
The tech world is split over Telegram’s fund-raising campaign - thmslee
https://www.nytimes.com/2018/03/04/technology/telegram-initial-coin-offering.html
======
cornholio
When even the most invested in the crypto bubble are skeptical, you should
stay well away. This sounds like the blockchain equivalent of pets.com, the
hype inflection point:

>“It’s a pitch that sounds good to V.C.s that haven’t participated but makes
no sense to people that have been in the space,” said Nick Tomaino, the
founder of a virtual currency investment fund, 1confirmation, that didn’t
invest in Telegram.

>The most obvious reason to be skeptical of the project is that there is not
even a prototype — just a 132-page paper promising what the system will look
like one day. The Telegram team is promising to release the software late this
year or next year.

>What’s more, Telegram is promising to do more than any other virtual currency
and to fix the intractable problems that have plagued virtual currencies like
Bitcoin, such as overcoming the network’s difficulty handling all the
transactions that have poured onto the network as it has become more popular.

>An analyst at one virtual currency-focused hedge fund, Pantera Capital, wrote
a scathing essay noting that the Telegram team has given no evidence that they
will be able to solve the problems that have dogged everyone else.

>“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,” the analyst,
Charles Noyes, wrote about the Telegram project on Medium.

~~~
htormey
I wouldn’t be so quick to write the telegram team off. Most of the existing
players in crypto have a vested interest in seeing them fail.

On the one hand the Telegram team have a solid track record & a lot of users:
They produced a high quality app that’s used by hundreds of millions of users.
Also add to that the fact that more of the crypto chat related channels are on
telegram.

On the other hand if you read through the white paper they put out, they give
a timeline that promiss to do everything from wallets, to distributed file
storage/computing/exchanges. That’s a very high bar to set without providing a
lot of technical details. A leaked copy of the white paper can be read here:

[https://drive.google.com/file/d/1ucUeKg_NiR8RxNAonb8Q55jZha0...](https://drive.google.com/file/d/1ucUeKg_NiR8RxNAonb8Q55jZha03WC0O/view)

Personally I think it’s worth taking a small bet on them. The biggest problem
in crypto right now is a lack of widely used consumer apps. Getting hundreds
of millions of people to use an app is a harder than solving some of the
distributed systems problems facing crypto right now in my book. I could see
the telegram team pulling this off.

~~~
tfha
You can see the telegram team pulling this off because you aren't in the
crypto space. They are claiming to be able to solve open research problems
that some of the best minds in the world have been studying for years, and
don't have an answer to.

This isn't a matter of one startup failing where another stands a chance. The
problems that Telegram is proposing they can solve aren't execution problems.
They are unsolved research problems. And some of those problems (like
verifiable computing) have been actively researched for decades, well pre-
dating cryptocurrency and Bitcoin.

Everybody has blinders on.

~~~
wongarsu
I can see them pulling something off. It probably won't be earth shattering
from a technical perspective, it will have some compromises that the crypto
space will dislike, their storage service will suck, and "TON Services" will
be a slightly nicer interface for an Etherium clone. But that doesn't matter,
as long as the payment part works and scales, the interface is good and the
marketing is right.

Large adoption can smooth over a lot of flaws, and Telegram has the right
tools and vision for achieving that.

~~~
htormey
Great comment, that is exactly what I think is going to happen.

The big risks I see with the Telegram ICO have nothing to do with the tech.
They are as follows:

A) They build out all this functionality to support crypto currency, etc and
it sees low adoption/usage with their users.

This happened with Snapchat and messenger when they introduced the ability to
send money. People still used Venmo, including many of my friends who work at
Facebook.

B) They roll out this tech, it starts taking off, Facebook detects it and they
smoother it by cloning the functionality and rolling it out in
messenger/WhatsApp. Aka what happened to Snapchat with stories.

------
thisisit
Whenever someone in cryptocurrency says this:

> “TON can become a VISA/Mastercard alternative for the new decentralized
> economy,” said a TON primer that was sent to investors. “We believe that a
> whole new economy saturated with goods and services sold for cryptocurrency
> will be born.”

run for the hills.

This is one of the most generic and regurgitated ideas in cryptocurrency.
There are tons, pun intended, out there promising to be the next payment
channel but have no idea on what it takes to run one.

~~~
wongarsu
It's crypto, you just write some code and it runs itself /s

~~~
kgwgk
It’s most like “you take some money and run”.

------
cslarson
I think many people involved in Ethereum community now believe the current ICO
model to be fundamentally broken despite being the platform most of them are
hosted on. Vitalik, for instance, has said "fund ideas, not teams" and
proposed the DAICO model - which makes it easy for investors to move their
money to whoever is most likely to get the job done. ICOs were for 2017.
Hopefully they will be replaced with something superior.

~~~
paulie_a
That seems counterintuitive, a team has to implement the idea. A bad idea can
be successful with a good team. And yes a good idea can become successful with
a bad team.

But personally I would put my money on the good team over the bad regardless
of the idea

~~~
cslarson
I don't think it's that the team is not crucial to delivery, but rather that
incentivising that team by giving them such an upfront, guaranteed reward is
not ideal.

------
golergka
Every time crypto is discussed on HN, I amazed how few mentions of drugs are
there. Bitcoin is filling, first and foremost, one single human need: to buy
drugs. It's not safe from dedicated investigators, but drug USERS (not
dealers) almost never find themselves targets of such investigations.

Another piece of technology that is always used for the same need is Telegram.
You got drug-selling bots, channels who aggregate your local dealers, secret
chats... Everybody uses this messenger, exclusively, to communicate. It
doesn't matter if it's really secure or if it's just good PR – it works.

So, back to Bitcoin: it's a pain in the ass. People constantly try
alternatives, even if they're even less secure (like Qiwi). Now imagine that
suddenly, you can pay someone straight through Telegram, which has a
reputation (doesn't matter of deserved or not) of being secure. What do you
think is going to happen?

~~~
Taek
Uh, no? Maybe in 2013, but Bitcoin is used for substantially more than that
today. It keeps people alive in Venezuela. A lot of African communities are
finding it to be an excellent source of stability as well.

My company has done more than $10 million in hardware sales selling
cryptocurrency miners for bitcoin. Bitcoin is really the only option for us,
because there's so much fraud (check, credit, etc.) that we couldn't accept
another form of payment without something like 30% markup. The instant
finality (well, 1-2 hour finality) of Bitcoin makes that tractable.

Several startups that I know of have also gained a ton of traction and
competitive edge by switching to bitcoin for payment rails. You won't know
that they use Bitcoin based on their website or based on interacting with
them, but when you send money to another country, they are on the back-end
transferring bitcoin, and this allows them to shave days off of their process
vs. competitors using other payment rails.

Cryptocurrency services a very wide range of niches, because it offers several
very substantial features that no other currency or payment option can offer.
Beyond all the hype and sillyness, there is a technology that is actively
changing the world and is gaining real traction every day.

~~~
atomical
> Uh, no? Maybe in 2013, but Bitcoin is used for substantially more than that
> today. It keeps people alive in Venezuela. A lot of African communities are
> finding it to be an excellent source of stability as well.

There have been a lot of puff pieces written about this. Very little actual
proof in numbers.

> My company has done more than $10 million in hardware sales selling
> cryptocurrency miners for bitcoin. Bitcoin is really the only option for us,
> because there's so much fraud (check, credit, etc.) that we couldn't accept
> another form of payment without something like 30% markup. The instant
> finality (well, 1-2 hour finality) of Bitcoin makes that tractable.

Can you not take payments through Visa? I thought the standard was 2-3% for
fees.

> Several startups that I know of have also gained a ton of traction and
> competitive edge by switching to bitcoin for payment rails. You won't know
> that they use Bitcoin based on their website or based on interacting with
> them, but when you send money to another country, they are on the back-end
> transferring bitcoin, and this allows them to shave days off of their
> process vs. competitors using other payment rails.

There aren't many companies taking Bitcoin. The book 50 foot blockchain by
David Gerard has more on this. The gist though is that often a payment
processor is encourages by Bitcoin maximalists to accept Bitcoin. Months later
they realize no one is using it and remove it as a payment option. Then the
Bitcoin maximalists pounce and harass them.

> Cryptocurrency services a very wide range of niches, because it offers
> several very substantial features that no other currency or payment option
> can offer. Beyond all the hype and sillyness, there is a technology that is
> actively changing the world and is gaining real traction every day.

In the niche of get rich quick it offers many features.

~~~
Taek
You are responsible for the fraud yourself if you use Visa. They also just
outright won't let us use them, we asked almost a dozen providers, including
stripe, including paypal, including several other popular options that are
generally cryptocurrency friendly.

> There aren't many companies taking Bitcoin. The book 50 foot blockchain by
> David Gerard has more on this. The gist though is that often a payment
> processor is encourages by Bitcoin maximalists to accept Bitcoin. Months
> later they realize no one is using it and remove it as a payment option.
> Then the Bitcoin maximalists pounce and harass them.

That's true for small time merchants like tshirt providers and restaurants.
That's not true for more serious platforms like Circle, Abra, and a couple
that facilitate large (6 figures or more) payments across borders. Those
companies absolutely find value in the fast finality, in the low fees (a $10
transaction fee is less than 0.01% for a 6 figure USD transaction), and in the
fact that there are bitcoin exchanges in almost every country in the world.
Fiat payment rails provide other features, but for some use cases Bitcoin is
by far the best option.

------
skellera
Just more signs were at the end of a business cycle. Hopefully everyone is
prepared for the eventual downturn but they never are.

What about Telegram explains needing to raise $1B?

~~~
snissn
[https://www.investopedia.com/articles/investing/032515/whats...](https://www.investopedia.com/articles/investing/032515/whatsapp-
best-facebook-purchase-ever.asp)

[https://www.expressvpn.com/blog/whatsapp-vs-telegram-
encrypt...](https://www.expressvpn.com/blog/whatsapp-vs-telegram-encryption-
battle/)

~~~
daveguy
That explains why telegram might be worth over $1 billion one day (or even
today).

It still doesn't explain why telegram needs $1 billion.

It also doesn't explain how any of the value of telegram is imparted to the
coin itself.

Just because a coin is associated with a company doesn't make it as valuable
as the company.

~~~
freshhawk
ssshhh, that kind of talk is how you pop the bubble before the people who know
this can cash out.

------
nopinsight
If the amount of capital willing to take high risks from cryptocurrencies only
increases a bit over time but more and more high-profile cryptos are launched
successfully, wouldn't the capital in existing cryptos decrease, which
effectively dampen down their valuations?

Obviously, this depends on the rate of incoming new capital vs successful
crypo launches, but as long as the appetite for such high-volatility assets is
limited, the ceiling must be hit some day. Wouldn't that then start the
unwinding of crypto prices as less devouted believers increasingly sell as
losses mount?

------
sopooneo
I'm missing something huge here. What is the relationship between the tokens
people get as part of the ICO, and the product(s) being made by the company
doing the ICO?

I've heard this described as bing similar to an IPO. But in that case, you are
buying part of the company. Is there any similarity here?

~~~
gruez
you're not getting a stake. you're getting tokens that can be used in the new
system. the idea goes that if the system succeeds, the tokens will be worth
something, at which point you sell for a profit. straight up selling stake in
the business is a no-no because it would run afowl of the SEC

------
luka-birsa
My position with Telegram ICO is contrarian. I think it will be massively
successful and actually makes sane investment right now.

Telegram is a defacto standard app for any Crypto user and integrating crypto
makes total sense. Native crypto integration changes the telegram app into the
largest crypto platform.

Too bad they decided to do an ICO, as it would be much better for the
ecosystem to integrate Bitcoin or Eth (see status.im). But why do that when
you can get a cool couple of B and roll your own.

~~~
atomical
How are they going to make money? Telegram users aren't like friends in the
real world who send money to each other.

~~~
maelito
You're saying the small groups or direct messages are a small fraction of the
users ?

~~~
atomical
How will they make money?

------
Y_Y
In other news, pumping the value of bandwagoning shitcoins is at an all time
high.

~~~
fbonetti
2017 was the year of the shill.

~~~
atomical
2018 is the year of the security token -- also known as another way for VC's
to raise a fund. Good luck actually getting access to the broader market of
startups.

------
mythrwy
Good. Variety is key to selection which is the basis of evolution.

------
paulpauper
but the price of a lot of coins is far , far from the jan 2018 highs

------
andrew-lucker
What is the policy on rewriting headlines like this? Was it determined
clickbait?

------
samstave
serios question;

when i think of blockchain as it is, im not focused on “currency” as much as I
am focused on accurasy - in that I am looking at blockchain asa soluition to
tracability for things such as agri

so we can complain about how maybe there is hype in the blockchain space when
it revolves around currency exclusively - but there are valid reasons to use
it for things other than money.... thus, I like the idea of blockchain
intrinsicly

changeMyView

~~~
geofft
"Blockchain" is not a well-defined technical term, but to the extent it has a
meaning, it refers to a distributed-consensus system using a Merkle tree for
tracking ownership of items and proof-of-work for avoiding Sybil attacks (and
therefore double-spend).

If you don't need distributed consensus (e.g., you're fine with a centralized
party maintaining the current state of the system), you don't need the above.
If double-spend attacks aren't meaningful for your application (e.g., there's
nothing that someone can maliciously do twice in different ways, and cause two
different groups of people to believe two different, incompatible actions
happen), then you don't need proof-of-work. If Sybil attacks aren't a concern
(e.g., you can only use the system if you're authenticated via some external
means), then you might not need proof-of-work.

For tracking ownership of physical items by known participants in a real-world
economy, blockchain probably doesn't help a whole lot. Just use normal Merkle
trees.

------
johnchristopher
It's really too bad because I find the telegram app really nice. Every URL I
throw at it gets a nice og rendering when whatsapp is just soso. The bots are
more open, the stickers are greater in numbers, etc.

------
granaldo
The total number of ICOs
[https://www.coingecko.com/en/ico](https://www.coingecko.com/en/ico) happening
now is just insane

And how the market dropped and correct recover in a span of less than 24 hours
is beyond everyone's mind
[https://www.coingecko.com/en](https://www.coingecko.com/en)

The way to get through this is to assume that blockchain finance industry is
unconventional wisdom

