Toncoin: Telegram’s Ticket to Super-App Status and Mass Adoption?

The main problem keeping cryptocurrency and blockchain from becoming mainstream technologies is the lack of a seamless user experience that feels no different than using the modern-day internet. Telegram, a secure messaging platform with 700 million monthly active users, hopes to change this with Toncoin, a blockchain designed for use with Telegram’s app. Let’s dive into the controversial history of TON, its use cases, and analyze whether or not it could keep its spot as a top 15 cryptocurrency by market capitalization.

The Telegram Open Network (TON) was first announced in 2018 with an affiliation to the Telegram messaging app. Initially, the project was meant to be a way for Telegram, which does not run advertising and had trouble finding profitability, to raise money and monetize its platform. It was meant to be a decentralized protocol to turn Telegram into a super app, like WeChat but decentralized. A private initial coin offering, or ICO, raised almost $2 billion by April 2018, making it one of the largest ICOs ever. 

The network was planned to launch in October 2019, but a few weeks beforehand the U.S. Securities and Exchange Commission restrained the distribution of the TON tokens, which were called Grams at the time. They were concerned that the token sale could be an unregistered security offering due to how the sale was structured. Instead of the private buyers purchasing the tokens for their personal use, they were to be resellers to the general public.

This lengthy legal battle led to Telegram disaffiliating from the project in 2020, and Telegram ultimately returned over $1 billion to buyers to settle the case. Since then, the TON Foundation has rebranded it to “The Open Network” and overseen the project, leading to the token being renamed Toncoin.

Like many smart contract-compatible blockchains, The Open Network aims to build an ecosystem for payments, collectibles, and gaming. It also has a decentralized VPN service and storage network, two features that set it apart from most major smart contract platforms. As a chain meant to scale to hundreds of millions, it uses sharding technology to achieve high scalability with low transaction fees. Additionally, it takes inspiration from the Ethereum Virtual Machine and is compatible with Ethereum smart contracts, albeit with a few nuanced differences. As the native currency of the network, TON is used for paying transaction fees and given to stakers as a reward for upholding the network's security.

TON has recently become relevant due to Telegram integrating a TON wallet directly into the Telegram app. Anyone not based in the United States can now interact with the @wallet bot to set up their TON account and begin interacting directly with the TON ecosystem from their Telegram account. With the explosion of Telegram cryptocurrency bots like Unibot, users have been proven to appreciate this type of Web3 interaction since it does not require storing private keys or using an extension like MetaMask to interact with the network. 

Accessing TON through the Telegram app is the closest product to a decentralized super app. Even though Telegram has a massive user base, it is unclear how many of these users will become frequent TON transactors. If there were to be a way for an unheard-of network to become a household name, it would be through this type of collaboration, where hundreds of millions of users are immediately exposed to a beneficial product with a simple onboarding process. That being said, current leaders in the smart contract blockchain space, like Ethereum and Solana, have massive network effects regarding users, developers, and on-chain liquidity.

TON is an impressive case of a cryptocurrency on the verge of collapse due to regulation rebounding and finding a product market fit inside of one of the world’s largest messaging applications. Only time will tell whether or not TON will bring new users into Web3 and become a top smart contract platform. Until then, it would be wise for TON’s competitors to consider creating an as-seamless onboarding experience and emphasizing a simple UX to bring as many novice users into their blockchain ecosystem as possible.

By Lincoln Murr

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