Why Telegram Is The Platform Of Choice For ICOs

Facebook Inc. (FB) and Twitter Inc. (TWTR), among the most popular platforms for social networks today, have both either banned or placed restrictions on ads related to initial coin offerings (ICO). So, what’s an ICO entrepreneur to do? Call the Russians! 

Or, at least in this case, use the Russia-based messaging app Telegram. (See also: Telegram's Initial Coin Offering Raises $1.7 Billion). 

Even as it is targeted by the Russian government, Telegram has emerged as the most important marketing platform for ICOs. Kickstarter, another popular method to raise funds, requires users to create login credentials and search for projects in order to fund them. Telegram has streamlined the process and offers several features, such as channels and groups, which are great for disseminating information about an ICO or possible future ICOs. The app populates groups and channels with bots initially. The bot swarm attracts real individuals, who follow soon after. According to an estimate earlier this year, the average number of members in Telegram channels is 13,077 per ICO and the median is 8,632. Telegram has benefited from the global nature of cryptocurrencies, which has helped attract audiences and entrepreneurs onto its platform from all over the world. (See also: The Rise Of The Initial Coin Offering).  

Will Telegram’s Popularity As An ICO Platform Last? 

Because they are not beholden to regulations from specific regimes, ICOs have attracted entrepreneurs and scamsters alike. In fact, according to some estimates, 80% of ICOs are scams and 57% die before their fourth month. (See also: 80% of ICOs Are Scams). These statistics could cause problems for Telegram down the road. Governments around the world are cracking down on ICO tokens and establishing regulations for their sale and distribution. For example, the SEC has repeatedly issued warnings to investors and entrepreneurs about the scams in the industry. It has also cracked down on security tokens masquerading as utility tokens to escape expense and regulations. In fact, some reports claim that Telegram itself scuttled its ICO due to regulatory concerns. Given the app’s importance in the ICO marketing ecosystem, it is very probable that it will have to establish guidelines for its platform. 

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

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