Less than a year after creating its own cryptocurrency, Kik wants to build its own blockchain.
The Canadian messaging app is planning to move away from its current blockchain to create one that better suits its goals for building out a new digital ecosystem for users and brands with faster transactions—and, ultimately, no fees.
Here’s the backstory: The digital currency, Kin, was initially created in May 2017 by Kik and the nonprofit governing organization Kin Ecosystem Foundation as a way to boost engagement on Kik’s own app. It’s also a new way for Kik to better compete with the likes of Facebook and Google by creating an alternative to the data-heavy systems currently siphoning most of the new online ad revenue from publishers and other platforms.
Through a process called “forking,” which is when you take the source code from an open source software program and create a different program, Kin’s blockchain will split off—like a fork in the road—from the blockchain code used for the Stellar blockchain it currently uses. While it will be a derivative of Stellar, Kin’s custom blockchain will have its own code. (And, much like a tailored shirt, Kin’s custom blockchain will make for a better fit rather than using one made for something else.)
Alex Frenkel, a vp of product at Kin, said creating a custom blockchain will allow Kin to operate more efficiently as it builds out ways for users to earn and spend Kin through messaging each other on Kik or by interacting with brands and media companies. Users will then be able to buy real-world rewards with the tokens created when Kin had its $98 million “initial coin offering.”
“One of the key things we understood after a few months is how big the need is [for an engagement alternative],” he said. “When you look at the data today, we see a huge opportunity to do a huge online economy that is more fair for developers struggling to monetize with user data or retargeting users with more and more ads, or they have a big challenge of monetizing without charging users.”
This isn’t the first time Kik has pivoted Kin to another blockchain. While the initial coin offering for Kin was built on the Ethereum blockchain, last year the Kin Foundation decided to create a hybrid blockchain, moving transactions onto Stellar while continuing to use Ethereum for investors that participated in the ICO.
While much of Kik’s plan to make Kin mainstream might sound hypothetical, Kik has been working to woo brands into trying Kin to engage with users in a way that doesn’t require digital advertising. Some brands are already experimenting with Kin. For example, in December, Sperry’s and Dunkin’ Donuts both offered Kin in exchange for customers participating in polls. (Results of the test have not yet been disclosed.)
Last month, it signed on Unity, the gaming software powerhouse, and Blackhawk Network, a company that sets up rewards programs for brands. (For example, a user might earn Kin while playing a game and then later spend it through a company that accepts it as payment through Blackhawk.)
Blackhawk’s API will help facilitate offers such as e-codes and e-offers through its hundreds of partner brands. Some brands including Domino’s, Nike, Gamestop and Sephora are already testing Kin’s integration with Blackhawk.
According to Dany Fishel, head of partnerships at Kin, users feel more incentivized to talk with each other and with brands when there is an actual real-world reward.
Kin also allows Kik and other organizations to reward users—perhaps power users, first-time users, or maybe just someone they want to surprise. And over time, Kin also will have its own software development kit built in a way for companies to drop it into the code to find earn-and-spend opportunities.
“Usually the users are the ones that are creating the value: uploading videos, moderating channels, creating content,” he said. “And they are not often compensated.”
Asked what these blockchain evolutions do to the overall value of Kin, the company said all 10 trillion Kin tokens that will ultimately be in existence should eventually have the same value. That way a Kin token on the Ethereum blockchain will be worth the same as one on Kin’s own blockchain.
“Users won’t care which kind of Blockchain you’re using just like they don’t care whether an app uses Java,” Fishel said.