Telegram messaging app transforms into blockchain innovator

Telegram was launched as a simple messaging app in 2013. Today, it has become a major player in the cryptocurrency space by integrating the TON blockchain.

When brothers Nikolai and Pavel Durov founded Telegram, the startup quickly gained popularity due to its emphasis on privacy and speed.

In the following years, Telegram underwent a transformation: it transformed from a communication tool into a major platform for crypto users and applications.

In this article, we will cover Telegram’s journey from its first foray into blockchain technology with TON Blockchain, to its legal battles with the U.S. Securities and Exchange Commission, to its current influential role in the crypto community.

Telegram’s origins and transition to crypto

As mentioned earlier, Telegram started as a messaging app — praised for its strong security features and user-friendly interface. It used encrypted chats and large group chats.

A major turning point was Telegram’s introduction of bots in 2015. This allowed the app’s users to automate tasks, manage groups, and even facilitate complex interactions.

As the platform grew, Telegram further enhanced its communication capabilities by introducing voice calls in 2017 and video calls in 2020.

Its evolution continued with the launch of channels, which provided a new way for users to broadcast messages to large audiences. This tool was further enhanced with stories for channels, a feature that allowed users to share ephemeral content with unique dual-camera functionality and granular privacy settings.

In addition, a transparent and fair raffle system was introduced within the channels, allowing users to win real-world prizes.

But the Durov brothers had a bigger vision for Telegram beyond messaging. They aimed to create a decentralized platform that could change the way people handle digital transactions and communications.

This vision led to the creation of the Telegram Open Network blockchain. The goal was to create a high-performance blockchain that could process millions of transactions per second and seamlessly integrate with Telegram’s messaging platform.

The project is expected to offer new features such as decentralized applications, smart contracts, and the local cryptocurrency Gram.

Development of the TON blockchain

TON Blockchain began in earnest in 2018 when Pavel Durov published a whitepaper outlining the technological advancements and its potential.

Initially designed to integrate cryptocurrency and blockchain features into the Telegram ecosystem, TON’s creators designed it with scalability in mind. It was intended to process millions of transactions per second, a feat it aimed to achieve through a unique multi-blockchain architecture and sharding mechanism.

The mechanism divides the blockchain into a main chain that governs the overall network and multiple business chains, each of which can operate independently.

To realize this dream, Telegram sought to raise funds through an initial coin offering. The company had previously raised around $1.7 billion from 175 investors in a private sale of its native Gram token.

However, the success was short-lived. Shortly after the pre-sale, the U.S. Securities and Exchange Commission set its regulatory eyes on the platform.

Legal battle with SEC

In October 2019, the SEC filed a complaint against Telegram, alleging that the company conducted an unregistered securities offering by selling Gram tokens. The Commission argued that these tokens were securities and should be registered under U.S. securities laws.

The legal battle culminated in a groundbreaking decision in March 2020, when a US federal court ruled in favor of the SEC and halted the distribution of Gram tokens.

As a result, Telegram delayed the project and eventually abandoned it in May 2020. It also agreed to return the money raised in the pre-ICO event to investors and pay a penalty of $18.5 million.

Telegram felt the impact of the decision, which came as a shock to the cryptocurrency industry at large, highlighting the regulatory challenges facing blockchain projects.

When Telegram stepped back, a group of independent developers filled the void and continued to build TON, now renamed The Open Network. This ensured the project’s survival.

Its development is now supported and guided by the TON Foundation, a non-profit organization based in Zug, Switzerland. Steve Yun serves as the TON Foundation’s president, while Andrew Rogozov, former CEO of Russian social media site VK, is one of the founding members.

Throughout 2021 and 2022, the TON community focused on improving the network’s architecture, implementing dynamic sharding, and improving the proof-of-stake consensus mechanism.

Continued support and integration of Telegram

While no longer the architect of TON’s development, Telegram has continued to support the platform. For example, in September 2023, the messaging app, which had over 800 million users at the time, integrated the TON Space self-custody wallet.

Following this integration, the ad revenue sharing system was introduced in March, with payments made exclusively in Toncoin (TON), the successor to Gram, allowing for greater interaction with the TON ecosystem.

In September 2023, Telegram officially endorsed TON by declaring the blockchain and its associated token as the “official web3 infrastructure” of the app. This move sparked investor interest and led to significant gains for the TON token.

As a result, the total value locked in TON surpassed $300 million on May 27, 2024, marking a significant milestone supported by the TON Foundation’s community rewards program.

Telegram’s current role in crypto

Despite expressing disappointment at not being able to build the TON network on its own, Telegram has continued to play a significant role in the crypto space. The messaging app has become a central hub for the crypto community, providing a platform for discussion, collaboration, and knowledge sharing.

Telegram groups and channels are widely used for announcements, trading signals, and community building within the crypto ecosystem.

Additionally, the platform’s influence in the crypto space has been further solidified with the recent introduction of new features aimed at crypto users, such as an in-app digital marketplace and integration with popular wallets like Trust Wallet.

Telegram’s partnership with Trust Wallet will allow the crypto wallet to leverage the messaging app’s large user base and focus on gaming financing and dapps. It will also reportedly allow Trust Wallet’s 100 million users to send and receive TON tokens.

Additionally, TON announced that it will soon support Tether (USDT) tokens on its blockchain, allowing Telegram users to send the stablecoin within the app.

News of this development pushed TON’s value to $7.63 on April 11, up from around $2.21 a year ago, according to CoinGecko data.

At the time of writing, one TON token was going for $5.46, giving the cryptocurrency a total value of $13.7 billion and making it the tenth largest digital asset by market cap, just behind Dogecoin (DOGE).

The rise of mini apps and the tap-to-play ecosystem

On July 31, Telegram announced the release of a new in-app browser that expands its blockchain capabilities and user experience. The announcement follows CEO Pavel Durov’s introduction of a mini app store earlier in the month.

The latest Telegram update added a Mini App Store in search, where users can find a list of popular mini apps. Featured mini apps display their monthly active user count, and developers can now add screenshots and video demos to their bot’s profile. pic.twitter.com/Jxr0CdUeMM

— Telegram Messenger (@telegram) August 3, 2024

This new browser will allow Telegram’s large user base to access TON sites, a platform for decentralized websites. The Telegram co-founder emphasized that the browser offers similar features to traditional web browsers and integrates web browsing with messaging.

You can also access the Telegram mini app store through the app’s search feature. According to the announcement, 500 million of Telegram’s 950 million users engage with mini apps on a monthly basis, and they can now find all their mini apps in one consolidated location.

The ecosystem is also introducing a new in-app currency, “Stars,” which launched on June 7. Users can send Stars to friends and use them for transactions within mini-apps, which can then be exchanged for Toncoin.

Telegram’s mini-apps have been quite successful. Popular apps like Notcoin (NOT) and Hamster Kombat attract millions of users worldwide. In Notcoin, users earn tokens by completing social challenges. The game has amassed over 35 million users in five months and has a market cap of $1.15 billion at the time of writing.

Cryptocurrency exchange management simulation game Hamster Kombat isn’t bad either. It’s become one of the fastest-growing web3 apps, reportedly reaching over 300 million users since its launch in March 2024.

The project plans to launch a major airdrop for its native token HMSTR on the TON network, describing the move as “the largest airdrop in crypto history.”

According to Crypto.news, Hamster Kombat plans to distribute at least 60% of its HMSTR supply to gamers via Telegram.

Another notable mini-app launched alongside Hamster Kombat, Catizen, has attracted over 27 million active users. This success led to HashKey Capital, a Hong Kong-based crypto venture firm, investing in the app’s publisher, Pluto Studio.

Despite the excitement, however, some delays have caused frustration among users. The highly anticipated token airdrops for HMSTR and Catizen’s CATI tokens were expected to launch on the TON blockchain in July, but both have been postponed.

Catizen cited scheduling challenges such as securing exchanges, ensuring liquidity, and compliance issues as reasons for the delay. Similarly, Hamster Kombat explained that the complexity of the technical task delayed the token release.

Look ahead

Telegram’s entry into the crypto and digital assets market is a testament to its vision of becoming a comprehensive digital ecosystem. With its monetization approach and the success of its mini-apps, the messaging platform is positioning itself to continue its growth in the crypto space.

It also appears that Telegram is planning an initial public offering. In his first interview since 2017, Pavel Durov revealed his plans for the messaging app’s financial future, including a possible IPO.

Durov also told the Financial Times on March 11 that Telegram aims to become profitable by 2025, or even earlier.

Telegram has raised $2 billion through bond issuances since 2021, and bondholders will reportedly receive a 10-20% discount on the IPO if it occurs before March 2026.

Telegram’s journey from a messaging app to a major player in the crypto space is a testament to its ability to adapt and innovate. Despite facing regulatory challenges and setbacks, it has remained a vital platform for the crypto community.