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telegram_irl
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I generally agree with you. I haven't seen Signal getting much hype outside Soatok mentioning it the other day, but I could see it as it's something close to Telegram and people always try to go to whatever is the next closest thing. That said, Matrix isn't without it's issues either. While I also prefer decentralized, open source, software, (one of the main reasons I'm here,) my experience with Matrix and XMPP hasn't been great. Largely because nearly no one I know uses them.
I haven't seen it hyped as much recently (at least not outside of alt-right spaces) but I do remember a time when people wouldn't shut up about signal.
Matrix certainly does have it's issues, biggest one being that you can lose your encryption keys and with it message history, though it's still much better than what you get with signal where you lose message history if you lose that device or lose your account if you lose your phone number (emails are more portable and permanent than phone numbers but you also don't need the email to log in again, last time I used signal you do need your phone number to log in).
XMPP seems very glitchy and unreliable, I also wasn't really able to find very good clients on Most modern platforms, but I may not have been looking hard enough. I also didn't find many rooms of interest on XMPP so lack of people using it is definitely real, though I found no shortage of rooms on Matrix.
Using them to talk to people you know can be hard if people you don't know don't use them, I know Matrix does have bridges but I haven't tried setting those up and I'm not sure how well they'd work.