“Bitcoin has established itself as the «digital gold», and Ethereum has proved to be an efficient platform for token crowd sales. However, there is no current standard cryptocurrency used for the
regular exchange of value in the daily lives of ordinary people. The blockchain ecosystem needs
a decentralized counterpart to everyday money — a truly mass-market cryptocurrency.”
Thus begins the white paper for Telegram’s own Open Network (TON), “designed to host a new generation of cryptocurrencies and decentralised applications.” It is, to put it politely, a lot of hot air. Bitcoin did not start off as digital gold, for one, but the bigger issue is still that “a truly mass-market cryptocurrency” requires a true mass-market, not buzzwords like disruption hurled at an imagined, credulous public. It reflects poorly on both Telegram and those tech journalists who have enabled these attempts to grab headlines.
Granted, it succeeds in identifying that fewer and fewer vendors in the real world are actually using cryptocurrencies (and for those in countries without such vendors, getting your money out of the system requires you to take all sorts of bizarre transactions). But it’s solution to the problem seems to be ‘you can use cryptocurrencies to purchase things in app!’ The idea that using what amounts to ‘in-game currency’ for services on Telegram will transform the cryptocurrency environment feels like the height of hubris – if Bitcoin and Ethereum couldn’t break into the current banking scene (and not for lack of hype), then the idea that messenger-integrated TON will do so, merely by dint of being messenger-integrated, suggests a somewhat complicated relationship with ground truths.
There is also the question of the security, which Telegram casts as its main selling point. Ignoring the wonderful and salacious claims in the Fusion GPS memo, that the Russian government had compromised Telegram’s vaunted cryptography, we know for sure that hackers in Iran have done so. This does not bode well for the security of all that in-app currency in TON, or in bolstering that mass-market interest in cryptocurrencies more widely. Given the ease with which wallets can be lost, or the frequency with which exchanges turn out to be elaborate scams, it’s not hard to see why ordinary people aren’t so keen to turn hard-earned cash into ‘the next big thing’.
You could write off this decision by Telegram as a sort of fluke – a mistake by a company desperate to stand out from its rivals. This would be overly generous, since Kik (a messaging app most popular with kids and teens) is doing much the same. Yet again, the idea is that somehow, in-app currency will translate into a wider appeal for cryptocurrencies – or indeed, that a messenger app/cryptoexchange is all that’s needed to give blockchain-derived currencies a shot in the arm.
Cryptocurrencies are not beyond redemption, certainly – but the answers to their problems does not lie in the hubris of Telegram or Kik, attempting to build atop a system that is already unstable and then shouting that they are disruptors. If they want to make the blockchain really change the world, they’d try to set about lowering the power consumption (although some, like Ethereum, are doing so); they’d try to work with vendors to see how trust in cryptocurrencies could be created. Instead, they’ve chosen to follow a path of over-blown estimates and wild claims. We’ve seen bubbles before, and they usually turn out poorly.