Note: In the early morning of August 25, 2024, Telegram founder Pavel Durov was arrested by the French National Anti-Fraud Office at a French airport. According to French police, Pavel Durov faces multiple criminal charges including "terrorism, drugs, guns, fraud, money laundering, receiving stolen goods, child pornography", and may face up to 20 years in prison.
After Pavel Durov was arrested, many celebrities expressed their support for him, including Musk, American journalist Tucker Carlson, and Pantera Capital general partner Franklin Bi.
Jinse Finance reporter Jessy previously published an article that deeply analyzed the story of Telegram founder Pavel Durov's creation of Telegram and his entry into the crypto world. When Durov was arrested, he republished this article to review his legendary story.
Quote: "I am not fighting for freedom, I am just using my existence to prove that freedom has not disappeared." - "The Durov Code"
Telegram Pavel Durov presents himself as a fighter for freedom in the business world: in the face of big capital, he responded to rumors of Internet giant Mail.ru acquiring VKontakte (VK) with a photo of him showing his middle finger. In response to the Russian government's request to censor comments on VK, he posted photos of "dog heads".
However, the above are all stories about Durov when he founded VK, the largest social networking site in Russia. Durov is more well-known and worthy of praise for creating Telegram. This social software, which has caused headaches for governments around the world, has become a free front for some people who oppose totalitarianism because its content is difficult to crack, and it is also a hotbed for various crimes.
However, this is also naturally in line with the spirit of blockchain fundamentalists: fighting against totalitarianism, advocating liberalism and people being responsible for themselves.
Durov himself is a fan of the crypto world, and Telegram is naturally close to crypto: it is a public chain, equipped with third-party crypto wallets, trading robots, and user name confirmation and transactions on the blockchain, etc.
As a social software with over 800 million users worldwide, Telegram's entry into encryption is undoubtedly a dimensionality reduction blow to existing Web3 applications. But the story of Telegram is far more than encryption. What happened since Durov was forced to give up the Russian social software VK he founded and started Telegram is a unique business legend and a story about how the political ideals of liberalism are realized in the business world with the help of blockchain technology.
Liberals' past business setbacks
To understand why Telegram is getting close to encryption, you first have to understand its founder, Pavel Valeryevich Durov.
Durov doesn't like to be interviewed by the media, but according to some interviews with people around him and his social dynamics, Durov's image is roughly outlined: he wears black all year round, loves fitness, has a toned body and a handsome face. He is unruly and rarely bows his head in the face of power and capital in order to defend his belief in freedom. He is a technical genius who is obsessed with privacy. After founding Telegram, his whereabouts are uncertain... Of course, in the eyes of people around him, angels also have a devil side. When Durov was in college, he founded a website to help students cheat. Some classmates said that he was a very vain young man who rarely had a common language with others, but he cared very much about the opinions of people around him and wanted to make himself look successful.
Born in 1984 in Russia (now a UAE citizen), Durov's wealth was estimated at $11.5 billion in 2023. He ranks tenth among Russian billionaires. So far, Telegram is privately owned by the Durov brothers, and unlike other commercial companies, Telegram refused to raise funds from traditional venture capital firms. Instead, the founders developed it out of their own pockets and later turned to ICO and bond issuance.
But of all Durov’s traits, the one most relevant to encryption and his vision for Telegram is that he is a libertarian.
The impact of this feature was already evident when VK was first created.
As with Telegram, Durov completely indulged all kinds of speech and piracy on the VK platform. However, as VK continued to grow and gained enough influence, conflicts brought about by this "freedom" broke out.
In December 2011, Russian protesters organized an event on VK over suspicions of rigged elections in the Russian State Duma. This became the trigger for the Kremlin to crack down on Durov. However, Durov did not follow orders to delete his account and page, but instead turned his VK page, Twitter and Instagram accounts into a battlefield, using ridiculous pictures of cute pets to express his dissent.
In the story that has been circulating, Durov’s intransigence led to armed forces entering his home the night he posted the photo. And as with all stories of government intrusions into business, Durov slowly lost control of VK, which was then controlled by Mail.ru, a company with close ties to the Kremlin.
Later, Durov's shares became increasingly diluted, and at the end of the story about VK and him, he was removed from his position as CEO by the board of directors.
He is a typical liberal who believes that freedom of speech is above all else. When he was in charge of VK, he was often asked by the Russian government to censor his speech and delete posts, which was completely contrary to Durov's political philosophy. Durov himself is a tough character who is unwilling to give in, so the outbreak of direct conflict in the end became inevitable.
However, during his time at VK, Durov had to compromise. After all, the company was not owned by him alone, and the combined forces of politics and capital were strong enough that VK finally agreed to share user information with the Russian Federal Security Service. Later, Durov threw several paper airplanes made of 5,000 rubles from the window of his St. Petersburg office. He said that this move was to prove that the company's decision was not made for money.
Embracing encryption is both a political ideal and a necessary business choice
The paper airplane later became the icon of Telegram.
In January 2014, Durov sold all his shares in VK, left Russia, and began his "wandering" life. What was sold was not only shares, but also all fixed assets such as houses and cars.
Before going into exile, Durov had already started Telegram with his brother. The widely circulated version is that he started this business because he realized the importance of personal privacy when he was under government surveillance during his time running VK. The company's headquarters is in Dubai, but Telegram has no fixed office location. He and the core team move around the world to work, and he holds all the shares of Telegram himself in order to avoid a similar ending to VK.
Telegram supports freedom of speech, follows end-to-end encryption (users need to manually select private chat mode), and does not censor content on the platform. This brings people freedom of speech, but of course, it also becomes a hotbed for crime because of the lack of censorship: drug trafficking, personal information trading, and even groups like "Korea's Nth Room" can be found on Telegram.
This was Telegram's original background, although it later made some "correct" compromises, such as blocking accounts, robots and channels related to terrorist organizations and child abuse.
But deep down, Durov is still an extremely liberal person and a supporter of blockchain and virtual currency. In 2012, when he was in VK, he publicly suggested that Russia abolish the existing monetary system. And he himself publicly stated that he owns Bitcoin. In 2012, he published a declaration named "Liberalism", in which he specifically explained his ideas on how to improve Russia. In the declaration, Durov advocated reforming the Russian education system; abolishing taxes in the information field; abolishing the visa system, registration and conscription; reducing tariffs; giving regions full autonomy; and opening up jury trials.
It is not surprising that Telegram, with such a background, is involved in encryption. Starting from the public chain, it is Durov's ambition to build an encryption world that blends with Telegram. In 2018, Telegram issued its own digital currency Gram and blockchain platform TON. Recalling that six years ago, Durov advocated the abolition of the ruble, supporting digital currency and decentralization. Six years later, he began to practice his original idea.
The public chain TON aims to provide Telegram users with fast and secure decentralized payments, digital identity and other services. As a Layer 1 public chain, compared with similar Ethereum and Solana, its biggest feature is scalability and sharding, with advantages such as ultra-fast transactions and low fees.
From the characteristics of TON, it is hoped that it can carry the large-scale needs of a large number of users. Another feature of TON is the asynchronous architecture. Although it limits the development of TON in the field of DeFi, it also indirectly confirms that large-scale adoption is the real vision of TON. It is precisely because of these characteristics that TON was described at the beginning as a decentralized application and service platform similar to WeChat, Google Play or App Store, or even a decentralized alternative to Visa and Mastercard payment processing services.
Allowing Telegram users to better enter the crypto world may be the vision of TON. For example, the current payment and wallet applications on Telegram are installed on TON, and a full ecosystem involving NFT, Defi, Dex, games, etc. has been formed on TON.
Durov, who learned the lesson of being cannibalized by capital from VK, did not raise funds for Telegram through traditional fundraising methods. Instead, he turned to the fundraising methods of the crypto industry. TON raised more than $1.7 billion through the ICO of its token Grams. But in 2019, it ushered in strong supervision from the United States. The U.S. SEC sued Telegram, accusing it of conducting an unregistered securities offering. Subsequently, the Telegram team suspended the launch of TON's mainnet, and eventually chose to give up in the fight with the SEC, stopping the development of TON and returning the ICO funds to investors.
In 2020, Telegram announced that it would abandon TON. However, the technology supporting the project is still continuing. In fact, for such an open source project, "TON's independence" has brought new opportunities and vitality to its development. Because of the participation of the community, the TON public chain project has become a more decentralized project, realizing the co-construction of the community.
In 2020-2021, the New TON team restarted the development of TON based on open source materials. The New TON team also changed its name to the TON Foundation, as a non-profit community to support and develop TON.
This is the TON we are familiar with now, the full name is The Open Network. Although TON has so many advantages, it is undeniable that its current situation is mediocre and lacks ecology. According to Defiliama data, the current TVL on TON is $10.65m, ranking 61st.
Telegram uses ICO to raise funds for itself. On the one hand, it is because Durov is naturally close to encryption. On the other hand, it exposes the reality that Telegram is not profitable. Durov is unwilling to compromise with "capital" and may have no other way to go. From some aspects, although Telegram has a hot product that fits the market, it has not yet achieved the fit between the product and the business model. Embracing encryption is also an exploration for Telegram to achieve better commercial profits.
Similar to WeChat, access blockchain third-party programs on Telegram
At this year's Token 2049 conference, Telegram officials said that they would transform Telegram into the entrance to Web3 through TON. Although TON is independent of Telegram, they still cooperate frequently.
Telegram has long been a must-have app for the crypto industry. The founder of Telegram said in his personal channel on July 18 this year that Telegram has more than 2.5 million new users registering every day, and the monthly active users have exceeded 800 million.
In fact, Telegram is not only integrating blockchain third-party applications in an orderly manner. This is similar to the integration of various third-party applets in WeChat, which allows users to directly use third-party services such as "taking a taxi, financial management" without leaving the platform, and Telegram plays the role of a traffic pool. Moreover, Telegram has entered the game, such as launching the Telegram Passport function.
Telegram Passport aims to help users complete services that require personal identification through unified authorization. Telegram officials describe it as "you only need to upload your proof file once, and you can immediately share your data with service providers that require real identity authentication, such as financial and ICO services." These identity information is stored in an end-to-end encrypted manner.
In July this year, TON blockchain launched Telegram's new Wallet Pay function, which will allow merchants to integrate wallet robots within Telegram to receive cryptocurrency payments in the future. Users can pay Bitcoin, USDT, and TON to merchants within the App.
Users can deposit and withdraw funds directly through bank cards, and use @wallet to pay for many services in the Telegram ecosystem, such as purchasing Telegram Premium directly, purchasing a virtual eSIM phone card in @Mobile, and even using TON to trade Telegram usernames.
It is understood that Wallet Pay operates completely independently from Telegram. Wallet robots and applications are based on the Telegram Web Apps open protocol, which allows developers to create their own applications and services on Telegram. However, commissions will be charged for transactions. In fact, the cooperation between Telegram and TON has not been interrupted. Telegram has also integrated TON Space, a self-hosted crypto wallet launched by TON.
Another feature worth mentioning is the "Fragment" feature. On December 7, 2022, Telegram officially announced that users can have a Telegram account without a SIM card and log in using the blockchain-supported anonymous number provided on the Fragment platform. In October of the same year, Telegram was able to auction usernames on the Fragment platform, which means that the power and assets of the social media platform have begun to shift to users.
This is an important milestone. As Durov said, this is the first time in the history of social media that a fair and transparent username market has been established, and people will own their own social media addresses. These addresses are protected in an unchangeable ledger "TON" on a decentralized blockchain network. Purchasing usernames requires Toncoin, and the launch of this application actually enriches the ecosystem on TON.
This is an NFT-like smart contract that confirms the user's username on the blockchain. According to Durov's own information, 50 million US dollars worth of usernames were sold in less than a month after Fragment went online.
And precisely because of Telegram's openness and tolerance to encryption, many innovations around Telegram and encryption to build a bridge between Web2 and Web3 have been launched one after another. For example, trading tool robots like Unibot built into Telegram are undoubtedly a hot track this year. Similar trading robots allow users to issue trading instructions in the form of dialogue with robots in Telegram to complete the trading activities of on-chain tokens on Uniswap, such as token exchange, copy trading, limit orders, privacy transactions, etc.
From supporting virtual currency transactions and payments through wallets to confirming the ownership and trading of user personal data, this is a major innovation for Web2 social products. Compared with the Socialfi product currently trying in this direction, Telegram, which has such a large number of users, is undoubtedly a dimensionality reduction attack.
What Telegram is doing and what various project parties are doing on Telegram are making the connection and communication between the Web2 and Web3 worlds smoother, which is one of the futures of the industry.
