
Telegram has raised an initial $850M for its billion-dollar ICO - doppp
https://techcrunch.com/2018/02/16/telegram-ico-850-million/
======
runeks
The inherent issue with ICOs is pricing.

Buying tokens, which can be exchanged for a service at an unknown ratio
(price), amounts to financing a new fast food chain by buying a million tokens
for $1,000, where the tokens can be used to purchase hamburgers once the chain
opens. The problem is that you have no idea if those million tokens — once the
chain is up and running — will buy a thousand hamburgers or three.

So there’s a dichotomy here. Either your tokens remain low in value, and the
end product of the business will be cheap (as it’s priced in these tokens) and
you make no money as an investor, or the token price will increase and the end
product will be expensive (but you’ll be able to sell your tokens for a
profit).

In the end it’s a useless proposition: either token holders will be able to
buy cheap hamburgers if the token price is low (thus causing a loss to the
issuer/hamburger producer) or they will sell their expensive tokens for
dollars and use dollars to buy their hamburgers elsewhere.

~~~
prostoalex
It’s launching an airline by pre-selling miles. Sure, you might have 1,000,000
miles and Platinum status on that new airline, the boarding passes are on the
blockchain, but the airline gets to control the mile redemption rates and
status privileges for that Platinum level.

~~~
bhouston
Also if people redeem these miles, wouldn't it bankrupt the airline or at
least significantly affect its profitability?

~~~
philipodonnell
It you control the redemption rate then you can just force redemptions below
some level that keeps you profitable.

Airlines do this already, frequent flyer-eligible tickets are a small portion
of the overall tickets available, blackout dates, etc...

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firefoxd
Maybe I'm the last to join the party but if i understand correctly, is this
money they are going to receive as investment?

I ask because as much as i can google I can't find any product they are
selling or any ad they are displaying, so what is being bought here?

I'm not trying to be sarcastic, is there something i am missing?

~~~
mrb
Per the SEC filing, yes, they are receiving the $850M as cash from private
investors (mostly VCs).

The "product" they are selling is tokens for their ecosystem, described in
this leaked whitepaper:
[https://drive.google.com/open?id=1oaKoJDWvhtlvtQEuqxgfkUHcI5...](https://drive.google.com/open?id=1oaKoJDWvhtlvtQEuqxgfkUHcI5np1t5Q)

~~~
thisisit
Thanks, that was a good read. And raises a lot of questions in my mind.

They are going to use PoS mechanism. So, I had to look at the token
distribution scheme. 4% by the team and 52% by "Ton Reserve", which I think is
not explained. With only 44% held in hands of non-Ton people, is this even
decentralized?

~~~
xorcist
ICOs aren't decentralized. They are tokens sold by an entity that premine them
and generally control most aspects of the project. There might be exceptions,
but I can't think of any.

~~~
thisisit
So are you saying when Ethereum did ICO it was not decentralised? And you do
realise this will have its own blockchain and only reason there needs to be a
blockchain is "decentralisation".

~~~
xorcist
Ethereum didn't even exist when it ICO'd, neither in code or in blockchain.

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ebbv
This is truly nuts. We are living through some truly irrational craziness that
makes the dot com bubble look like nothing. When this correction comes it’s
gonna be really bad. Greed is not a good thing folks.

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granaldo
To be honest I have not seen any official marketing page from telegram nor any
ico calendars like
[https://www.coingecko.com/en/ico](https://www.coingecko.com/en/ico) . Is this
entirely private by some group of deserving entities? When will the public can
and able to participate?

~~~
tonfa
They seem to want to do things properly wrt SEC. That would mean only
advertising to accredited investors.

~~~
CryptoPunk
Thanks to securities laws, the rich get richer, and the poor have to wait for
the scraps.

Ideally the SEC's mandate would be limited to going after P&D groups and other
scams, and no longer include enforcing restrictions on selling securities to
unaccredited investors as a non-public company.

If the poorest households are allowed to spend 9% of their income on lottery
tickets, I don't see the justification for preventing unaccredited investors
from investing in whatever they want.

All it does is eliminate the long-tail of small companies and nonprofessional
investors from participating directly in a key sector of the economy.

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davidgrenier
This is going to be an interesting fiasco, chewing ever more on the shaky
public trust. The layman still getting in on this stuff makes it so private
investors can liquidate their worthless investment at a premium, the former
won't learn before the later does.

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bob_theslob646
This is hilarious as so many people use telegram to pump and dump crypto
currency using Telegram.

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utellme
One of the wealthiest russians Roman Abramovich invested about $300M in
Telegram.

[https://en.crimerussia.com/oligarchs/roman-abramovich-
invest...](https://en.crimerussia.com/oligarchs/roman-abramovich-
invests-300mln-in-pavel-durov-s-telegram/)

~~~
dennisgorelik
That means that Roman Abramovich is the largest investor in Telegram ($300M is
35% of $850M).

~~~
utellme
The only question is - was it business investment followed by will of
Abramovich or something else?

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stevebmark
Other than the people at the top laundering money, I don't see how anyone
could get tricked into putting any money into this.

~~~
zanny
We now live in a world where you can have two products side by side, where one
has any of "Crypto" "Block" Coin" or "Chain" in their name or description and
the other does not, where both products do the exact same thing, and have one
of them raise billions of dollars overnight from VCs and the other one not get
a single upvote on the new page of HN.

We truly live in a post-informational time. Everything is emotion. Nothing is
about rationalization or sense or an actual understanding of how something
works. Because we don't know how the thing worked, the numbers got _giant_ ,
and we want giant numbers too. So if you use the same words as the thing we
will plow money into you like no tomorrow because we still don't understand
the thing but we see 1000x profit in 5 years.

------
corndoge
Isn't their crypto implementation still private?

~~~
ktta
It is. I hope they don't do the same thing with their code for whatever
they're making.

~~~
jstanley
What do you mean by "it is"? The Telegram client is open source.

~~~
SXX
In this case "private" have nothing to do with the code license. Problem with
Telegram is that protocol and cryptography they use is their own. They might
use better reviewed protocol like one of Signal, but they didn't.

No need to explain what dangers same strategy going to cause with
cryptocurrencies.

~~~
unicornporn
Was the Signal protocol reviewed in 2013 when Telegram was launched? It seems
it was developed in 2013.

I'd say the biggest problem with Telegram is the fact that E2EE isn't enabled
by default and no one (that I've chatted with) uses it.

~~~
def_true_false
The official desktop client doesn't even support it, after years of people
asking for it. Telegram is basically equivalent to Hangouts or any other
random chat app, if you care about security.

~~~
unicornporn
Yup, terrible. The native macOS desktop client (available in App Store)
actually supports it. At least it did when I tried it.

------
gaetanrickter
Relevant: 'Dawn of the Billion Dollar ICO' [https://hackernoon.com/the-dawn-
of-the-1b-ico-a0486f6587a2](https://hackernoon.com/the-dawn-of-
the-1b-ico-a0486f6587a2)

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slimshady94
There's obviously no way they need so much money. The discounts pre-sale
investors receive on their tokens will be enough to let them sell at a profit
when the tokens become saleable. We don't even know how far along is the
implementation they're working on, what will future adoption be like - at this
point, there's only insider investors looking to cash in on the hype.

~~~
rs86
Yep. 850m is a crazy amount of money for product development. What do they
want to do with all that money?

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orasis
Given that Russians created Telegram, why does anyone trust it?

~~~
munchor
This is a quite racist and unnecessary comment. It doesn't belong on Hacker
News.

~~~
skellera
I am not sure how you think that’s racist. Distrust in Russian products is a
current discussion.

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therealmarv
Another ICO. ICO that, ICO this... you cannot even go to another tech
conference without an ICO gets mentioned. All this 1000 of crypto coins are
useless in long term and I won't support Telegram too. There are 3 main
players named Bitcoin, Litecoin and Ethereum which will stay here longterm and
I don't see that changing anytime soon.

~~~
johnsushant
You mention Litecoin but not Ripple?

~~~
therealmarv
Ripple will also stay I think. But I would be careful of Ripple. Just my
opinion. It's interesting it's connected so well with many financial
institutions and that they have big names on board but I would be a bank I
would rather look in something like Stellar than Ripple which is
(theoretically) in a centralized control of one entitity. All this locked up
XRPs which are not in circulation would not let me sleep well.

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miralabs
I guess they are expecting x20 basing it on the 20B paid to Whatsapp

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zebraflask
More Russian bullshit.

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ttul
There’s definitely zero hype left in Blockchain.

~~~
arthurcolle
crypto/blockchain is significant and has broad implications for how human
social structures cooperate on a global scale. consider everything you do on a
daily basis and think about transactions and interactions you have with others
- all of them

