Telegram is making a move into the world of digital currency.
Popular secure messaging app Telegram looks set to enter the cryptocurrency space, with plans underway for a major ICO.
The company is planning to raise $1.2bn in total, first with a $600m pre-sale restricted to venture capital backers and close investors, according to TechCrunch. This will be running from January to February on an invitation-only basis. Following the private pre-sale, Telegram is said to be planning a public sale in March, which will allow retail investors to enter. This sale aims to raise a further $600m.
According to documents viewed by TechCrunch and Business Insider, Telegram wants to create its own platform to rival the likes of Ethereum, hosting a whole range of decentralised services that could be made possible by using blockchain technology.
Telegram is likely to surpass 200m active users this year and its messaging app is popular for those involved in ICO projects.
The company will call its platform TON (Telegram Open Network) and investors will receive TON tokens or grams for taking part in the ICO by the end of 2018 at the latest.
In a white paper, the company set out its intentions: “Telegram will use its expertise in encrypted distributed data storage to create TON, a fast and inherently scalable multi-blockchain architecture.
“TON can be regarded as a decentralised supercomputer and value transfer system.
“By combining minimum transaction time with maximum security, TON can become a Visa/Mastercard alternative for the new decentralised economy.”
The majority of the funds raised will go towards developing the TON ecosystem and architecture, and the rest will go towards wages, legal services and other administration fees.
It looks like Telegram wants to be the first to truly bring cryptocurrency to the masses, as well as potential services from anonymous browsing to file-sharing, which could be bought with their native tokens, the gram. By having cryptocurrency-powered payments within Telegram, users could avoid remittance fees and move money privately due to the app’s secure nature.
CoinDesk reported that the company hopes to enable easy exchange of micro-payments among users and bots alike, and make blockchain-enabled services appealing to general consumers.
Criticism from analysts
The ambitious move is not without its critics. Blockchain analyst and quantitative trader at Pantera Capital, Charles Noyes, said that Telegram’s lack of transparency around how its encryption protocol works is worrying.
Noyes noted that the 132-page white paper says “nothing substantial about the hard parts of designing a decentralised protocol. It is essentially a wish list of things they want to have, and how it will work assuming that their wish list doesn’t crash and burn.”
He continued: “I do not know how it will work. I cannot, in 132 pages, gain the slightest intuition as to how to go about proving that the hard problems it needs to solve will be solved.”
Noyes went on to describe the move by Telegram as an “opportunistic ploy”.
MIT professor Christian Catalini told CoinDesk that more information around the governance of such a platform should be supplied. “They need to provide a lot more detail on the monetary policy, how the parameters will be decided, what governance they see for the foundation etc.”