Facebook and Telegram move in on crypto

Although it has taken Internet messaging giants a while to join the cryptocurrency scene, it was inevitable that they would become involved at some point. So, it’s no surprise to see a New York Times article by Nathaniel Popper and Mike Isaac discussing how “Facebook, Telegram and Signal, are planning to roll out new cryptocurrencies over the next year that are meant to allow users to send money to contacts on their messaging systems, like a Venmo or PayPal that can move across international borders.”

Facebook’s secretive actions have been much discussed in the last few weeks, as they have been employing blockchain engineers and crypto experts, and has been in talks with crypto exchanges, but as yet haven’t revealed their precise plans. It is believed that Facebook is working on a token for Whatsapp that would allow users to send the tokens to other users almost instantly.

Telegram, the messenger channel used by numerous crypto-related projects, is also working on a digital asset in some form. Meanwhile, Signal, which is a specialist messaging service used by technology specialists and those working on privacy issues, is also said to have a token in the works.

The messenger app advantage

The advantage companies like Facebook and Telegram have over bitcoin and other cryptocurrencies is this: they already have millions and millions of users; Telegram has 300 million worldwide and Facebook has billions. In other words they have a global reach that the crypto projects as yet don’t have and as a result Facebook and Telegram can make the digital wallets used for cryptocurrencies available, in an instant, to hundreds of millions of users.

Eric Meltzer, co-founder of a cryptocurrency-focused venture capital firm, Primitive Ventures, remarked, “It’s pretty much the most fascinating thing happening in crypto right now. They each have their own advantage in this battle, and it will be insane to watch it go down.”

Regulations may be problematic

However, the likes of Facebook and Telegram may face the challenge that existing crypto platforms know all too well — the issue of regulations. Popper and Isaac state that the messaging companies are likely to face many of the same regulatory and technological hurdles that have kept bitcoin from going mainstream

Will it be a crypto token or a stablecoin?

It is likely that Facebook will opt for a stablecoin solution, although it is rumoured that its token will be pegged to a basket of currencies rather than just the US dollar. This will make the token unattractive to speculators, but attractive to consumers who would be able to use the token to pay for goods knowing that it has a stable value. Furthermore, as Popper and Isaac suggest, “Facebook could guarantee the value of the coin by backing every coin with a set number of dollars, euros and other national currencies held in Facebook bank accounts.” As Meltzer say, it is going to be exciting to watch how it plays out with Facebook and Telegram.

Is the crypto community just smoke and mirros?

You’ve probably noticed that ‘community’ is a buzzword in the crypto sphere. There isn’t an ICO that doesn’t refer to building its ‘community’, which is really another way of talking about their investors, because that is what they are. But ‘community’ sounds warm, fuzzy and friendly when compared with the ‘investor’, which instead suggests neutrality, detachment and anonymity.

Why crypto geeks chose ‘community’

In the traditional world of business it is very important to build loyalty among clients and customers; that’s one of the functions of great branding, but the crypto startups focused on the concept of ‘community’ at the start, in my opinion because they were operating on the fringes and therefore wanted to use a word that suggested a coming together of like-minded people, as well as a sense of equality between those who developed the crypto projects and those who basically crowdfunded them.

In the early days of crypto, this rather ‘liberty, equality and fraternity’ approach served a good purpose; it strengthened belief in a new technology by making everyone feel they had skin in the game, even if an individual’s financial commitment to a new project was $100, let’s say. However, as the ICO took off and every project wanted to build followers who would buy into it, what had been a collection of believers turned into, as Michael K. Spencer writes in his article for Medium, “communities more prone to pump and dump” who were never really loyal followers.

Now crypto projects need to get real

Spencer’s argument is, and I agree with him, is that the so-called ‘communities’ built up by ICOs on Telegram and elsewhere are not as useful to projects as they were once thought to be. The reason for this is that the crypto world has moved on significantly since the launch of bitcoin. Crypto projects now need real clients and products with a real world use.

Communities show no loyalty

In short, a project’s community that has come together just for the Airdrop, or whatever freebies a project wants to hand out, is rarely loyal. These marketing tools may build numbers of followers on social media quite rapidly and make a project look as if it has broad support, but most of those people are just there for the giveaways and once they have them, they’ll be off.

Spencer says, “Crypto saying that its community is its best resource, is like Facebook saying it’s valuable because it has over 2 billion users.” Building community is not where crypto projects should be focusing; they should focus more on real world applications, demonstrate utility and by doing so attract loyal clients and investors.

Telegram ICO raises initial $850 million

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Telegram is the chat channel of choice for ICO and cryptocyrrency fans., so it is perhaps unsurprising that it has already raised an initial  $850 million in its pre-sale stage, as part of its billion dollar ICO.

The company filed a document with the United States’ SEC confirming that the money raised is to be used “for the development of the TON Blockchain, the development and maintenance of Telegram Messenger and the other purposes.”

Investors in the pre-sale were largely venture capital firms and large investors who received significant discounts in order to attract them. According to Bloomberg, the target figure was originally $600 million, but demand pushed the end figure up to $850 million. Bloomberg has also previously suggested that the public sale component will expand to $1.15 billion, bringing the total raised to nearly $2 billion if successful.

It is big news, because this is going to be the biggest ICO to date judging by the pre-sale figure. According to Tokendata statistics, if the Telegram ICO goes as anticipated and raises over even one billion, the second largest ICO –for Filecoin–only raised a mere $257 million. And Tezos, hyped as one of the most successful ICOs at the time, is in third place with $232 million.

To date, Telegram has been privately funded by its inventors, brothers Pavel and Nikolai Durov. The two Russians had previously set up VKontakte, the Russian answer to facebook, but had to leave their home country after a clash with investors.

The demand for telegram tokens is undoubtedly due to its unique position within the crypto community. Its messaging app is used by the majority of ICO projects, with its group feature particularly popular with crypto watchers. The Durov brothers have announced plans to develop Telegram’s services and deliver distributed file storage, a proxy service for creating decentralised VPNs and micropayments services amongst other things. It has already introduced new versions of its messaging apps for Android and iOS. Will the Telegram ICO be the biggest in 2018? We’ll have to wait and see.