IT’S A PITCH THAT ... MAKES NO SENSE TO PEOPLE THAT HAVE BEEN IN THE SPACE.

solved,” the analyst, Charles Noyes, wrote about the Telegram project on Medium.

Telegram representatives did not respond to requests for comment.

Believers in the Telegram project have said that the company has a team of developers that have already proved themselves by building two incredibly popular tech products, VKontakte and Telegram.

Durov, a self-described libertarian, founded VKontakte in 2006, but gave up his role and his ownership stake in 2013 after Putin’s allies took control of the company.

Since then, Durov and his brother, who is said to be the technical genius behind the projects, have built Telegram into a messaging giant with nearly 200 million users. (When Facebook raised US$1 billion, it already had half a billion users.)

The Telegram app has been popular in authoritarian countries because it promises that all messages are encrypted and protected from government snooping. Its pro-privacy stance has made it popular with many in the virtual currency community.

The virtual currency network that Telegram is building, known as the Telegram Open Network, or TON, would allow users of the Telegram app to send each other payments when they are not in the same country. It would be a bitcoin equivalent to the popular payment systems that messaging programs like WeChat have built.

“TON can become a VISA/Mastercard alternative for the new decentralized economy,” said a TON primer that was sent to investors. “We believe that a whole new economy saturated with goods and services sold for cryptocurrency will be born.”

The Telegram Open Network will use the idea of the blockchain, first introduced by bitcoin, to maintain all the records of Telegram’s currency, known as the Gram, on computers around the world, without any central authority.

But Telegram is promising that its blockchains will do much more than bitcoin: serve as the basis for a global super computer, somewhat like the popular Ethereum network.

The bitcoin and Ethereum networks have both struggled to keep up with transactions, but Telegram said it will overcome this by using multiple blockchains that will allow it to process millions of transactions a second. The bitcoin network limit is currently around five transactions a second.

The Telegram documents say that 5 billion units of the currency, called Grams, will initially be released to users. The investors who put the first US$850 million into the project paid 37 cents for each token, according to offering documents.

The next round of investors, expected to come together over the next month, will pay about 3 1/2 that for each Gram. If the current round raises another US$850 million, Telegram said in documents that it may hold yet another round, to raise US$850 million more.

The price that Telegram is charging in the current fundraising round — US$1.33 a Gram — assumes the entire currency will grow to be worth at least US$6.6 billion. There are already eight virtual currencies worth that much, and all the bitcoins in the world were worth around US$185 billion on Sunday. Given Telegram’s experience, many investors think it will not be hard to achieve that long-term value.

Telegram’s team has also been careful to stay on the right side of the law, only offering their tokens to accredited investors and working with the established Wall Street law firm Skadden, Arps, Slate, Meagher & Flom.

Telegram initially said in its offering documents that it would do a public sale of Grams, to smaller investors, but it backed away from that after U.S. regulators spoke in congressional hearings in February about their concerns over ICOs, according to the people briefed on the deal.

Despite those precautions, many virtual currency investors said the Telegram offering was too risky.

“This is an order of magnitude larger than any of the most hyped ICOs we’ve seen,” said Joe DiPasquale, founder of BitBull Capital, a hedge fund. “As an investor who looks at a lot of projects in this space, that for me is a concern.”