Pavel Durov’s Cryptocurrency and TON Network: what is it and how does it work
Let’s talk about the blockchain platform from the brothers Nikolai and Pavel Durov — the creators of the cult social network VK and the secure Telegram messenger.
What is TON
Telegram Open Network (TON for short) is a fast blockchain network with declared maximum protection.
What is Gram
Gram is a TON network token, a cryptocurrency for payments both within TON and for external payments.
What does Telegram need currency for
- Payments within Telegram ecosystem
- External payments
- World cryptocurrency
- Replacement of Visa and Mastercard
- Source of accumulation, investment, and profit
- Factor for a successful ICO.
Technical features of TON blockchain platform
When launching the project, Telegram described in detail the problem of existing cryptocurrencies — low transaction speed and high costs. Bitcoin can process 7 transactions per second (tps), and Ethereum can process only 15 tps, which makes them unable to compete with Visa and Mastercard.
According to the creators, the transaction speed in TON will be commensurate with the transaction speed in Visa and Mastercard.
The consensus of TON is built on the Catchain system — an improved version of the Byzantine Fault Tolerant (BFT) protocol. In a nutshell: the system is built on a deeper tripartite verification of each block. At the same time, tests showed that the block verification speed is much higher than that of Bitcoin and Ethereum.
Is free mining possible in TON
No, it’s not. When creating a network, all the coins are already mined. With the official launch of the network, only a few validators could mine Gram.
Project development timeline, successes and failures, courts and decisions
- The beginning of 2018 — Telegram announcement about the start of work on TON multi-blockchain platform, the release of White Paper for the future ICO, the beginning of the preliminary sale of Gram tokens. The amount of currency sold amounted to $ 1.7 billion.
- July 26, 2018 — Telegram officially launches the Telegram Passport user verification and authorization service. On the one hand, this was supposed to enhance security and increase loyalty when entering international markets, on the other hand, it questioned anonymity and decentralization. As a result: the partial indignation of many potential investors and users.
- October 11, 2019 — The U.S. Securities and Exchange Commission (abbreviated SEC — editorial note) prohibits the issuance of new Gram tokens and conduct to both offshore companies Telegram Group Inc. and TON Issuer Inc. any activity related to them.
- By the court decision of the Southern District of New York on October 25, 2019, Pavel Durov, Ilya Perekopsky (vice president of Telegram) and Shyam Parekh (employee and person involved in the case) should testify in court. SEC recognized Gram tokens as a security that Durov’s company is trying to distribute without registration. According to the Commission, the issuer (Telegram) does not provide all the information necessary in this case.
- March 24, 2020 — the court of the Southern District of New York agreed with the decision of the SEC. The court relied on the so-called “Howey Test” as justification.
What is a Howey Test
This test helps to analyze a process or an object and understand whether it is a security or not. This method has many opponents disputing its correctness. But in legal disputes, they continue to use it.
Why do US authorities hinder the development of TON? What about scammers’ activities around this net? How will the possible failure of TON affect the cryptocurrency market? What are the forecasts for TON in the near future? Make sure to read the second part of the review!