- Telegram, the messaging app, is developing a blockchain platform to rival bitcoin and ethereum.
- It is looking to raise at least $1.2 billion to develop its so-called TON platform and cryptocurrency called Grams.
- It would be the largest token sale ever.
Private messaging app Telegram is planning to gatecrash the cryptocurrency world with a blockbuster ten-figure initial coin offering.
The company, which reaches more than 170 million monthly users, is looking to raise at least $1.2 billion from a token sale which would include a private sale set for February 2018 and public sale in March, according to documents seen by Business Insider.
Telegram expects to raise $600 million in both sales. At $1.2 billion, it would be the largest token sale ever, beating the $257 million raised by Filecoin, a network of decentralised cloud storage providers, in September last year.
The fundraising method, which is best thought of as a cryptocurrency twist on the initial public offering process in which companies issue their own token to investors in exchange for bitcoin or ether, took off in 2017 with seven companies raising more than $100 million last year. Analytics provider Autonomous NEXT estimates more than $4 billion have been raised via ICOs.
As for Telegram’s ICO, the money raised will support the company’s so-called TON (Telegram Open Network) blockchain platform, which will “host a new generation of cryptocurrencies and decentralized applications,” according to a white paper reviewed by Business Insider. Investors will receive TON tokens, or so-called Grams, for participating in the ICO by December 2018 at the earliest.
The company doesn’t expect tokens to be listed on major exchanges until 2019.
TON seeks to solve a problem that neither bitcoin or ethereum address, the company said.
“Bitcoin has established itself as the «digital gold», and Ethereum has proved to be an efficient platform for token crowd sales,” the white paper said. “However, there is no current standard cryptocurrency used for the regular exchange of value in the daily lives of ordinary people.”
While bitcoin and ether have reached incredible heights over the past year, critics point out they have not been able to scale to the point at which they can truly rival cash or credit cards. The common tag-line evoked by skeptics is “you can’t buy a cup of coffee with a bitcoin.”
Telegram is designing its token to be “a decentralized counterpart to everyday money” that’ll target the mass-market. Here’s the company (emphasis is our own):
“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 decentralized supercomputer and value transfer system.By combining minimum transaction time with maximum security, TON can become a VISA/Mastercard alternative for the new decentralized economy.“
The company is set to start accepting letters of intent for the pre-sale from qualified investors at the end of the month. Such investors will get a more than 60% discount to the public sale price, according to the white paper.
Telegram will use 80% of the funds to develop the TON ecosystem.
“More than 80 percent of collected funds will be spent on equipment, bandwidth, colocation, and user verification costs,” the white paper said. “The rest will be allocated for wages, offices, and legal and consulting services.”
Joe DiPasquale, the founder of crypto fund of funds BitBull Capital, told Business Insider he’ll sit this fundraise out given its high valuation.
“It’s a high risk-high reward gamble,” DiPasquale said. “And the risk of having money locked up for almost a year until launch, and up to 18 months after that launch – I’ve personally made the decision to sit on the sidelines.”