Telegram is selling handles, creating demand for toncoin in the process
Telegram has just created a big source of demand for the cryptocurrency built to collaborate with the hugely popular messaging app.
Driving the news: The company is going to start allowing people to buy and sell Telegram handles (user names on the app), but they have to use a cryptocurrency called toncoin (TON) to do it, as TechCrunch reported.
- The minimum auction value for four- and five-character handles is 10,000 toncoin (about $16,000).
Why it matters: Names are the web's equivalent of real estate. Every website in the world is paying for the right to use its own name in its URL.
- If "namespace" on Telegram proves popular, that would create a permanent demand source for toncoin.
Zoom out: Telegram has a reported 700 million users — more people than live in the U.S. But odds are, you aren't one of them.
- It's sort of like all the weirdoes everywhere on Earth use Telegram, but normal people don't, really. So, it's very big, but its users still feel scarce.
- Probably not a surprise but: Everyone in crypto uses Telegram.
By the numbers: Toncoin was up as high as $1.97 on Wednesday, but it fell as low as $1.59 on Thursday, after the news came out.
How it works: Interested users can go to Fragment.com to participate in an auction, but it's blocked in the U.S.
State of play: Telegram has pulled an end run on regulators, sort of.
Flashback: In 2018, Telegram did one of the first billion dollar initial coin offerings in an all private sale.
- But the U.S. Securities and Exchange Commission made them give all the money back in 2020.
- Then a group independent of Telegram (at least that's the official story) launched a blockchain based on the open source work the Telegram team had completed to run the blockchain.
- First called the Telegram Open Network, it later became "The Open Network."
The intrigue: Telegram's blockchain was interesting because it had the potential to reach hundreds of millions of people. It could have turned every copy of the Telegram app into a crypto wallet with a flip of a switch.
- Copying the code independent of Telegram didn't seem that interesting, however.
What we're watching: That all looks different now, though, since Telegram seems to be embracing The Open Network.
The bottom line: Telegram has its blockchain despite friction from D.C., but the team probably also wishes it had those billion dollars.