How Russia’s Ban on Telegram Could Cripple the Russian Crypto Industry

Startups in the crypto community often rely on Telegram to communicate with users and each other.

Telegram founder Pavel Durov doesn’t seem to be too worried about the future of his platform, which Russia attempted to ban last week. Durov claims that in spite of Russia’s attempts to block access to the Telegram app (which began yesterday), there hasn’t been “a significant drop in user engagement so far.”

Writing on his own Telegram channel, Durov said that usage was virtually unaffected because “Russians tend to bypass the ban with VPNs and proxies.”

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“We also have been relying on third-party cloud services to remain partly available for our users there,” he added.

Evading Authority

Indeed, TechCrunch reported that following the announcement of the ban, Telegram began moving some of its online operations to Amazon web services and Google Cloud in order to prevent the blockade from working. The Russian government blocked millions of IP addresses in retaliation, reportedly causing “collateral damage to swathes of other digitally-delivered services,” including some online payment services.

However, the attempts to block access to the messaging service were not entirely successful, as one Twitter user wrote:

The Russian government has also reportedly put direct pressure on several internet firms to stop offering access to Telegram. Apple and Google have allegedly both been asked to remove Telegram from their respective app stores.

While no official statement has been given by either company regarding whether or not they will succumb to the pressure being placed on them, Apple notably caved into China’s requests to remove VPN apps from its app store last year.

In addition to making use of the cloud services, Durov’s Telegram post also announced that he was intending to personally donate “millions” of dollars in Bitcoin grants to “individuals and companies who run socks5 proxies and VPN.”

The post ended on with a sort of ‘call to resistance’–“I am happy to donate millions of dollars this year to this cause, and hope that other people will follow. I called this Digital Resistance — a decentralized movement standing for digital freedoms and progress globally,” wrote Durov.

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Telegram’s Choice to Keep Encryption Keys Private Was “An Easy Decision”

The ban was the result of a court ruling against the platform after it refused to give the Russian government encryption keys. The Russian government claimed that the encryption keys were required for counter-terrorism measures.

Durov wrote that “for the last 24 hours Telegram has been under a ban by internet providers in Russia. The reason is our refusal to provide encryption keys to Russian security agencies. For us, this was an easy decision. We promised our users 100% privacy and would rather cease to exist than violate this promise.”

The Ban Could Cripple the Russian Crypto Industry

According to Durov, Russian residents account for roughly 7% of Telegram’s user base–about 14 million of Telegram’s 200 million total users.

While the Russian government’s ban hasn’t been very effective (yet), a more successful ban on the future of Telegram in Russia could have significant implications for the crypto industry, particularly within Russia. While the Russian government’s contradictory statements on crypto haven’t made things easy for the industry, a report estimated that Russian investments in crypto startups reached $200 million last year.

A report by TheNextWeb reads that “among alternatives like Reddit and Twitter, the encrypted messenger has gradually cemented its position as one of the go-to platforms for crypto-discussions – especially to Russian netizens.”

In fact, “many startups in the blockchain space have actively relied on Telegram to build up engaged communities and keep their user base updated.”

Some major crypto firms rely on Telegram to communicate with their users, particularly within Russia. For example, 9000 users participate in Binance’s Telegram channel specifically for Russian residents.

Telegram is particularly well-suited for the cryptocurrency industry because of its virtually unlimited group scalability, its encryption capabilities, and its group chat features.

A successful ban on Telegram within the Russian crypto community could mean a significant reduction in communication between Russian crypto firms and the global crypto community, which is most definitely not a good thing for the industry as a whole.

Possible Industry Troubles, But Good Things for the Telegram Blockchain Itself?

While the Russian crypto industry may take a hit from the Telegram ban, the actions that Telegram itself is choosing to take may position it as a global hero in an era of data security concerns and a Russian lean toward authoritarianism.

“Current events in Russia could bolster the case for investment in Telegram,” wrote CoinDesk’s Director of Research, Nolan Bauerle. The Telegram ICO has reportedly raised more than $1 billion, and more funding may be on the way.

In any case, Durov, who has exiled himself “somewhere between Dubai and a Caribbean island,” (according to Forbes) is standing his ground. “Privacy is not for sale,” he wrote on his Telegram channel. “Human rights should not be compromised out of fear or greed.”

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