Telegram ICO Review
For a Telegram ICO Review to make sense, here;s a little on the background of the messenger service. Telegram is an instant messaging service that was launched in 2013. Its founder is the Russian entrepreneur Pavel Durov. According to the company, it has 200 million monthly users (March 2018). The company recently captured the attention of everyone on the ICO scene when it launched one of the largest ICO’s in history, to fund the development of the Telegram Open Network (TON). In its first round of the ICO which 81 investors participated in, the company managed to raise $850 million. By April 2018, the company reported that the total amount raised has reached $1.7 billion. This figure represents the largest amount that anyone has ever raised through an ICO. This is in spite of the fact that the company is only 5 years old and has yet to show any profits on the services that it offers.
Telegram ICO Value Proposition 250W
In December 2017, Telegram announced its plans to develop and launch the Telegram Open Network (TON). It is supposed to be a secure and scalable blockchain platform that is capable of handling a large volume of transactions per second. To fund the development project, Telegram will create 5 billion tokens dubbed “grams”. Out of the 5 billion tokens created, Telegram will sell 44% of these tokens through three rounds of token sales. 52% of tokens will be kept by the company as reserves while 4% will be allocated to developers. Telegram intend for these tokens to be used by individuals to pay for the goods and services offered by Telegram.
Telegram ICO Team
The Telegram ICO project is spearheaded by the following key personnel:
- Nikolai Durov (Co-founder, CTO)
- Pavel Durov (Co-founder, CEO)
- Aliaksei Levin (Engineer)
- Vitalik Valtman (Engineer)
- Arseny Smirnov (Engineer)
Telegram ICO Strengths and Opportunities
- Widely Adopted
As a messaging app, Telegram is one of the top instant messaging platforms in the world with 200 million monthly users. While the number of active users might be less than Facebook messenger or Whatsapp, the number of its active users is still sizeable considering the fact that it is a standalone application.
- Transactional Currency Capability
When Bitcoin was first introduced, it was envisioned that the cryptocurrency would act as a medium of exchange for goods and services. But due to the high volatility and high fees, Bitcoin is no longer a viable transactional currency. According to Telegram, TON will not suffer the same fate and it will have the ability to facilitate micropayments around the world. The success of the WeChat messaging platform doubling as a payment gateway shows that this will represent a huge opportunity for TON’s investors.
- Capable Development Team
Both founders of Telegram are experienced and successful. Together, they previously co-founded Russia’s largest social network, VKontakte (VK). There is no doubt in the mind of investors that the Durov brothers will be able to successfully see through the TON project to its end.
- Highly Liquid Investment
Unlike traditional investments where the investments are locked up for a period of a few years, TON investors can liquidate their investments within a timeframe of 3 to 18 months. Even with the longest lockup period of 18 months, TON’s investors can still liquidate their investments much earlier than a traditional investment venture.
Telegram ICO Review: Weaknesses and Threats
- Large Amount Raised
The size of the ICO is larger than any ICO ever launched. Telegram reportedly planned to raise a total of $2.6 billion through its token sales. Many critics have questioned whether such a large amount is really necessary for the development of the TON platform.
- Pre-Revenue Business Model
Although Telegram is a hugely popular instant messaging platform with more than 200 million monthly active users, the platform has never being monetized and has yet to produce a single cent of profit for its founders. Hence when you factor this fact in with the size of the ICO, the proposal does not seem to be attractive. Everything still needs to be developed and deployed making this a very high risk venture. Although Telegram has stated in its investor proposal that it will return the capital to investors if the TON platform is not completed by the end of 2019, this is on the condition that there will be money left to return at the end of that period.
- High Expenditure
Telegram reported that in 2017 alone, it has spent $70 million to cover its operational expenses. With the development of the TON project coming on stream, the expenditures are forecast to increase significantly. Based on its white paper, Telegram has announced that it intends to spend more than half a billion dollars over the next 4 years. If spending continues to increase with no prospect of income, Telegram could face the risk of bankruptcy.
- Limited Blockchain Experience
While the founders of Telegram have demonstrated their ability in building large scale social and messaging platforms, their exposure to blockchain technologies is comparatively limited. So far, the company has not hired anyone with considerable blockchain technology expertise to lead the project.
Following news of Telegram successful token sales, officials in Iran are calling for the ban of Telegram in the country. Officials fear that the use of Telegram as an economic platform will result in it undermining the national currency.
- Lack of Transparency
Unlike other ICO’s, Telegram’s ICO is structured differently. First of all, participation in the token sale is by invitation only. This means the token sales are not open to the general public. In addition, investors will not receive any equity in the company and have no say in how the company will be managed.
The Verdict on the Telegram ICO Review
A huge part of the TON project hinges on the word “if”. If the project is successful, Telegram will be in a position to control a multibillion dollar business. If this proposal is from a startup venture, then the potential for returns is hundreds of times over. But given the fact the Telegram is raising more than $2 billion to finance the TON project, there are doubts that the project can return a yield in the region of a hundred times. In addition, we mustn’t forget that Telegram has yet to hire talents that can make TON a reality.