Elizabeth Howcroft
(Reuters) – A coin called TON has surged in value in recent months as investors bet its integration with messaging service Telegram could bring cryptocurrency to the app’s roughly 900 million users.
Telegram approved TON last September, saying the blockchain and its associated token would become its “official Web3 infrastructure.” Earlier this month, TON said tokens could also be issued on its blockchain, allowing Telegram users to send stablecoins to each other within the app.
The TON token rose, reaching $7.63 on April 11, up from about $2.21 a year earlier, according to CoinGecko.
With $18.3 billion in circulation, it is the 10th largest cryptocurrency after Memecoin.
The prospect of creating a “super app” or “everything app” that combines payments and shopping with social networking or messaging services has long been the Holy Grail for investors who take inspiration from China’s WeChat. In the cryptocurrency world, it is sometimes called “SocialFi,” short for “social finance.”
Such ideas led to Elon Musk’s acquisition of Twitter (now X) in 2022. Binance, which helped finance the buyout, said it would explore how the cryptocurrency could be used on the platform. UK company Revolut, meanwhile, took a different approach by starting with a financial app and then adding social features to it.
While TON’s appeal is part of a broader interest in super-apps, it has also been helped by a general resurgence in altcoins, said Thomas Peich, CEO of digital asset hedge fund Indigo.
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“TON has really outperformed many of its peers as many people are buying the project as interest in alternatives has returned and also with support from Telegram,” he said, adding that Indigo was trading the TON token.
TON, short for Open Network, has a crypto wallet product on Telegram with over 6 million monthly users.
LIBRA FAILURE
Attempts to introduce cryptocurrency payments into social networks have not yet been successful. Facebook (NASDAQ:), now Meta, shut down its Libra cryptocurrency project after fierce opposition from regulators around the world who were concerned it could harm financial stability and undermine control over monetary policy.
“The recent foray into crypto payments via Telegram introduces a new use case for the app, but its adoption and adoption is still in its early stages,” said PitchBook senior analyst Robert Le, who said there has been a rise in venture capital interest in Social Fi.
“The main challenge is to change user perception in non-Asian markets, where messaging apps are largely seen as purely communication tools rather than feature-rich platforms.”
According to Ram Gopal, a professor at Warwick Business School, such integration poses “regulatory, technical and security challenges.”
“Regulators may be concerned about how well these platforms comply with existing financial rules,” he said.
“Ensuring users are protected from scams, scams and potential losses due to cryptocurrency volatility will be a critical concern for regulators,” he added.
HISTORY OF TONE
Telegram Messenger created the TON blockchain in 2018 and raised $1.7 billion by selling the cryptocurrency associated with it. But the project faced charges from the US Securities and Exchange Commission, which said the token sale violated federal securities laws.
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As part of an agreement with the SEC in 2020, Telegram agreed to stop developing TON. He neither admitted nor denied the SEC’s allegations.
A group of unrelated developers then continued work on the project, picking up where Telegram left off, according to a story on the TON website.
TON claims to be decentralized, based on an open source code base, and has no single regulatory authority. Behind this is a non-profit foundation registered in Zug, Switzerland.
A TON representative stated that Telegram and TON are completely different organizations.
The president of the TON Foundation is Steve Yoon, according to the organization’s website. Andrey Rogovoz, the former CEO of the Russian social network VK, is one of the founders of the fund, according to his LinkedIn profile. He appeared on stage with Telegram co-founder Pavel Durov and Tether CEO Paolo Ardoino at a conference in Dubai where a partnership to issue a stablecoin on the TON blockchain was announced.