Bitcoin and Co have always been a Russian Play
Ever since the very beginning of blockchains and cryptocurrencies, the Russian crypto-innovators have been important players. They have been around long before the US guys entered the market. Actually. Silicon Valleay arrived quite late at the party. The Russian tech entrepreneurs have always been highly passionate and gifted but, unfortunately, they had no Silicon Valley or VC culture. Admitted, when it comes to business models, the Russians tend to copy successful Valley ventures for their home markets which are predominately Russian speaking regions.
Pavel Durov, the founder of the Russian-style Facebook VK (formerly known as VKontakte), did another successful copy-venture – the instant messenger app Telegram whose business model is not really innovative but similar to WhatsApp (Facebook) or the Chinese WeChat (Tencent). But it’s Russian and that’s obviously what counts.
Telegram or the Russian Crypto-Big Bang
Pavel and his brother Nikolai just reported to the US Securities and Exchange Commission (SEC) that they have raised $850 million in their Initial Coin Offering (ICO). It’s estimated that 94 different entities were involved in the ICO which started on 14th March 2018. Telegram’s private token placement took place in January 2018 where they managed to collect about $850 million from 81 investors.
Hence, the impressive USD 1,7 Billion from private and public token sale were invested by some 175 investors which makes an average investment of USD 9.7 Million per investor. It seems that most of the money was invested by Russian investors. Among them Sergey A. Solonin, founder of Payment Service provider Qiwi, David Yakonashvili, co-founder of Wimm-Bill-Dann, the largest Russian company. Rumors say that the Russian billionaire Roman Abramovic invested about $300 million in the Telegram ICO.
In 2017, 902 ICO projects were tracked by TokenData. They managed to raise $5.6 billion USD in 2017, according to Business Insider. Until March 31, 2018, according to Coinschedule, 48 ICOs were conducted raising more than $5.8 billion (including Telegram). The total amount of funds raised via ICOs since 2016 is around USD 12 Billion. Hence, the Telegram ICO alone accounts for 14% of the total funds raised which is undoubtedly impressive.
China is Crypto-Mining but Russians plays ICO
Not only has China a monopoly in mining server but is also home to the largest mining pools. The Chinese Antpool is one of the biggest mining pools in the world with more than 25% share of the world’s hash power. BitMain, who owns Antpool and a few other big pools, recorded profits as high as $3-$4 billion in 2017. According to current data from Blockchain.info, Bitmains mining pools make up just over 40% of the computing power on the Bitcoin blockchain. They are a real superpower in crypto-mining.
Based on our analysis of the data we estimate that some USD 5 to 6 Billion of the ICO funds were raised by Russian projects which would result in a Russian market share of up to 50%. It’s can only be a rough guess because many of the ICOs have not really disclosed details on their whereabouts. But in any way, I think it’s fair to say – ICOs are still a Russian play and will maybe continue to be so.