As more established tech companies such as Telegram enter the Initial Coin Offering arena it is important to not let their impressive user base cloud what appears to be a risky investment. The analysis of the Telegram ICO presents a refreshing challenge compared to scams and Ponzi schemes of yesteryear.
For those unsure of what an ICO is, or what an IPO is, for that matter. An ICO is a method of raising capital in cryptocurrency, in return investors receive tokens that usually give them access to the project. Much like an IPO (Initial Public Offering) without some of the legal safety features. But while wolves are among the sheep, cautious optimism is the best approach to take when investing in ICOs.
The Telegram ICO, promises to be a genuinely record-breaking equity fund for the organisation. But is there anything about this ICO that ought to be looked at with suspicion?
TON: Not An 'Everyman' Investment
Telegram serves as a decentralised messaging application. Which, by its admission, boasts over 200 million active users as of the 21st March. As a company, it's based off a credible set of values: everyone has a right to be free and anonymous online.
It's positioning itself to provide users with a means of anonymously storing, accessing and sharing data of all mediums with other users. However, Forbes Magazine doesn't see it as the 'Everyman' investment. With the price tag attached to it, including the fact that its begun and may continue as a series of private sales means that the public may not get an equitable look in.
According to Vlad Dobrov, owner of QYK Bar, said the following regarding Telegram:
"There are no signs that Telegram will approach the public directly in the crowdsale fashion. There is no mention of this ICO even on their website."
Between its first ICO in January and second round this March: over $1.3 billion has been raised for the company. All before the full public ICO begins, which begs the initial question: What is this money is for exactly? And where is it going?
While the company does host more than 200 million users, just how it makes money from these individuals remains a mystery. And with no clear definition of how it turns a profit within its business model, just how its investors expect to turn a profit remains elusive too.
Telegram CEO, Pavel Durov, believes profits are not an end-goal for Telegram:
“If Telegram runs out, we will introduce non-essential paid options to support the infrastructure and finance developer salaries. But making profits will never be an end-goal for Telegram.”
Telegram's Controversial Background
According to Engadget back in June 2017, the anti-establishment and confrontational reputation that Telegram's CEO has towards Russian Intelligence acts as a major asterisk at the end of its crowdfunding. Because of the previous clashing of horns between Russian Intelligence over their messenger's user by the terrorist organisation ISIS.
The refusal to hand over this information has resulted in the app being threatened with a nationwide ban within Russia. While the rationale is to protect the constitutional freedoms of its users, the already outstanding questions surrounding this company are enough for any senior investor to avoid the risks of participating in the Telegram ICO.