Telegram, a popular Dubai-based encrypted texting startup, will integrate a blockchain system called “Telegram Open Network” (TON) into its messenger app and launch a new cryptocurrency called “Gram,” according to TechCrunch.* The initial coin offering (ICO) is expected to be one of the largest—and maybe the largest—ever.
Marrying cryptocurrency transactions with the app’s encrypted communication features could be monumental, as the combination would give users access to a decentralized payment system with little oversight from governments or banks. That means that users could privately send and receive money, even in the form of micropayments, between countries without transfer fees. But the use of ICOs has become controversial as they’ve quickly grown in use.
Telegram appears to be positioning itself as a decentralized, cryptocurrency-enabled version of WeChat, the Chinese social media messenger that has become a ubiquitous tool for making payments in the country. With TON’s capacity to facilitate one million transactions per second, according to the company, Gram would theoretically be better suited for the quick transactions necessary for a functioning currency, compared to other cryptocurrencies like Bitcoin, which only allows for seven per second. Telegram announced in a white paper that there will be 200 million Grams in circulation—4 percent will be allotted to the development team, 52 percent will be stored to prevent speculative trading, and 44 percent will be distributed.
Because Telegram is already an established app with around 180 million users, there is expected to be high demand for Gram’s ICO. The startup is aiming to raise up to $500 million in private presales, with a minimum buy-in of $20 million for investors who don’t have the right connections. The overall valuation for the cryptocurrency could be between $3 billion and $5 billion.
For reference, the biggest ICOs so far, according to Bitcoin Market Journal, include the likes of Filecoin ($257 million), Tezos ($232 million), and EOS ($185 million). Last September, the messaging app Kik nearly raised $100 million in an ICO. However, ICOs are fairly fickle compared to initial public offerings, and Telegram’s ambitious goal of raising $500 million only in private presales could very well change before March, the earliest possible date for the offering.
*Correction, Jan. 16, 2018: This post originally misstated where Telegram is based. It’s in Dubai, not Russia.