Crypto payments are becoming commonplace: people shop online, fund their accounts on sites like Vulkan Vegas and even pay taxes with cryptos. Telegram doesn’t want to stand aside from this trend and is now enabling its users to send and receive cryptocurrencies through its platform. Telegram itself designed a decentralized blockchain called TON or The Open Network. It also goes by the moniker Toncoin. The 550 million users of Telegram will be able to send and receive crypto while using the app.
Furthermore, the transactions do not come with a fee. Telegram announced this on April 26 through a tweet. They said that the app was a new way to send and receive Toncoins with no fees. The benefit of this move is that people who want to send and receive cryptocurrency no longer have to copy and paste long wallet addresses. The service also allows users to forego the long wait times to confirm the transaction.
The TON Foundation is responsible for managing the token. They say that the users should now be able to buy and sell bitcoin through the Telegram app. However, Telegram users who want to use the new wallet or feature must update their apps. They must use the most recent version of the app.
In a press release, the spokesperson of the TON Foundation said that the new process, which was an oversimplification of cryptocurrency transactions, would pave the way for more people to start using cryptocurrency and encourage people to adopt digital coins as part of their day-to-day lives.
TON said that they had raised $1 billion in donations to help make this project come to life. It took two years for Telegram to make it happen, as they had a bout against the Securities and Exchange Commission (SEC).
Telegram Cryptocurrency Shutdown
Back in 2019, the SEC forced Telegram to shut down its cryptocurrency operation that included a native token called “Gram.”
While Telegram dropped the project, other developers continued working on it, and then they later called it The Open Network. They also renamed Gram to Toncoin.
Telegram and the SEC had years of going back and forth, or what some people called drama. Sometime in 2020, the CEO of Telegram Pavel Durov, said that the involvement of Telegram with the TON was over. He even told users to not give money to people who use TON and Telegram when they promote their projects.
Originally, TON was a blockchain that was designed to offer decentralized digital currency to anyone that had a smartphone. It is highly similar to what Facebook did, which it dubbed Libra.
The SEC ordered Telegram to shut down the sales of its cryptocurrency called Gram. The reason behind that is that it failed to register its early sale, which amounted to $1.7 billion in tokens. They made this sale even before the token was launched.
At that time, Telegram managed to raise such a huge amount of funding in a series of investment rounds. Telegram said it had been pre-ICO offerings, which they had done as early as 2018. The company ended up cancelling its ICO because of SEC’s involvement.
Telegram’s CEO said that he was not happy with this ruling. He also argued that the Americans should not have the authority to stop the sale of cryptocurrency beyond their country.
Why use cryptocurrency at all?
Why is there a craze to use cryptocurrency? How come companies like Facebook and Telegram attempt to develop a crypto-based payment system?
- The simple answer is money. For one, these companies already have a wide user base, and this user base is worldwide. As such, it is easier for these companies to find customers who will use their cryptocurrency platform, as opposed to building a solo digital coin wallet.
- Second, these companies will eventually earn based on their transaction count. While Telegram is not charging fees now, it eventually will. Telegram cannot keep on subsidizing the cost of transaction fees. By the time the users are hooked on the service, Telegram can start charging fees. No matter how small, the fees are still profits. A transaction fee of $0.50 with 52 million transactions translates to $26 million in earnings. That is how huge the profits are.
- In addition to making money, digital currencies are also safe and secure. Once they have established their credibility and strength against breaches, Telegram will eventually become the go-to platform for people to transact cryptocurrency.
- Lastly, Telegram can charge fees from recipients, not necessarily the sender, of cryptocurrency. For example, it can enable merchants, big and small, to accept digital coins. In exchange, the merchant pays a fee.
Telegram and TON on the Rise
The TON Foundation now has 800,000 accounts. The system has already processed 52 million transactions among 486,000 wallets.
In time, both Telegram and TON are expecting to expand their capabilities. They want the crypto-wallet to reach consumer-to-business payments.
The goal is to allow people to use, send, receive and even trade cryptocurrencies on the platform. They want people to use digital currencies as a fast mode of payment for goods and services.
While Telegram has succeeded in doing this, it faces a big hurdle ahead. Many companies have tried using Bitcoin or Ethereum in their blockchains, but the problem is how they could globalize their user base.