Can two Russian siblings harness fintech to undermine the Establishment?Blockchain technology is delivering solutions to the world’s most evasive problems. Secure payments, data storage, logistics, encryption, commodity digitisation – you name it and blockchain has the power to make it happen.
Meanwhile, cryptocurrencies have arrived to liberate the masses by decentralising functions carried out by governments and central banks. As a concept, blockchain could help deliver security and self-governance.
However, the so-called “establishment” may have other plans. Legislators are fearful that blockchain technology could serve as a foil for terrorists and organised crime given its ability to conceal user activity.
As things stand, hundreds of blockchain-powered solutions are vying for dominance in order to serve the world’s consumers and businesses. Despite the hype, a consensus-backed currency or blockchain application has not managed to garner favor with most users, let alone policymakers. The blockchain ecosystem needs a decentralised counterpart to everyday money — a truly mass-market cryptocurrency that appeals to all market participants and thereby reaches mainstream adoption.
Currently established blockchain networks (Bitcoin and Ethereum) play important roles in the ecosystem, but don’t have the capacity to replace dominant payments systems because the current architecture allows a maximum of 7-15 transactions per second, resulting in insufficient speeds and high transaction costs.
To synchronise the existing crypto movement, two Russian brothers have raised US$2 billion in exchange for developing what users have always wanted: a fast, secure and scalable user-focused blockchain project capable of handling millions of transactions every second.
From Russia with Tech
Pavel and Nikolai Durov have developed what they claim is a method of hosting all conceivable applications simultaneously which “preserves freedom through encryption”.
|The Durov brothers: 38-year-old Nikolai (left) and 34-year-old Pavel (right)|
The ambitious duo has created Telegram, an encrypted platform that makes it nigh on impossible for governments to spy on users. Some tech commentators speculate it was a response to the intrusion by the Kremlin into VKontakte, whereas the Durov brothers claim they’re offering users services they deserve.
Russian authorities ordered the Durov brothers hand over the keys to their brainchild in the name of national security and crime detection – but the brothers emphasised their libertarian roots and refused, counter-claiming that Russian authorities were hellbent on actualising an Orwellian ‘Big Brother’ state that treats people like cattle. “Privacy is not for sale!” was their resolute answer to the Russian state.
Such belligerence was not well received in Putin’s Russia, a country where old habits die hard and authoritarianism still rules supreme. The clash with Russian authorities raised the same questions other tech firms have faced for years: is privacy truly sacrosanct? Should reprehensible behaviour of the few, warrant restrictions on liberty for the many?
According to government rhetoric, privacy is worth sacrificing in exchange for security. For billions of average people, it’s not. After being forced out of VKontakte and fleeing Russia, the Durov brothers have set up camp in Dubai to raise their next social media project for the world’s privacy-focused users – to the applause of millions of users and the wrath of alphabet-soup government agencies such as Russia’s FSB, Britain’s GCHQ and America’s NSA.
Waiting for Telegram
After months of anticipation and multiple delays, Telegram has finally launched a beta testing phase with the app already amassing 200 million users, and according to the company, picking up around 700,000 users per day.
In Iran alone, Telegram has around 40 million users with the country’s authorities blocking it for national security reasons and claiming that its coin offering could rival the local currency, thereby jeopardising the entire Iranian economy.
With a pile of money raised and expectant users queuing up, Telegram has commenced testing TON Blockchain via a limited number of developers. Russian news sources have reported that dev teams have demonstrated “extremely high transaction speeds” – exactly what users are looking for in the modern world of crypto-powered digitisation. Telegram is also planning to offer its own cryptocurrency called the “Gram”, which is set to become a direct rival to Ethereum for the launch and execution of smart contracts and decentralised applications.
Making Money in Crypto
As a platform, Telegram is a direct competitor to not only popular consumer-focused messaging apps such as Facebook Messenger and WhatsApp but also payments systems including Visa, Mastercard and PayPal that handle B2B and B2C payments. As cryptocurrencies gain unprecedented traction, Telegram wants to expand its sphere of influence by offering an innovative blockchain platform and its native Gram token.
Crypto analyst Alex Sofpel from crypto trading platform Monfex predicts that the Gram token could generate as much as US$4 billion in revenue by 2022. Other analysts have claimed that Gram’s total market capitalisation could be worth as much as US$30 billion in its first year. That equates to a return of over 1,000% for early investors.
Forked Road to Success
Despite the glowing predictions and plausible rationale for its success, there are clouds on the horizon. Telegram’s founders have a prickly relationship with regulators and despite vowing to have resolute KYC and AMLR procedures, the service could fall short of being approved at the top levels of government, and therefore, struggle to accrue the user numbers it needs to become a worldwide sensation.
Achieving market success is hard enough without the scorn of regulators. If the Durov brothers can reconcile governments’ predisposition for surveillance with users’ desperation for privacy, Telegram could spearhead a fintech revolution while making its investors millions of dollars in the process.
On the flip side, if reconciliation is not possible then Telegram will, unfortunately, reach a glass ceiling with the keys to its kingdom either bought, retrieved or stripped away from the benevolent Durov brothers. This would entice users to seek out an alternative method to exchange information with yet another platform presumably arising to accommodate the herd.
In a world where such polar opposites exist between security and privacy, centralisation and decentralisation, authoritarianism and self-governance – relentless revolutions and platform migration may be the best thing that users can hope for. For investors, it may be a case of cashing in at the right time.
Written by George Tchetvertakov in collaboration with Dr Demetrios Zambolgou
Published by CoinSpeaker and Hacker Noon