The ‘exiled’ Telegram co-founder and his crypto ambitions

The 'Exiled' Co-Founder of Telegram A Visionary Pursuing Crypto Goals

LianGuai Reporter Jessy

Introduction: “I’m not fighting for freedom, I’m just using my existence to prove that freedom has not disappeared.” – “Duroff’s Code”

Telegram Pavel Valerievich Durov, as presented to the outside world, is a warrior in the business world chasing after freedom: faced with big capital, he responded with a photo of a raised middle finger to the rumors of internet giant Mail.ru acquiring VKontakte (VK). And when the Russian government demanded censorship of speech on VK, he responded with photos of “dog heads”.

But all of the above is the story of Durov when he founded VK, the largest social networking site in Russia. Durov is more widely known and worthy of praise for creating Telegram. This social messaging app, which is difficult to decrypt its content, has become a haven for some anti-authoritarian activists and a breeding ground for various crimes.

• Vitalik Bulldozer vs Veto and the Political Coordinates They Define
• FTX’s Titanic Collapse: When Funds Hit the Iceberg
• BC Technology Group Considers Selling OSL: The Crypto Exchange that Moos Money

But this also naturally aligns with the spirit of blockchain purists: fighting against authoritarianism, promoting liberalism, and holding oneself accountable.

Durov himself is a supporter of the crypto world, and Telegram is naturally close to encryption: creating a public chain, integrating third-party crypto wallets, trading bots, and establishing ownership and transactions of usernames on the blockchain, and more.

As a social messaging app with over 800 million users worldwide, Telegram entering the world of encryption undoubtedly poses a significant threat to existing Web3 applications. However, Telegram’s story is not just about encryption. It is a unique business legend that unfolded after Durov was forced to abandon VK, the social networking site he founded, and embarked on the journey of entrepreneurship with Telegram. It is also a story of how the ideal of liberalism in politics is realized through blockchain technology in the business world.

Former Business Setbacks of Liberalists

To understand why Telegram is close to encryption, we must first understand the founder, Pavel Valerievich Durov.

Durov does not like to give interviews to the media, but based on interviews with people around him and his own social activities, we can roughly outline Durov’s image: he always wears black, loves fitness, and has a fit body and handsome face. He is rebellious and rarely bows down to power and capital in order to defend his belief in freedom. He is a technical genius, obsessed with privacy, and after founding Telegram, he has been unpredictable… Of course, in the eyes of people around him, angels also have a devilish side. During his time at university, Durov created a website that helped students cheat. Some classmates say he is a young man with a strong vanity and rarely finds common ground with others, but he cares a lot about people’s opinions and wants to appear successful.

This Russian, born in 1984 (now a citizen of the United Arab Emirates), has a fortune valued at $11.5 billion in 2023. He ranks tenth among Russian billionaires. To this day, Telegram is privately owned by the Durov brothers, and unlike other businesses, Telegram has refused to raise funds from traditional venture capital companies. Instead, the founders funded its development themselves, and later turned to ICOs and bond issuances.

However, among Durov’s various characteristics, the strongest association is with cryptography and his vision for Telegram, which is his libertarian ideology.

This characteristic was evident from the beginning when he founded VK.

Just like with Telegram, Durov allowed all kinds of speech and piracy on the VK platform. However, as VK continued to grow and acquired significant influence, the conflicts caused by this “freedom” began to erupt.

In December 2011, in response to doubts about the manipulation of the Russian State Duma elections, protesters in Russia organized an event on VK. This incident became the catalyst for the Kremlin’s suppression of Durov. However, instead of complying with the orders to delete accounts and pages, Durov turned his VK page, Twitter, and Instagram accounts into a battleground, using hilarious pictures of cute pets to express his dissent.

In the story that circulated externally, Durov’s uncompromising attitude directly led to armed forces entering his home the same night he posted that photo. Subsequently, like any other story of government intrusion into business, Durov slowly lost control of VK, which is now controlled by Mail.ru, a company close to the Kremlin.

Later, Durov’s shares were further diluted, and the end of the VK and his story was him being removed from the CEO position by the board of directors.

He is a typical libertarian who believes that freedom of speech is paramount. While in control of VK, he often faced demands from the Russian government for speech moderation and deletion, which directly contradicted Durov’s political beliefs. And Durov himself is a stubborn person who is reluctant to bow down, so the inevitable clash ultimately erupted.

However, during his management of VK, Durov also had to compromise. After all, the company is not owned by him alone, and the combined forces of politics and capital are strong enough. Eventually, VK agreed to share user information with the Russian Federal Security Bureau. Subsequently, Durov threw several paper airplanes made of 5,000 ruble bills out the window of the St. Petersburg office. He stated that this action was to demonstrate that the company’s decision was not motivated by money.

Embracing encryption is both a political ideal and an inevitable business choice

The paper airplane later became the icon of Telegram.

In January 2014, Durov completely sold his shares in VK and left Russia, starting his own “wandering” career. What was sold was not just shares, but also all fixed assets such as houses and cars.

Prior to exile, Durov had already started the entrepreneurial journey of Telegram with his brother. The widely circulated version is that this was inspired by the awareness of personal privacy due to government surveillance during the operation of VK. The company is headquartered in Dubai, but Telegram does not have a fixed office location. He and the core team migrate and work globally. He owns all the shares of Telegram himself in order to avoid a fate similar to VK in the future.

Telegram advocates freedom of speech, follows end-to-end encryption (although users need to manually select private chat mode), and does not censor any content on the platform. This has brought people freedom of speech, and of course, because there is no review, it has also become a hotbed of crime: drug trafficking, personal information trading, and even groups similar to the “Korean Nth room” can all be found on Telegram.

This is the initial color of Telegram, although later he made some “correct” compromises, such as blocking accounts, bots, and channels related to terrorist organizations and child abuse.

But in his heart, Durov is still an extremely liberal person and a supporter of blockchain and cryptocurrencies. In 2012, during the VK period, he openly suggested that Russia abolish the existing monetary system. He also publicly stated that he owns Bitcoin. In 2012, he published a declaration he named “Liberalism”, in which he explained his ideas on how to improve Russia. In the declaration, Durov advocated for reforming the Russian education system, abolishing taxes in the information field, canceling 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 background, is involved in encryption. Starting from the public chain, the fusion of architecture and Telegram in the encrypted world is Durov’s ambition. In 2018, Telegram issued its own digital currency Gram and blockchain platform TON. Looking back six years ago, Durov advocated for abolishing the ruble, supporting digital currency, and decentralization. Six years later, he started to put his initial ideas into practice.

TON, as a public chain, aims to provide Telegram users with fast, secure decentralized payments, digital identity, and other services. As a Layer 1 public chain, compared with similar ones like Ethereum and Solana, its biggest characteristics are scalability, shardability, and advantages such as ultra-fast transaction speed and low fees.

From the characteristics of TON, it can be seen that it hopes to carry a large-scale demand from many users. TON also has the characteristic of asynchronous architecture. Although this limitation hinders TON’s development in the DeFi field, it indirectly confirms that mass adoption is TON’s true vision. It is these characteristics that initially described TON as a decentralized application and service platform similar to WeChat, Google Play, or App Store, and even a decentralized alternative to Visa and Mastercard payment processing services.

Allowing Telegram users to better enter the crypto world may be TON’s vision. For example, the payment and wallet applications on Telegram are currently built on TON. On TON, an ecosystem involving NFTs, DeFi, Dex, games, and more has already been formed.

Learning from the lessons of VK being engulfed by capital, Durov did not raise funds for Telegram through traditional fundraising methods. Instead, he turned to the fundraising methods of the cryptocurrency industry. TON raised over $1.7 billion through its token, Grams, ICO. However, in 2019, it faced strong regulation in the United States, with the SEC accusing Telegram of conducting unregistered securities issuances. Subsequently, the Telegram team suspended the mainnet launch of TON and eventually chose to abandon it during the struggle with the SEC, returning the ICO funds to investors.

In 2020, Telegram announced the abandonment of TON. However, the technology that supported the project continues, and even for an open-source project like TON, its “independence” has brought new opportunities and vitality to its development. Because of community participation, the TON public chain project has become a more decentralized project, achieving community collaboration.

In 2020-2021, the New TON team restarted the development of TON based on open-source materials. The New TON team also renamed itself as the TON Foundation, supporting and developing TON as a non-profit community.

This is the TON that we are familiar with now, which stands for The Open Network. Despite the many advantages of TON, it is undeniable that its current status is average and its ecosystem is lacking. According to Defiliama data, the TVL on TON is currently $10.65m, ranking 61.

Telegram used ICO as a way to raise funds for itself, partly because Durov himself has a natural affinity for crypto. On the other hand, the reality exposed is that Telegram’s profitability is not good, and Durov may have no other choice but to refuse to compromise with “capital” proudly. In some aspects, although Telegram has a high-demand product that matches the market, it has not yet achieved a match between the product and its business model. Embracing crypto is also an exploration for Telegram to achieve better profitability in the business sense.

Analogous to WeChat, integrating third-party blockchain applications on Telegram

At this year’s Token 2049 conference, Telegram officials stated that they will turn Telegram into a Web3 gateway through TON. Although TON is now independent of Telegram, they still have frequent collaborations.

Telegram has long become a necessary app for the crypto industry. The founder of Telegram stated on his personal channel on July 18 this year that Telegram has over 2.5 million new registrations every day, with a monthly active user base exceeding 800 million.

In fact, Telegram not only integrates third-party applications into its blockchain. This is similar to WeChat integrating various third-party mini-programs, allowing users to directly use third-party services without leaving the platform, such as “ride-hailing, financial management,” etc., and Telegram acts as a traffic pool. And Telegram has also entered the game, launching the Telegram LianGuaissport function.

Telegram LianGuaissport aims to help users complete services that require personal identification through unified authorization. Telegram officially describes it as “just upload your proof documents once, and you can immediately share your data with service providers that require real identity verification, such as financial and ICO, etc.” These identity information is stored using end-to-end encryption.

In July of this year, the TON blockchain launched the Telegram New Wallet LianGuaiy function, which allows merchants to integrate wallet bots within Telegram to receive cryptocurrency payments. Users can make Bitcoin, USDT, TON payments to merchants within the app.

Users can also directly deposit and withdraw funds through bank cards, and can use @wallet to directly pay for many services within the Telegram ecosystem. For example, directly purchasing Telegram Premium, or purchasing virtual eSIM phone cards in @Mobile, or even trading usernames within Telegram using TON.

It is understood that the operations of Wallet LianGuaiy are completely independent of Telegram. The wallet bots and apps are based on the Telegram Web Apps open protocol, which allows developers to create their own apps and services on Telegram. However, transactions will incur commissions. The cooperation between Telegram and TON has not been interrupted, and Telegram has integrated TON’s self-hosted encrypted wallet, TON SLianGuaice.

Another noteworthy feature is the “Fragment” function. On December 7, 2022, Telegram announced that users can have a Telegram account without a SIM card and can log in using blockchain-supported anonymous numbers provided by the Fragment platform. In October of the same year, Telegram implemented username auctions on the Fragment platform, meaning that the power and assets of social media platforms have begun to transfer 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 have ownership of their social media addresses. And these addresses are protected in the immutable ledger “TON” of a decentralized blockchain network. Purchasing usernames requires spending Toncoin, and the launch of this application also enriches the ecosystem on TON.

Similar to NFTs, smart contracts ensure the ownership of users’ usernames on the blockchain. According to Durov’s own message, in less than a month after the launch of Fragment, $50 million worth of usernames were sold.

And it is precisely because of Telegram’s openness and inclusiveness towards encryption that many innovations that build bridges between Telegram and encryption in Web2 and Web3 are being launched one after another. For example, popular trading tool bots like Unibot, which are embedded in Telegram, are undoubtedly a hot trend this year. Similar trading bots allow users to complete on-chain token trading activities on Uniswap in the form of conversations with the bots, such as token exchanges, copy trading, limit orders, and private transactions.

From supporting virtual currency transactions and payments through connected wallets, to empowering users with personal data ownership and tradeability. This is a major innovation for Web2 social products, especially when compared to the attempts made by Socialfi products in this direction. The fact that Telegram, with such a large user base, is doing this undoubtedly delivers a significant blow.

What Telegram is doing, along with what various project teams are doing on Telegram, is also making communication between the Web2 and Web3 worlds much smoother. This is undoubtedly one of the future trends in the industry.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!