The Telegram founder of "exile" and his crypto ambitions

Author: Jessy, Golden Finance Reporter

Introduction: "I am not fighting for freedom; I am merely proving through my existence that freedom has not disappeared." ------ The Durov Code

Pavel Valeryevich Durov, the founder of Telegram, presents himself as a fighter for freedom in the commercial world: in response to rumors of internet giant Mail.ru acquiring VKontakte (hereinafter referred to as VK), he posted a photo of himself giving the middle finger. When faced with demands from the Russian government to censor speech on VK, he responded with images of "dog heads."

However, these stories are from Durov's time founding Russia's largest social network, VK. Durov is more widely known and praised for creating Telegram. This social software, which has caused headaches for governments around the world due to its content being difficult to crack, has become a bastion of freedom for some anti-authoritarian individuals and a breeding ground for various crimes.

This aligns naturally with the spirit of blockchain fundamentalism: resisting authoritarianism, advocating for liberalism, and promoting personal responsibility.

Durov himself is an advocate of the crypto world, and Telegram is inherently close to crypto: it supports public chains, integrates third-party crypto wallets, trading bots, and the verification and trading of usernames on the blockchain, among other features.

As a social software with over 800 million users globally, Telegram's entry into crypto undoubtedly represents a significant shift in the existing Web3 applications landscape. However, the story of Telegram goes far beyond crypto; it is a unique business legend and a narrative of how liberal political ideals can be realized in the commercial world through blockchain technology, stemming from Durov's forced departure from VK.

The Business Setbacks of a Liberal

To understand why Telegram is close to crypto, one must first understand its founder, Pavel Valeryevich Durov.

Durov is not fond of media interviews, but through interviews with people around him and his social media activity, a rough image of Durov emerges: he is often dressed in black, loves fitness, has a muscular build and handsome features. He is rebellious, rarely bows to power or capital in defense of his belief in freedom. A technical genius with an obsession with privacy, his whereabouts became unpredictable after founding Telegram… Of course, those around him also see a darker side; during university, Durov created a website to help students cheat, and some classmates describe him as a very vain young man who rarely finds common ground with others but is extremely concerned about how others perceive him, wanting to appear successful.

Born in 1984, this Russian (now a UAE citizen) had his wealth estimated at $11.5 billion in 2023, ranking tenth among Russian billionaires. To this day, Telegram remains privately owned by the Durov brothers, and unlike other commercial companies, Telegram has refused to raise funds from traditional venture capital firms, instead relying on the founder's own funds for development, later turning to ICOs and bond issuance.

Among Durov's many characteristics, the strongest connection to crypto and his vision for Telegram is his identity as a liberal.

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

Like with Telegram, Durov allowed various forms of speech and piracy on the VK platform. However, as VK grew and gained significant influence, the conflicts arising from this "freedom" began to surface.

In December 2011, in response to allegations of manipulation in the Russian State Duma elections, Russian protesters organized an event on VK. This incident became the catalyst for the Kremlin's crackdown on Durov. However, when faced with orders to delete accounts and pages, Durov did not comply; instead, he turned his VK page, Twitter, and Instagram accounts into battlegrounds, using ridiculous cute pet images to express his dissent.

In the stories that circulated, Durov's uncompromising stance directly led to armed forces entering his home on the very night he posted those images. What followed was a familiar tale of government intrusion into business; Durov gradually lost control of VK, which was ultimately taken over by Mail.ru, a company closely tied to the Kremlin.

Durov's shares were increasingly diluted, and the end of his story with VK was marked by his removal as CEO by the board.

He is a typical liberal who believes that freedom of speech is paramount. While managing VK, he frequently faced demands from the Russian government for speech censorship and content removal, which was entirely contrary to Durov's political beliefs. Durov's strong-willed nature made a direct conflict inevitable.

However, during his time managing VK, Durov had to compromise; after all, the company was not solely his, and the combined power of politics and capital was formidable. Ultimately, VK agreed to share user information with the Federal Security Service of the Russian Federation. Subsequently, Durov threw several paper airplanes made from 5,000 ruble notes out of the window of his St. Petersburg office, claiming this act was to prove that the company's decision was not motivated by money.

Embracing Crypto as a Political Ideal and Inevitable Business Choice

The paper airplane later became the icon of Telegram.

In January 2014, Durov completely sold off his shares in VK and left Russia, beginning his "wandering" life. What he sold included not just shares but also his house, car, and all fixed assets.

Before his exile, Durov had already begun the entrepreneurial journey of Telegram with his brother, a widely circulated version of the story is that this initiative stemmed from his realization of the importance of personal privacy due to government surveillance during his time at VK. The company is headquartered in Dubai, but Telegram has no fixed office location; he and his core team work while migrating globally. He holds all the shares of Telegram to avoid a fate similar to VK's.

Telegram advocates for freedom of speech, follows end-to-end encryption (though users must manually select the private chat mode), and does not censor any content on the platform. This provides people with freedom of speech, but the lack of censorship has also made it a breeding ground for crime: drug trafficking, personal information trading, and even groups similar to the "Korean N Room" can be found on Telegram.

This was the initial essence of Telegram, although it later made some "correct" compromises, such as blocking accounts, bots, and channels related to terrorist organizations and child abuse.

However, at its core, Durov remains an extremely liberal person and an advocate of blockchain and virtual currencies. In 2012, during the VK era, he publicly suggested that Russia abolish its existing currency system. He has also stated that he owns Bitcoin. In 2012, he published a manifesto he called "Liberalism," where he elaborated on his ideas for improving Russia. In the manifesto, Durov advocated for reforms in the Russian education system; abolishing taxes in the information sector; eliminating visa requirements, registration, and conscription; reducing tariffs; granting regions sufficient autonomy; and opening up jury trials.

Given this background, it is not surprising that Telegram ventured into crypto. Starting with public chains, the integration of the crypto world with Telegram is Durov's ambition. In 2018, Telegram issued its digital currency Gram and the blockchain platform TON. Looking back six years, Durov advocated for the abolition of the ruble and supported digital currencies and decentralization; six years later, he began to implement his initial ideas.

The public chain TON aims to provide Telegram users with fast, secure decentralized payments, digital identities, and other services. As a Layer 1 public chain, compared to similar platforms like Ethereum and Solana, its most significant features are scalability and sharding, offering ultra-fast transactions and low fees.

From the characteristics of TON, it aims to accommodate the large-scale demands of numerous users. Another feature of TON is its asynchronous architecture, which, while limiting its development in the DeFi sector, also indirectly confirms that large-scale adoption is TON's true vision. These characteristics led to TON being described from the outset as a decentralized application and service platform similar to WeChat, Google Play, or the App Store, and even a decentralized alternative to Visa and Mastercard payment processing services.

Helping Telegram users better enter the crypto world may be the vision behind TON's establishment. For example, the payment and wallet applications on Telegram are integrated with TON, and an entire ecosystem involving NFTs, DeFi, DEX, and gaming has already formed on TON.

Learning from the lessons of being consumed by capital in VK, Durov did not raise funds for Telegram through traditional fundraising methods. Instead, he turned to the fundraising methods of the crypto industry. TON raised over $1.7 billion through its token Gram's ICO. However, in 2019, it faced strong regulatory scrutiny from the U.S., with the SEC suing Telegram for conducting an unregistered securities offering. Subsequently, the Telegram team suspended the mainnet launch of TON and ultimately chose to abandon the project in its struggle with the SEC, halting the development of TON and refunding the ICO funds to investors.

In 2020, Telegram announced it would abandon TON. However, the technology supporting the project continued, and for such an open-source project, "TON's independence" brought new opportunities and vitality for its development. Community participation turned the TON public chain project into a more decentralized initiative, achieving community co-construction.

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

This is what we now know as TON, short for The Open Network. Although TON has many advantages, it is undeniable that its current state is unremarkable and its ecosystem is lacking. According to Defiliama data, the current TVL on TON is $10.65 million, ranking 61st.

Telegram raised funds for itself through ICOs, partly due to Durov's inherent closeness to crypto. On the other hand, the exposed reality is that Telegram is not profitable, and Durov's unwillingness to compromise with "capital" may leave him with no other options. In some respects, while Telegram has a hot product and market fit, it has yet to achieve alignment between its product and business model. Embracing crypto is also an exploration for Telegram to achieve better profitability.

Integrating Blockchain Third-Party Programs on Telegram Similar to WeChat

At this year's Token 2049 conference, Telegram officially stated that it would transform into a Web3 entry point through TON. Although TON has become independent from Telegram, they still collaborate frequently.

Telegram has long been an essential app in the crypto industry. On July 18 of this year, Telegram's founder stated in his personal channel that over 2.5 million new users register on Telegram daily, with monthly active users exceeding 800 million.

In fact, Telegram is not only orderly integrating blockchain third-party applications. This is similar to WeChat integrating various third-party mini-programs, allowing users to directly use third-party services such as "ride-hailing and wealth management" without leaving the platform, with Telegram serving as a traffic pool. Moreover, Telegram has actively entered this space by launching the Telegram Passport feature.

Telegram Passport aims to help users complete services requiring personal identity verification through unified authorization. Telegram describes it as "uploading your proof documents once, allowing you to immediately share your data with service providers requiring real identity verification, such as for financial services and ICOs." This identity information is stored using end-to-end encryption.

In July of this year, the TON blockchain launched the new Wallet Pay feature, enabling merchants to integrate Telegram's wallet bot to accept cryptocurrency payments, allowing users to pay Bitcoin, USDT, and TON to merchants directly within the app.

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

It is understood that the operation of Wallet Pay is entirely independent of Telegram. The wallet bot and application are based on the Telegram Web Apps open protocol, which allows developers to create their own applications and services on Telegram. However, transactions will incur fees. Telegram and TON's collaboration has not been interrupted; Telegram has also integrated the self-hosted crypto wallet TON Space launched by TON.

Another noteworthy feature is "Fragment." On December 7, 2022, Telegram officially announced that users could have a Telegram account without a SIM card and log in using anonymous numbers supported by the blockchain on the Fragment platform. In October of the same year, Telegram enabled username auctions on the Fragment platform, indicating that the power and assets of social media platforms have begun to shift into the hands of users.

This is an important milestone. As Durov stated, this is the first time in social media history that a fair and transparent username market has been established, where people will own their social media addresses. These addresses are protected in an immutable ledger on a decentralized blockchain network called "TON." Purchasing a username requires spending Toncoin, and the launch of this application has enriched the ecosystem on TON.

This is similar to NFTs, where smart contracts verify users' usernames on the blockchain. According to Durov's own information, within less than a month of Fragment's launch, usernames worth $50 million were sold.

Moreover, it is precisely because of Telegram's openness and inclusivity towards crypto that many innovations building bridges between Web2 and Web3 around Telegram and crypto have been launched. For instance, trading tool bots like Unibot, built into Telegram, have undoubtedly become a hot trend this year. Such trading bots allow users to issue trading instructions to the bot in a conversational format within Telegram, completing on-chain token trading activities on Uniswap, such as token swaps, copy trading, limit orders, and privacy trading.

From supporting virtual currency transactions and payments through wallet integration to verifying and trading users' personal data, these are significant innovations for Web2 social products. Compared to the current SocialFi products attempting this direction, Telegram's approach, with its vast user base, undoubtedly represents a significant shift.

What Telegram is doing, and what various project teams are doing on Telegram, is facilitating smoother connections and communications between the Web2 and Web3 worlds, which is one of the futures of the industry.