{"id":341933,"date":"2017-05-25T20:03:42","date_gmt":"2017-05-25T12:03:42","guid":{"rendered":"http:\/\/techcrunch.com\/?p=1495605"},"modified":"2017-05-25T20:03:42","modified_gmt":"2017-05-25T12:03:42","slug":"chat-app-kik-takes-on-facebook-with-developer-ecosystem-built-on-the-blockchain","status":"publish","type":"post","link":"https:\/\/people.utm.my\/asmawisham\/chat-app-kik-takes-on-facebook-with-developer-ecosystem-built-on-the-blockchain\/","title":{"rendered":"Chat app Kik takes on Facebook with developer ecosystem built on the blockchain"},"content":{"rendered":"

<\/p>\n

There\u2019s been much talk of ICOs<\/a>\u00a0\u2014 initial coin offerings \u2014 amid the rising value of bitcoin and other cryptocurrencies like Ethereum<\/a>.\u00a0Now the industry is about to see its first \u2018big name\u2019 move into the space after Kik announced plans to introduce its own cryptocurrency via a token sale.<\/p>\n

Messaging app Kik is particular popular among teens and young people in North America. Overall the eight-year-old company, which is based in Canada, claims 300 million registered users. Kik doesn\u2019t break out how many of those are active any given month, but we do know\u00a0that growth has slowed<\/a> over the past year.<\/p>\n

Kik isn\u2019t just the most used service to venture into ICOs, it is also the highest financially\u00a0backed company. It has raised over $120 million to date, and its most recent fundraising round in late 2015<\/a> valued its business at $1 billion.<\/p>\n

Most of the interest around ICOs has centered around it being a process that allows companies to raise money independently of so-called professional investors \u2014 such as VC firms \u2014 since any individual holding the relevant cryptocurrency can invest. However, Kik is emphasizing that, beyond raising capital, it is turning to cryptocurrencies to develop its own ecosystem for digital goods and services.<\/p>\n

\u201cThe\u00a0broader motivation is that it is really hard for independent developers to compete wth huge companies,\u201d Kik CEO Ted Livingston told TechCrunch in an interview.<\/p>\n

\u201cOn one side, you see digital services, on the other they are being owned and controlled by fewer companies because they are the only ones to monetize at scale using advertising. You\u00a0try to sell things but you are trying to sell to consumers who think everything should be free.<\/p>\n

\u201cEven if a few companies can\u00a0break through, the giants turn to copy and crush. We think this is leading to a future with less choice and freedom for consumers [and] for the\u00a0first time ever we can present a potential solution to change all that.\u201d<\/p>\n

Taking on Facebook<\/h2>\n

Reading between the lines, it is clear that Livingston is referring to Facebook \u2014 the world\u2019s largest social network that operates Messenger and WhatsApp, the two largest chat apps on the planet (based on userbase) which compete head on with Kik and others.<\/p>\n

The reference to copying applies across the board, since Messenger and WhatsApp have adopted common industry features well after other chat apps, but it is particular true for Snapchat \u2014 which has had its feature set copied by Facebook, Instagram and WhatsApp<\/a> to the point of absurdity<\/a>.<\/p>\n

Livingston and Kik\u2019s audacious proposal is to free developers from needing to fit inside Facebook\u2019s ecosystem \u2014 and its focus on advertising \u2014 by creating its own environment that is powered by a cryptocurrency.<\/p>\n

Livingston illustrated his point with a personal anecdote about a developer he knows who, despite catering to 600,000 users with his app, is\u00a0\u201ccompletely broke.\u201d That, he said, is because of the \u2018culture of free\u2019 which consumers have become accustomed to due to the advertising model that, he asserts, is perpetuated by Facebook.<\/p>\n

\"\"<\/p>\n

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Kik CEO Ted Livingston<\/p>\n<\/blockquote>\n

Kinship<\/h2>\n

Kik\u2019s proposed coin is called Kin \u2014 that is apparently short for \u2018Kinship:\u2019 or family\/community \u2014 created on top of Ethereum\u00a0an ERC20 token. Kik\u00a0is in the early stages of drawing up a plan to launch it and integrate it into its app potentially as soon as early \u201cthe coming\u00a0summer\u201d. Kik didn\u2019t say how much it aims to raise, but it plans to release 10 percent of the total coinage in the first sale.<\/p>\n

Next year, Livingston revealed, Kin will open up to third party developers for use where he hopes it will find an audience willing for a different approach.<\/p>\n

\u201cOur ultimate vision is for Kik to be one of hundreds or thousands of digital services for Kin,\u201d he explained. \u201cWhat if we got all these developers to integrate Kin, then, as a consumer, I\u00a0can earn and spend Kin\u00a0inside all these places?\u201d<\/p>\n

It\u2019s ambitious, but perhaps not entirely new. Kik introduced its own virtual currency<\/a> \u2014 Kik Points \u2014 three years ago in its first effort to monetize its service. Livingston said that May 2014 launch and June 2016, Kik Points was used in three times more transactions than bitcoin itself \u2014 although that applies to the total number of transactions not volume processed, where bitcoin would be far ahead.<\/p>\n

There\u2019s a long way to go before this theory can be a working concept. Kik is still fleshing out its advisory team, although one partner is\u00a0Chain.com<\/a>, which shares a common investor in Union Square Ventures, the VC firm that is particularly bullish on cryptocurrencies and ICOs.<\/p>\n

A new kind of ecosystem<\/h2>\n

While most people are aware that a token sale (or ICO) is used to generate funds, but what is often less understood is that holders of the coins that are sold gain ownership of the means of production, or indeed the total output of the decentralized system. That is where Kik believes it can build an ecosystem that rewards developers financially without having to resort to advertising.<\/p>\n

Livingston explained he envisages a daily pool of rewards for developers if Kin can become established. At a market cap of $500 million \u2014 meaning that the total number of Kin coins reaches a cumulative value of that figure \u2014 Livingston explained that somewhere in the region of $100,000 would be made available to developers working within the ecosystem on a daily basis.<\/p>\n

\u201cDevelopers would take a percentage of the daily reward in proportion to the number of transactions their service was responsible for,\u201d the Kik CEO explained.<\/p>\n

\u201cThis\u00a0creates a reward engine, a beautiful network effect, where the bigger the daily reward, the more services come into the ecosystem, which drives up the daily reward and more digital services.\u00a0Very quickly this could become a very powerful economic force to bring developers to,\u201d Livingston added.<\/p>\n

In its announcement,\u00a0Kik highlighted potential monetization in sticker sales, hosted group chats, and bots. Telegram, another chat app<\/a>, and Facebook both offer payment support for bots<\/a>, and Livingston himself recently said<\/a> that adding payment options can help bots reach their potential.<\/p>\n

But, those cases aside, this is all very much theoretical at this point.\u00a0Kik is making the first move after it released a whitepaper outlining the plans at\u00a0kin.kik.com<\/a>. It has also created the Kin Foundation, a non-profit organization that will be\u00a0responsible for managing Kin and its ecosystem.<\/p>\n

Finally, in a move that Livingston hopes will show this is not a gimmick,\u00a0Kik said it will open source all of its client and server code to show its commitment to a decentralized system.<\/p>\n

\u201cI\u2019ve\u00a0been hoping for this for years now,\u201d Livingston said. \u201cWe started thinking about it in 2011 \u2014\u00a0we can spark an entirely new ecosystem of digital services.\u201d<\/p>\n

\u201cWe believe cryptocurrency is the next important business model innovation in tech,\u201d Fred Wilson, partner at Union Square Ventures and a member of the Kik board, added via a statement. \u201cKik will be the first\u00a0mainstream application to integrate a cryptocurrency. This could be a watershed moment for the\u00a0blockchain sector.\u201d<\/p>\n

At a time when even the most knowledgeable experts are divided on how\u00a0ICOs and cryptocurrencies will develop, Kik is putting even more emphasis on the space. Time will tell how that turns out.<\/p>\n

Featured Image: Kik<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

\"\" There’s been much talk of ICOs\u00a0— initial coin offerings — amid the rising value of bitcoin and other cryptocurrencies like Ethereum.\u00a0Now the industry is about to see its first ‘big name’ move into the space after Kik announced plans to introduce its own cryptocurrency via a token sale. Messaging app Kik is particular popular among teens and young people in… Read More<\/a><\/p>\n

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