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This article was published on July 7, 2022

Why crypto fans love Telegram despite it betraying their decentralization ethos

Security and usability don't always align

Why crypto fans love Telegram despite it betraying their decentralization ethos

Communicating with crypto fans requires specific skills and attributes. There’s an esoteric language to learn, new social norms to adopt, and a toxically-positive philosophy to embrace. But perhaps the most important credential of all is a Telegram account.

The social media and messaging app provides both public square and private rooms for crypto enthusiasts.

So popular is the platform that those without it risk being ostracized from the community. That may not sound so bad in the current market, but for anyone still invested or interested, Telegram is a powerful tool.

Notably, the app’s appeal has endured despite fears it jeopardizes a tenet of cryptocurrencies: security.

A security complex

Since its founding in 2013, Telegram has been heavily marketed as privacy-centric.

Pavel Durov, the company’s CEO, earned admiration after refusing to give the Kremlin user data from another business he’d founded: VK, the largest social network in Russia. Soon after, Durov fled Russia and launched Telegram.

“We had a simple choice: either betray our values or keep our values and leave Russia to try to do something new,” he told Reuters.

Durov’s story lent credibility to his claims that Telegram is private and secure – two precious attributes for cryptocurrency advocates. But critics argue that the reality doesn’t live up to the hype.

Researchers have raised alarm about Telegram’s encryption protocol, metadata collection, and storage of user data. But their biggest concern involves end-to-end encryption (E2EE).

Telegram chats don’t have E2EE by default — which means anyone with access to the company’s servers can see the messages.

The app does provide an opt-in E2EE – but only for “Secret Chats,” which disable many platform features. Group chats, which are heavily used in the crypto community, can never be end-to-end encprrypted.

Cybersecurity experts recommend switching to apps with default E2EE, such as Signal. 

Web3 challengers are also starting to emerge. In January, xx.network, a company founded by cryptography pioneer David Chaum, launched an app that promises both E2EE and metadata shredding.

“Telegram is not only not private – it is not decentralized,” Ben Wenger, the chief engineer of xx network, told TNW.

“In theory, the organization that runs Telegram can censor any channel, user, or individual post. The crypto community needs communication tools that are as resistant as [the] networks they are building.”

Durov, Telegram’s CEO, has regularly defended his encryption strategy. He argues that E2EE renders many of the platform’s features obsolete.

These features help explain why crypto folk are willing to overlook Telegram’s security shortcomings.

Beyond chat

Durov insists that E2EE on Telegram sacrifices usability for security.

Chats that aren’t end-to-end encrypted are instead backed up in the company’s cloud storage. Durov described the benefits of this approach in a post on the platform

It allows for seamless multi-device sync with access to past chat history, huge group chats and channels, persistent message history, sending large documents and videos, instant media forwarding without reupload, minimizing storage usage on your phone, never losing your messages even if you lose your phone – and many other great features which decrease bandwidth, battery, and storage usage.

Some of these features are extremely popular in crypto circles. 

Channels are used to promote projects in one-way broadcasts to an unlimited number of followers, while groups can function as advertising boards for up to 200,000 viewers.

Signal, in contrast, restricts group chats to 1,000 members, while WhatsApp limits them to just 256 people.

This means Telegram users can reach far larger audiences — particularly given the platform’s strong support for bots.

Channels also offer further opportunities for monetization. Some traders share exclusive tips in exchange for subscription fees.

“Users can participate in crypto projects to update their communities on changes/progress, and to receive feedback,” said Tony Danjal, the head of tax Koinly, a cryptocurrency taxation platform.

“There’s [also] things like trading signal groups where they can receive buy/sell signals for specific cryptos.”

Many Telegram users are prepared to sacrifice security for these benefits – at least until a compelling web3 alternative emerges.

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