waiting times for the transaction validation process, thereby helping reduce waiting times for transaction confirmations, and keeping transaction costs to a minimum.
TON employs Hypercube, a smart routing technology that enables the swift execution of transactions between numerous blockchains (regardless of system size). Hypercube ensures that the time required to communicate information across the different blockchains in TON grows logarithmically with their cumulative number, resulting in scaling capacity that supports millions of independent chains, which communicate at the highest speeds.
TON utilizes a proof-of-stake (POS) consensus algorithm for their blockchain. In a POS system, validators, or ‘miners’ who are responsible for validating transactions and securing the network, will need to stake a portion of their coins to guarantee their dependability and ensure that they work towards the collective goals of the system. Instead of wasting a tremendous amount of electricity, such as with Bitcoin’s proof-of-work (POW), validator computing powers in the TON network are used to handle transactions in the system in a secure and efficient manner.
Two-Dimensional Distributed Ledgers
A unique feature of TON’s blockchain is its ability to ‘self-heal’, meaning that new and valid blocks can be generated on blocks previously proven to be invalid or incorrect. This avoids unnecessary forks that might occur in certain block-generating situations. This mechanism saves tremendous costs for the collective ecosystem and ensures that valid transactions are not discarded due to unrelated errors.
Several features of the TON platform serve as integral components of Telegram’s ecosystem.
Similar to the Interfile Planetary System (IFPS), TON storage will be a distributed storage system that is accessible via TON’s peer-to-peer network. This enables data to be stored in a decentralized manner with greater security and control, torrent-like technology, and smart-contract functionality to ensure availability. TON’s storage enables simple data storage, as well as paving the way for more complex dApps (decentralized applications) with greater storage requirements.
In pursuit of their core objective of privacy and confidentiality, this layer of anonymity is used to conceal the IP addresses and identity of TON nodes across the system. More importantly, this proxy layer serves as the foundation for the development of decentralized VPN services and blockchain-based TOR services that enable anonymity and safeguard online confidentiality, as well as protecting any decentralized service from censorship in the future.
TON’s Domain Name System (DNS) facilitates the categorization of human-readable names to accounts, services, smart contracts and network nodes. This enables the creation of a decentralized internet, in which accessing decentralized services can be as user-friendly and robust as the current internet architecture.
To facilitate greater depths of scalability and speed, micropayment channel networks will be used for microtransactions. These micropayments will be settled off-chain, and will feature numerous security mechanisms to mitigate risk vectors.
TON is focused on building its core blockchain, yet it is also concentrating on creating a robust and dynamic ecosystem for the decentralized world.
There is huge fanfare and hype surrounding Gram and TON, particularly since the greater retail masses do not have access to Telegram’s native coins. With an established user base in the hundreds of millions, and significant capital reserve derived from one of the most successful ICOs in the industry, it is only a matter of time before Telegram delivers on its promise.