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Telegram: What’s The Noise All About?

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There has been a lot of noise lately about Telegram.  When I first looked at the messaging app, it looked a lot like just another messaging platform.  Does the world really need another one of these? There are already over a dozen. Facebook Messenger leads and that is a huge competitor.  And then there is WhatsApp and WeChat.

I’m not a paid shill for Telegram. I write about things that are interesting to me and hopefully give you something to think about.  Like a lot of others, I am hearing valuation numbers for Telegram that seem ridiculous. It’s time to do some digging. So let’s get started.

The Biggest Asset: 200 Million Users

Over the course of the last 4+ years Telegram has connected 200 million users, mostly cryptocurrency owners.  This clearly has to be their core asset in placing a value on the company.

After that, there is just one question.  How much money do 200 million users generate?    Here is founder Pavel Durov’s answer:

“We believe in fast and secure messaging that is also 100% free. Telegram is not intended to bring revenue, it will never sell ads or accept outside investment. It also cannot be sold. We’re not building a “user base”, we are building a messenger for the people.”  Sounds a lot like Karl Marx.

Is Telegram’s non-profit approach any different the bitcoin or Ethereum? Not really.  What makes Telegram different from the start is the valuation.

According to several estimates, Telegram is aiming to bring in as much as $1.2 billion with its ICO.  Recently an independent analyst predicted that by 2023 Telegram could be worth $200 billion. How can a company that intends to remain 100% free generate so much value?

Telegram Whitepaper Reveals Huge Vision

Once you get a peep into Pavel Durov’s whitepaper, it becomes clear that Telegram intends to be much more than a messenger app. The fact that Telegram’s 200 million users are believed to be overwhelmingly cryptocurrency or ICO owners gives Durov the perfect target audience to aim a new cryptocurrency that he believes is a bona fide improvement over bitcoin and Ethereum.  Here are several key tidbits from the whitepaper.

Neither bitcoin or Ethereum have the capacity to replace VISA or Mastercard. The current architecture limits bitcoin transactions to a maximum of only 7 transactions per second and 15 transactions per second for Ethereum. This is insufficient speeds resulting in higher transaction costs.

Secondly, new users starting to engage with bitcoin and similar technologies often get confused when trying to buy, store, and send their coins. Launched in 2015, Telegrams API represents a important gain.

Finally, Telegram claims the market of goods and services that can be bought with cryptocurrencies is limited, and the demand for crypto-assets comes mainly from investors, not consumers.  Telegram launched a payments platform in Q2 2017 aiming to change all that.

The Vision

Telegram claim to be uniquely positioned to establish the Telegram Open Network and be the first mass-market cryptocurrency based on the following properties.

Speed and Scalability

The biggest advantage appears to be the TON use of multi-blockchain architecture that allows for processing millions of transactions per second.  This is still a long way from Visa and MasterCard at over 150 million transactions per day, but a major step forward nevertheless.

Intuitive User Interfaces

Any first time user will attest to the fact that dealing with exchanges, wallets and other crypto data sources can be daunting.  Telegram believes they can change that.

A Captive User Base

Over 200 million existing users already place Telegram among the five largest messaging services.  That is as many customers as PayPal. According to Forbes, Telegram is the cryptocurrency world’s preferred messaging app.

Promising A Giant Step Forward

We can pretty much agree there are three major issues crypto investors are concerned with: regulation, transaction speed and security.  The TON addresses processing speed and like everyone Telegram claims to have the security question answered. With no disparaging intended, only time will tell.

Business Plan Or Wish List

There have been enough ICOs sporting flashy whitepapers filled with globally disruptive technologies not to mention ecosystems to follow, that Telegram’s whitepaper really isn’t much different.  

The question that is stumping the investment world is: what is Telegram worth? Various estimates have placed a value of as much as $200 billion by 2023. If Metcalfe’s Law is applied, the value in five years could go even higher.

But those interested in the ICO want to know how much is Telegram worth today.  Even though you are not buying equity, you still need to know the probabilities of Telegram achieving its goals and being worth far more in the next few years.  

Telegram’s road map is laid out below.  I am in agreement with Bloomberg News that quoted AQR Capital Management as saying Telegram’s lofty valuations require everything to go right. There is lots of technology experience and wisdom behind that statement.

I like Telegram’s audacious plan. But at some point in the future, someone will miss a deadline, there will be a platform with faster transaction speeds and lower energy consumption.  That is the time when the risk will be in your favor.

Timeline

Q2 2017  Start of the development of TON

Q1 2018  Launch of Telegram External Secure ID

Q2 2018  Launch of the Minimal Viable Test Network of TON

Q3 2018  Testing and security audits of TON

Q4 2018  Deployment of the stable version of TON

Q4 2018  Launch of Telegram Wallet

Q1 2019  Creation of TON-based economy in Telegram

Q2 2019  Launch of TON Services, TON Storage, and TON Proxy

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 88 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Crypto Update: Divergence Deepens as Altcoins Fall, Bitcoin Flat

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The unusual discrepancy between BTC and the rest of the cryptocurrency market continued today, with the top 10 coins all losing ground with the exception of Bitcoin itself. Tuesday’s surge, which carried the segment to $300 billion in total market cap quickly fizzled out, at least as far as the major altcoins are concerned, but the largest digital currency is still holding on above the strong $7000 and $7350 support/resistance levels.

Altcoins are on short-term sell signals according to our trend model, but Bitcoin is still on a buy signal as the declining trend was broken by the break-out that remains intact, despite the segment-wide weakness.

Given the mixed, but one-sided setup, and the lack of bullish follow-through, odds still favor a bearish outcome, and traders should remain cautious with new positions here, even in BTC, the positive outlier. A broad trend change would require a meaningful leadership, and until that develops, a test of t eh June lows remains likely, with the possibility of new lows in the coming week as well.

BTC/USD, 4-Hour Chart Analysis

While Bitcoin failed to durably stay above the $7500 level, bulls successfully defended the support zone near $7350, despite the overbought short-term momentum readings. The coin is well above the line-in-the-sand $7000 level and the long-term support near $5850 that was in danger just one week ago.

Although the altcoin weakness makes BTC’s rally suspicious, the short-term bullish pattern is intact, as is the buy signal in our trend model. Further support is found at $6750, and $6500, while primary resistance is still ahead at $7650.

Selling Pressure Apparent in Altcoins

ETH/USD, 4-Hour Chart Analysis

All intraday rally attempts have been sold so far in most of the major altcoins, and Ethereum is just holding up above primary support at $450 despite the rally in the beginning of the week. The coin is on a short-term sell signal, and a test of the June lows is likely after the failed break-out. Strong resistance is ahead at $500 and between $555 and $575, while support is found at $420, $400, $380, and $360.

XMR/USDT, 4-Hour Chart Analysis

While Monero has been holding up relatively well in the last couple of days after getting stuck below the $150 level during the Tuesday surge, but the coin is still among the structurally weak majors, being on a long-term sell signal. As the other bearish leaders, NEO, LTC, and Dash are also trading below key long-term levels, we expect the coin to fall back below the $125 support and likely test the June lows in the coming weeks.

XRP/USDT, 4-Hour Chart Analysis

The third largest coin Ripple is already testing the $0.45 level after drifting lower ever since the Tuesday rally, and as its relative weakness is still clear, a break below that level seems to be imminent. Below that, the crucial long-term support zone near $0.42 could stop the decline of XRP again, but a move under that could trigger a long-term sell signal.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Forex Update: Boring Means Long-Term Sustainability for EUR/INR

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Billionaire investor George Soros once said, “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” As an experienced investor, I couldn’t agree more. There’s a lot of waiting and sitting involved but that’s how money is made in investing. The Euro/Indian Rupee (EUR/INR) pair seems to be the perfect embodiment of this quote.

Looking as far back as 1999, it appears that EUR/INR has been in an unstoppable bull run since the second half of 2002. If you invested in the pair a decade and a half ago, you would have more than doubled your money. Chances are you didn’t, but don’t fret because you can always invest today. EUR/INR looks as strong today as it did back then.

In this article, we show how EUR/INR is looking strong on all counts despite being boring.

Healthy Ascending Channel on the Daily Chart  

EUR/INR dropped to as low as 67.9819 on April 10, 2017 and it was nothing but blue skies since. It is trading within an ascending channel as it generates higher highs and higher lows in a sustainable manner. The ascending channel looks healthy, too, as the trading range is not significantly contracting or expanding.


Daily chart of EUR/INR

If you look at the technical indicators, everything is fairly clear. EUR/INR rallies when it flashes oversold readings. On the other hand, it corrects when it is overbought. You won’t find excitement here and that’s good news for long term investors.

Concluded Corrective Wave on the Weekly

EUR/INR started showing signs of weakness in September 2013 when it posted a shooting star weekly candle. The ensuing pullback drove the pair down to the 65 levels in March 2015 (A-wave). The market has not visited that price area since. It managed to generate a bullish higher low setup at 68 (C-wave). This was a clear signal to investors that the correction was over.

Weekly chart of EUR/INR

With a higher low in place, EUR/INR took out resistance of 76. The new support level was tested and retested before the pair mounted a strong rally. On top of that, we can see a hidden bullish divergence on the weekly RSI, hinting that the uptrend is in a good shape.

Even in the weekly chart, the market is not pulling any surprises. There are no false breaks and no shakedowns. You don’t have to look close to see where the market is headed. EUR/INR is boring and that’s why it is strong.

Major Support Line on the Monthly Intact

Conventional wisdom says to buy low and sell high. The problem with this is that you don’t really know when is the market low. The market can go down as there’s always the possibility that a key support can break. That’s just not the case for EUR/INR.

Monthly chart of EUR/INR

Buying low is fairly simple in this case. All investors have to do is to wait for the price to hit the long-term support. Investors can be confident in doing so because the trend line has been intact for over 15 years. More importantly, it bounces every time it hit the support. It’s not really exciting but it works.

Bottom Line

A famous billionaire trader once said that good investing is boring, and I agree. Look at the charts of EUR/INR and you’ll see why boring investing is good.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.6 stars on average, based on 201 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Pre-Market: China Tries to Support Markets as Global Stocks Slide

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Yesterday’s risk-off shift continued today in early trading with nervous and choppy trading in Asia and Europe, as global financial markets are still haunted by trade war fears and emerging market weakness. The major US indices rolled over after another period of apparent relative strength, with the Nasdaq being the most robust market once again, while most of the key European benchmarks continue to lag behind.

S&P 500 Futures, 4-Hour Chart Analysis

Chinese assets are still in focus before the weekend, as the Yuan’s recent steep devaluation sparked fears of a credit meltdown in the country. With the largest credit bubble in human history casting its shadow on China, some analysts think that with Trump’s trade war, the bug finally found its windshield and the bubble already started to burst.

USD/Yuan, 4-Hour Chart Analysis

All eyes are on the USD/Yuan pair as Chinese authorities are reportedly intervening in the market of the currency, and most likely local equities as well, trying to prevent a serious run on the most important assets.

With the Chinese stock market already in a bear market, and the Yuan trading at fresh 12-month lows against the Dollar, it might be a bit late to stop the slide, but the intervention could cause spectacular short squeezes.

Italy also made headlines today during the European session, as Italian government bonds got slammed lower, as the future of the new finance minister is uncertain, with another round of political turmoil possibly ahead for Europe’s most vulnerable country.

Unicredit (UCG), 4-Hour Chart Analysis

Looking at the charts of Italian banks, it’s clear that the spring turmoil had a lasting effect on the financial system, as Unicredit is on the verge of hitting a new low, and the other large players also remain under pressure, in part explaining the general weakness in European equities.

Europe Still Far Behind amid Mixed Economic Numbers

USD/CAD, 4-Hour Chart Analysis

The economic calendar is almost empty today with regards to the key markets, as the Canadian Retail Sales and CPI reports are the most important releases. The Canadian Dollar rebounded when the USD entered a correction June, but now the currency edging lower again, as the weakness in commodities and the Greenback’s rally are taking their toll. New highs are likely in the USD/CAD pair in the coming weeks, although strong resistance is just ahead at 1.33.

Commodities are little changed today after yesterday’s volatile session, as the bounce in China helped to stabilize the segment. Notably copper is back above the key $2.70 level, while WTI crude oil is trading at $68 per barrel again, and gold is hovering around $1225.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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