With hopes of boosting user and brand engagement while also decentralizing the digital duopoly of Google and Facebook, Kik, the messaging app, is creating its own cryptocurrency.
Today, the Canada-based company is debuting Kin, and the digital currency will become the primary payment method for transactions on the platform. Kin—which will be created as an ERC20 token on the Ethereum blockchain—will exist not just within the Kik, but other platforms and companies will also be able to adopt it.
According to Kik Chief Marketing Officer Erin Clift, the system will create a currency that will help democratize how users pay for experiences, products and services. The cryptocurrency could also make it easier for developers to create businesses outside of walled gardens like Facebook. (Users can earn and redeem Kin within Kik without using traditional currency, while anyone can buy or sell Kin through the public Etherum blockchain.)
“I think that the end result is a better suite of experiences,” Clift told Adweek in an interview. “More compelling content, more choice for consumers, and whether they engage on that, inside Kik or elsewhere on this network, it’s still good for the ecosystem.”
Kik and Facebook have both spent the past year building out their own chatbot platforms. And just as publishers have begun expressing frustrations with how controlled they are (Google and Facebook collectively receive an estimated 85 cents for every new dollar spent on digital advertising), developers getting into the chatbot game might soon find themselves in a similar situation, where their revenue and success are in large part determined by what their host companies decide. According to Clift, the “unbalanced economics” of the current digital ecosystem could potentially stifle innovation across companies.
Kin’s economic model allows users to earn the currency in a variety of ways, such as through interacting with chatbots and other services on the platform that are created by brands, publishers and other companies. Brands might find Kin as a useful way to reward people for carrying out various tasks or activities, such as offering Kin in exchange for posting about them or interacting with an experience. Users can then spend their Kin on interactions with a chatbot or through tipping.
The inspiration comes in large part from Bitcoin, which has grown rapidly in value the past few months and this month reach a record high of $2,500. A nonprofit Kik is setting up called the Kin Foundation will govern the currency and will circulate a set amount every day for developers. Similarly to how the value of Bitcoin rises depending on the number of daily transactions, as more users and developers transact with Kin, the more it will be worth.
The company is also inspired by the use of digital currencies on other platforms, namely the messaging app WeChat, which has become a major player in the world of mobile payments in China over the past few years.
There are also challenges. First and foremost will be getting users and developers to use Kin enough for it to maintain its relevancy and value. However, Kik has some past experience with this model. A few years ago, the messaging app created Kik Points as a pilot to see if they could get people to spend a digital currency on the platform. Kik said the daily value of the currency increased, with daily global transactions three times as high as they were on Bitcoin.
If Kik can get its 300 million registered users (15 million monthly users) to adopt the use of Kin, it’ll have a head start. Later this year, it will conduct a token distribution event where it will sell 10 percent of Kin reserves and begin integrating the currency into the Kik platform. Sometime after that—likely later this year or early in 2018—it will set up the Kin Rewards Engine and the Kin Foundation.
The plan has already won one supporter, Union Square Ventures partner and Kik board member Fred Wilson.
“We believe cryptocurrency is the next important business model innovation in tech,” he said in a statement. “Kik will be the first mainstream application to integrate a cryptocurrency. This could be a watershed moment for the blockchain sector.”