Telegram’s ICO the way to clear blockchain world

Some of Silicon Valley’s leading investors are lining up to buy into a much-hyped initial coin offering by Telegram, the encrypted messaging service that is seeking $1.2bn to build a virtual economy within its app.

As The Financial Times reported, Venture capital firms Kleiner Perkins Caufield & Byers, Benchmark and Sequoia Capital have each told the company they want to invest $20m, according to three people with knowledge of the deals. Sequoia and Kleiner declined to comment, and Benchmark did not respond to requests for comment.

But investors’ excitement about Telegram’s offering could be more than froth. Telegram already has more than 100 million users on its encrypted messaging service. Such a clientele also makes a lot of sense for censorship-resistant applications like decentralized file storage, anonymous browsing, and cryptocurrency micropayments—all of which appear in a leaked white paper describing the so-called Telegram Open Network (TON).

The bottom line is that although Telegram’s blockchain dream may make sense at first glance, many cryptocurrency experts will be skeptical until the company clarifies how it intends to solve some big technical and economic challenges. If the company’s fund-raising efforts come to fruition, it will at least have plenty of cash to invest in trying to figure it all out.

Telegram, whose libertarian stylings and focus on privacy mirrors semi-anonymous bitcoin, is the social medium of choice for online cryptocurrency communities.

Pavel Durov, Telegram’s founder and chief executive, launched Russia’s biggest social network VKontakte, and left the country in 2014 after claiming the government pressured him to censor information posted by opposition activists.

Mr Durov has since relocated Telegram’s team to Dubai. Meanwhile, the encrypted messaging app has gained some 170m users.