Telegram and the Cypherpunk Rebellion Against the Libra Empire

Welcome to part two of the Dreams of Crypto Spring series. Part one covered the cyberpunk nightmare of Libra and its sudden rise to power. In part two I cover Telegram, a new hope to strike a blow against the Libra empire. This is an expanded version of the story I did for Cointelegraph, with increased coverage of the privacy debates over Telegram and WhatsApp.

######################################################

Last month, Facebook rocked the world with its blockbuster Libra announcement. Even a year ago, the idea that an iconic United States company would launch a digital currency or that a sitting president would tweet about it seemed insane.  

Welcome to the new normal.

The Libra announcement sent politicians scrambling, hit the mainstream media like an atom bomb, and left many crypto influencers wondering if the social network giant just turned 90% of altcoins into shitcoins. What tiny crypto project with a few measly programmers and a few million bucks can stand against the combined might of not just Facebook but also the titans of the tech and payment processing world like Uber, Lyft, Paypal, Visa and Mastercard?

But there’s a new hope on the horizon. One company on the planet has the power to take on the social media monster and win:

Telegram.   

If Libra is the Empire Strikes Back, Telegram is A New Hope

While Facebook has 1.8 billion users, Telegram raised $1.7 billion.

While Facebook has the unwashed masses who’ve never held a Bitcoin, Telegram has the entire crypto community that lives and breathes altcoins for breakfast.

While Mark Zuckerberg is the poster child for the internet as a surveillance economy, Pavel Durov, the founder of Telegram, is a fight-the-power renegade, with privacy woven into his DNA.

While Zuckerburg looks like someone doing a bad impression of Data from Star Trek, Durov looks like he just stepped off the stage of Magic Mike.

If you’re a pioneering member of the crypto community, you might have looked with scorn on the Telegram fundraiser, which beat the initial coin offering regulatory backlash by raising all of its money from private accredited investors, rather than crowdsourcing it from the people. Maybe you only read the short Telegram white paper that looks and reads more like a marketing slick than a detailed deep dive?

You should take a look closer.

The Dark Knight Rises

The more you look, the more you realize there’s a lot to root for if you’re longing for a legitimate top contender to take on the cyberpunk nightmare of Libra.  

Start with Pavel Durov.  

The man built two successful companies, including VKontakte (aka VK), the Russian equivalent of Facebook, and he followed that up with Telegram. That means he knows how to build real, working, scalable platforms when most crypto projects can’t even get their testnets off the ground. He’s also an anti-hero and iconoclast with a philosophy of radical individualism and self-sovereignty that matches the cypherpunk ethos that launched Bitcoin and a thousand other crypto ships. 

Even better, he backs that philosophy up with action.  

While Facebook faces a $5 billion fine from the Federal Trade Commission for protecting users’ data the way the mob “protects” small businesses. Durov refused to create a backdoor to Telegram when the Russian Supreme Court demanded it and even as American companies like Apple, who normally stand tough on privacy, caved and yanked Telegram from the app store.  While Zuckerberg built his company on surveillance as a business model, Durov built his company on privacy.

If you only skimmed the short white paper, you might have missed that Durov isn’t alone. He's backed by a bevy of math geniuses and hardcore programmers who started coding in diapers and won strings of gold medals at the International Math Olympiad while you were watching Saturday morning cartoons. One of those folks is Pavel's brother Nikolai Durov, chief technology officer of Telegram, who solved cubic equations at the age of eight, started coding at nine, and wrote his first operating system at 13:

In assembly language.  

Nikolai Durov also wrote the much longer and more comprehensive technical white paper that weighs in at a whopping 132 pages. It’s a dense, complex and ambitious outline for the new Telegram Open Network (TON) platform. Some folks in the Miasma bashed it as a fantasy and nothing but “fun fiction” for promising a sci-fi utopia that solves every single problem in crypto. 

But let's look deeper and see if they're right.

Crypto Wars Redux

It’s not the first time Telegram faced criticism for their architecture choices, with Gizmodo’s William Turton once writing “Why You Should Stop Using Telegram Right Now." The article hits them hard for choosing client-server encryption instead of end-to-end encryption by default.

There's a lot of debate in the security community about whether we can or should trust Telegram versus WhatsApp or Signal or Wire.

The Electronic Frontier Foundation did a series of studies and surveys of secure messaging apps for their Surveillance Self Defense Guide and they found it wasn't all that simple and clear cut because "secure messaging is hard to get right—and it’s even harder to tell if someone else has gotten it right."

The WhatsApp faithful generally just forward the Gizmodo article and call it a mic drop but a little critical thinking about the article reveals some fundamental flaws. It fires the first shot by saying Telegram "doesn’t encrypt chats by default." That's just not correct. The chats are encrypted client to server and stored on the company's virtual machines which are distributed all over the world. Saying they don't encrypt chats is straight up wrong.

But that doesn't mean the article doesn't have a point.

It means we have to trust Telegram's servers and trust is tricky.

A woman and her business partner might have ten years of trust between them but if one partner steals from the company bank account then all that trust burns up over night. Trust is not fixed.

Trust is a moving concept.

If Telegram's servers are compromised, so are your chats. We also have to trust that they really make only encrypted backups of those servers, which they claim to do in their security FAQ. Client-server encryption also uses symmetric keys instead of asymmetric public/private keys, which means if the key gets compromised it's compromised for both the client and server, whereas with asymmetric encryption your privacy remains secure as long as you protect your private keys.

Telegram defends the architecture choice as giving people the best of both worlds with the choice of secret chats, which do offer end-to-end encryption and don't store chats on their servers. They also offer a way to delete messages and chats immediately. Either party can kill the entire chat with a few clicks, erasing it from their servers for good.

All of this is a trade off. Telegram wanted a way to restore chats and sync them to different devices. End-to-end encryption makes this a lot harder. If you switch your phone number on WhatsApp your chats go bye-bye (or you have to go through a procedure that backs those chats up unencrypted to Google Drive) because the phone number acts as your personal ID.

Security versus usability is an age old dilemma. They're inverse properties.

The more secure you make something the more hoops you have to jump through to use it. Make it easier to use and you just compromised the app's safety exponentially. Programming teams always have to pick between security and making it easier for users. Make it too secure and people won't adopt it, which is why Signal and other super privacy conscious apps never reach critical mass and remain niche.

Most regular people, aka non-privacy conscious, the vast majority of the world, won't use Signal. It's got a clunky interface and it's complicated to setup a new phone number and restore your old profiles. That makes it more secure but a lot harder to deal with on a day to day basis.

WhatsApp is based on Signal but it makes compromises to make it easier for users which the EFF flagged as major concerns. WhatsApp offers unencrypted backups to the cloud. Even if you turn it off, you can't be sure that your friend on the other side did the same. That means most of your secure end-to-end chats are probably compromised.

Paul Manafort learned this the hard way. Even next-gen quantum encryption won't save you if you back your chats up to the cloud.

There's another problem with WhatsApp too. Facebook has shown a willingness to hand over metadata with ease when authorities comes knocking. That means they turn over who you talked to and when. From there it's not hard to look for the weak links in your security chain.

If you really want to take a stand on hardcore encryption then you probably shouldn't use either WhatsApp or Telegram and you should switch to something like Wire or Signal and just deal with the lack of a pretty interface and the fact that 99% of your friends won't join you there.

Telegram's architecture is a compromise between usability and security. That criticism dogs them to this very day and colors people's perception of the new TON platform before it even gets off the ground. Redditors and other voices in the Din panned even the technical white paper as nothing but a bunch of buzzwords and hand waving.

But read through it closely and you’ll realize that if Telegram pulls off even a quarter of what they propose it's revolutionary. 

For one, they solve the whole debate about whether you need to trust Telegram's servers or not because instead of servers setup by the company and their IT staff, you get a distributed messaging and smart contract layer that serves the entire TON platform instead of a cloud platform.

And it doesn't stop there. If half of what Telegram wants to do works, they’ll solve the scaling, storage, decentralized identity and protect the platform against constant assault from hostile powers.

Sure, the paper is a grab bag of ideas, some of them unique and some taking inspiration from a wide spectrum of sources, which they openly acknowledge in the white paper as they directly address everything from Polkadot to Ethereum - but building on other people’s good ideas isn’t a problem, it’s a virtue.  

It’s only a problem for people suffering from not-invented-here syndrome, a debilitating mental disease that makes people think they have all the answers and that nobody else has any idea worth doing.  

Libra and the Compromises of a Compromised Company

While Libra’s white paper can’t even figure out if its a “blockchain” or a non-blockchain “cryptographically authenticated database," the TON team knows the difference between a blockchain and a hole in the wall.

Telegram is looking to deliver a massively sharded and scalable "fifth generation" blockchain and app ecosystem that sends and receives not only money, but encrypted messages and a kickass sticker collection that makes the emojis from WhatsApp’s messenger look like ASCII art. It wants to do all that while enabling robust peer-to-peer encrypted storage for your important documents and even allowing for decentralized virtual private networks. 

And yes stickers matter.

Remember that UI/UX drives adoption.

Regular folks don't care about what makes an app go in the background. They'll pick usability over security every time if they have a choice.

A beautiful interface is the answer.

Pretty stickers can gift the world privacy as a trojan horse.

And while Facebook soaks up the punishment and pressure from hysterical governments and politicians who say with a straight face that they’re worried that Libra’s wallet, which is compliant with Know-Your-Customer and Anti-Money Laundering laws, can be used for “terrorism," Telegram’s team wisely stays out of the spotlight, just like Satoshi Nakamoto did with Bitcoin.

If you want to build a platform in peace, it is better to do your work in private and not draw the attention of publicity-seeking politicians trying to get reelected in battleground states.

Governments love cutting off the head of the snake. If you don’t give them a head to cut off, then they don’t know where to strike.

But even with all that going for them, does Telegram have the power to build a true platform for e-commerce and the decentralized applications of tomorrow? Can it stand against the titanic forces behind Facebook's nascent digital currency and the masters of the e-commerce universe backing it? 

That's the trillion dollar question, as the platforms that win the day will control a massive chunk of the world economy and will make or break nations, companies and people.

With so much at stake, it’s going to be a war.

The Man in the Arena

To win, it will take a hero.  

The might of the old world guard is nearly absolute. Nation states print money, and printing money is the power of God.  

To break the stranglehold, you need to build a perfect platform: one that’s easy to use, scales massively and is impossible to bring down — a Hydra with a thousand regenerating heads. It must have all the features of the old financial system and new ones nobody can resist. It’s got to bring in people and businesses with ease so it grows too big to fail.  

At the dawn of the Internet age, technologist and utopians imagined a global network of free services and information, a golden age of openness and democracy. But all those free services needed bandwidth and servers and people to run them and that cost money. To fund it they pioneered a new business model:

Surveillance.

Now, the age of surveillance capitalism is upon us, and it’s growing stronger every day, a dragon that’s eaten the world.

Facebook is the dragon’s head.  

There isn't much hope to turn back the tide of Big Brother as a Business (BBaaB) because both big business and governments want to watch us 24x7. The rise of AI and blockchain will only make scaling surveillance easier and it will prove too tempting for governments and companies alike to resist.

But if there’s a knight left among us that can bring that dragon crashing from the skies, the early odds go to Telegram. 

While Libra can and will leverage Facebook’s 1.7 billion users to rapidly accelerate adoption, Telegram’s user base of over 200 million people is a growing force in its own right.

And even with less users, Telegram has one major advantage: Most Facebook users wouldn’t know a Bitcoin from an Alf Pog while Telegram has a vibrant, technically savvy community, including most of the world’s crypto-faithful who host their user groups and do their day-to-day business there.  

That means when TON drops a bunch of coins in its Telegram attached wallet, a bigger percentage of those users will know how to spend, save and send that money, while Facebook’s users will start ringing the support lines wondering how to reset the password on their private key.

That’s not to say Telegram’s team is perfect by any means. They’ve faced intense criticism for a hand-waving white paper that promises much without telling people exactly how it will work. Beyond that, we’ve gotten mostly radio silence from the team since their mega ICO. There’s a private beta but it’s closed to the wider public for now. In the end, the project might prove too ambitious even for a talented team with a lot of capital on hand.  

They’re also running out of time to deliver. If their team is going to succeed they need to step up now.  The stakes have never been higher.

People willingly sacrifice privacy for convenience without a second thought because they've got "nothing to hide."

The original crypto dream of self-sovereignty is slowing warping into a terrifying Black Mirror episode, where blockchains don’t enable privacy, they enable ubiquitous surveillance on an unprecedented scale. Chain analysis tools peer deeply into transactions and the SEC is looking for teams and tools dedicated to chain analysis. Facebook will happily give them that convenience and a two-way mirror into all of our lives.

Telegram might not be the hero we expected or even the one we wanted, but they might be the very best hope we’ve got for a future that doesn’t look like a dystopian nightmare of panopticoins.  

They’ve got the programming chops, the money, and a founder with the will to take on the kings of the world.

The crypto revolution started idealistically with a twinkle in Satoshi’s eye, hoping beyond hope that technology could save us all from ourselves. There’s always a certain naivety in revolutions.  You have to be crazy to take on entrenched powers.  

The kings of the world have the money and guns and the legal hammers and they’re willing to use them at all costs to keep a firm grip on the royal scepter.

But some revolutions find a way.

And in the coming crypto revolution, Telegram just might be the guerrilla warriors who leads us out of darkness and up into the light.

######################################################

"Long is the way and hard, that out of Hell leads up to light."

- Milton, Paradise Lost

####################################################

If you love my work please visit my Patreon page because that’s where I share special insights with all my fans.

Top Patrons get EXCLUSIVE ACCESS to so many things:

Early links to every article, podcast and private talk. You read it and hear first before anyone else! A monthly virtual meet up and Q&A with me. Ask me anything and I’ll answer. I also share everything I’m working on and give you a behind the scenes look at my process.

Access to the legendary Coin Sheets Discord where you’ll find:

• Market calls from me and other pro technical analysis masters.
• The Coin’bassaders only private chat.
• The private Turtle Beach channel, where coders share various versions of the Crypto Turtle Trader strategy and other signals and trading software.
• Behind the scenes look at how I and other pros interpret the market.

####################################################

I’ve got a new podcast, The Daily PostHuman, covering crypto, AI, tech, the future, history, society and more! Check it out for expanded coverage of my most famous articles and ideas. Get on the RSS feed and never miss an episode and stay tuned for some very special guests in the next few months!

####################################################

A bit about me: I’m an author, engineer, pro-blogger, podcaster and public speaker.

You can check out my latest novel, an epic Chinese sci-fi civil war saga where China throws off the chains of communism and becomes the world’s first direct democracy, running a highly advanced, artificially intelligent decentralized app platform with no leaders.

You can get a FREE copy of my first novel, The Scorpion Game, when you join my Readers Group. Readers have called it “the first serious competition to Neuromancer” and “Detective noir meets Johnny Mnemonic.”

#################################################

Lastly, you can join my private Facebook group, the Nanopunk Posthuman Assassins, where we discuss all things tech, sci-fi, fantasy and more. (And yes we are trying to move it off of Facebook so don't even ask. Security versus usability. See above debate.)