What is Telegram's business model

Telegram: This is how the world's largest ICO works, which is said to bring $ 1.2 billion for the messaging app

The messaging app Telegram, launched by the Russian brothers Nikolai and Pawel Durow in 2013, has had no business model in the past four years. There were a few vague announcements about additional functions that might be subject to a fee, but the development has so far essentially been paid for by the rather ominous investment company Digital Fortress. There are probably the many millions that Pawel Durov made through the forced sale of his remaining shares in the Russian social network VK.com.

But the financing of the non-profit company behind Telegram, about which so little is known, cannot go on forever. After all, dozens of employees and many servers have to be paid, over which the data of soon 200 million users worldwide run. And there it fits perfectly in terms of time and topic to dare an ICO. According to Techcrunch, which the whitepaper and investor prospectuses were leaked, a whopping 1.2 billion US dollars are to be raised for the so-called Telegram Open Network (TON).

In the presale from 20 million dollars

In a presale that is to expire in January and February, invited venture capitalists and confidants of the Durov brothers (at a rich discount of up to 70 percent) can be the first to buy the so-called Gram tokens. However, you have to let at least $ 20 million jump. In the presale phase, the operators hope, 600 million dollars will be accumulated, then the actual ICO will take place and this amount will double. According to Techcrunch, a Gram token will then cost 97 US cents.

If all of this works out, Telegram would launch by far the largest ICO to date - provided that large investors (whales) and small investors (primarily the users of the app) believe that the Gram tokens will be worth something in the future Will increase in value. After all: Telegram is particularly popular in the crypto community and among data protection users who want an independent alternative to WhatsApp and Messenger.

The largest ICO to date according to the TokenData.io analysis service were:

SurnameProduct divisionVolume in millions of dollars
Sirin LabsSmartphone158
ComsaICO platform96

If Telegram actually managed to achieve the targeted 1.2 billion US dollars, then the token would immediately make it among the 35 largest cryptocurrencies worldwide by market capitalization. But that's not all: Only 44 percent of the total of 5 billion Gram tokens will be traded by investors at the beginning, Telegram will keep the rest in reserve.

Ten percent should serve as an incentive for third-party developers who build new applications on the platform, four percent should finance the in-house developer team and remain under lock and key in the first phase of the project. This is supposed to protect the young cryptocurrency from speculation, according to the whitepaper. At the beginning, the operators retain control of more than 50 percent of the tokens.

Competitor for Ethereum?

What Telegram is planning after the ICO will sound pretty familiar to crypto insiders. The basis of the future functions and products is to be its own blockchain (the “TON Blockchain”), which, as the whitepaper claims, is supposed to create a million transactions per second. For comparison: Ethereum's record performance is around 1.35 million per day to date.

But the Telegram blockchain will have to be able to handle a million transactions if what is still on paper is actually implemented. Users should receive a wallet to store the Gram tokens and then be able to use this to send them to other users or to pay for paid services (e.g. paywall for news, games). TON should also be suitable as a platform for decentralized apps (DApps) or offer VPNs or TOR-like services for anonymous and tap-proof surfing.

But when all of this will be usable is open and primarily depends on whether the ICO is successful. On the plus side, there are currently around 180 million active users at Telegram, who could be introduced to new services via a new crypto currency. That's a lot more than many other ICO projects can claim.