Telegram wants to launch a cryptocurrency, and it has several key ideas that could help it rival Bitcoin, Ethereum, and Ripple at the top of the market. “Gram,” the proposed name for the new token, would integrate with the encrypted messaging app to provide an easy way to send money privately and internationally.
The “Telegram Open Network” that powers the system will be a “third generation” blockchain network, building on the work of previous cryptocurrencies to provide something groundbreaking.
The 132-page white paper, detailed in a Monday report from TechCrunch, plans to use the messaging app’s 180 million users to kickstart a new cryptocurrency that will rapidly scale to meet the needs of users. The wallet could launch as soon as the fourth quarter of this year, with the “Telegram Open Network” open to users at the start of 2019.
The blockchain will be based on the “proof-of-stake” model. Bitcoin and similar tokens use “proof-of-work,” where miners need to solve difficult math problems to release new funds. This has been criticized as energy intensive, with one anaylyysis suggesting the network has the same annual electricity consumption as the whole of Serbia, at around 32.36 terawatt-hours. “Proof-of-stake,” which asks users to prove their investment in a token, has been suggested as an energy-saving alternative.
Telegram’s cryptocurrency will also be fast. Unlike Bitcoin, which processed around seven transactions per second globally, the Telegram network will process around 1 million transactions per second. The blockchain will use a combination of centralized and decentralized management to scale rapidly, with the benefits of a centrally managed expansion combined with the censorship-busting benefits of decentralization.
There will be a planned 200 million “grams” in circulation. Four percent will be held by the development team, a further 52 percent will be held by Telegram to avoid speculative trading, and the final 44 percent distributed in a private and public sale.
The company is currently considering a limited token sale worth as much as $500 million, which would make it by far the largest private cryptocurrency raise so far. An “initial coin offering” could launch in March, giving the wider public a chance to invest.
Telegram will be joining a crowded marketplace. At the time of writing, bitcoin has a market cap of $261 billion, with Ethereum holding second place with $112 billion. Ripple, which focuses on easy transactions between financial institutions, is just shy of the $100 billion mark, but the three combined make up around half of the cryptocurrency market’s $754 billion total value. If anything could dent the dominance of these three, it could be a messaging app with privacy as its focus.