Kin ICO Manifesto
The whitepaper for Kin, the new decentralized currency from messaging service system Kik, is rather a manifesto for the future and a homage to Bitcoin’s libertarian and anti-authoritarian past. From its opening words, Kin sets a standard for how the new blockchain ecosystem should be formed and run by corporate entities. As they put it, “To safeguard the key tenets of a market-based economy and prolong innovation in the technology sector, the internet needs a fundamentally different way of doing business.”
Rather than waxing philosophical, the document sets the stage for a tested product almost two years in the making. Quite frankly, Kin could be the first DApp to bring Ethereum out of the wild and into the hands of billions.
The value of Kin will be derived from its network. Kin will be the cryptocurrency of Kik, one of the world’s largest chat networks and the fifth most searched term in the iOS app store. There are millions who already use Kik every single day. 57% of Kik’s user base is comprised of 15-24 year olds and 64% are based in the United States and “Over a quarter of a billion messages are sent on Kik every day. On average, Kik users spend 37 minutes and send 55 messages daily on the platform.” Kik was also the first messaging system to allow bots and now more than 187,000 have been created. This alone is incredibly valuable, as the data set garnered from this age group and nationality is incredibly worthwhile to advertisers.
The genesis of Kin was an in app-currency service Kik tested for two years starting in 2014 called Kik Points. The purpose of the program would be to test engagement levels for a centralized digital currency. The currency was provided as a reward for completing certain actions in the app and “Kik users completed 253 million offers and spent the points earned on 74 million purchases.” Incredibly, the average transaction volume was 300,000 per day, with 2.6 million at the peak, nearly three times that of Bitcoin.
By testing Kik points, the company learned how exactly their user base would earn and use their digital currency within their app. They are now monetizing these results into an earnable currency that can be used to purchase goods, services and other content within the app.
The largest problem Kin had to solve was to reduce the complexity of current crypto currency transactions to a user friendly method, reducing “onboarding friction.” Users will still have to purchase and transfer Ethereum to their account, however, once in their wallet, the interface will be simplified and “managed.”
What knocked me off my feet was their first use case, VIP groups. Any user can create and monetize a private channel. This will be huge for bloggers, influencers and other users with a strong following. The whitepaper reads as if the payment is only a one time fee, however, I’m sure there will be monthly subscriptions as well. They also have an auction process, which is crazy. If you have thousands of followers you could list an event and then only the top paying users get in. I can’t think of a better way for content producers to monetize themselves than this.
In addition to this, users will also be able to sell premium content. For example, in Smart ICO Investor’s Telegram signal channel we could set some of our charts to premium and charge users for them. Instead of having a monthly subscription like above, users could pick and choose the pictures and content they wanted to see. Users can also forward content onto others, who also have to pay to unlock the content. These two ideas in themselves will be groundbreaking.
Kin will also provide functionality for paid shoutout messages, tipping, and bot monetization. I think it’s the last point which has some of the biggest potential. Bots are the future. They will be integrated into our phones, TV’s and any other interactive electronic system in the future. From ordering a pizza to tech support, bots will handle most of our repetitive tasks in the future.
This is the future of social media. I predict that every single major social media platform will have some form of this in the future. Instagram will 100% offer this option, giving private photo channels. Many snapchat users already have this set up for their communities, except they must manual control who is members currently.
The scary part though is what Kin calls “Brand Missions.” It allows brands to “directly engage with consumers” by offering rewards for creating content, such as taking a selfie, “answering questions in a survey, creating themed content, or curating content.” How weird will it be when your location tracking phone buzzes you as you walk by Starbucks and offers you a 30% discount in tokens on your next cup of coffee if you take a picture and tag #starbucks. It’s dystopian to me because with the amount of device and data trafficking, advertisers invading your life in targeted ways like this just shows how little privacy we have.
While the Kik team is the creator of Kin, after launch, the currency will be transferred to a the Kin Foundation, “an independent, nonprofit, and democratic governance body for the members of this ecosystem.” Furthermore:
“The Kin Foundation’s mandate is to grow an open ecosystem of digital services that consumers can easily explore and find value in, while giving developers an open and sustainable platform to develop, deliver, and enhance those services and attract users. As time goes by it is likely that the foundation will be replaced by other, more innovative governance methods such as a decentralized autonomous organization (DAO).8 However, creating a formal legal body is an important first step in this process.”
Eventually, the foundation will fund research and development, create incentives for app development and ensure the transparency of the coin system.
Ethereum has a scaling problem which hasn’t been solved. The current Proof of Stake system cannot handle the massive growth Ethereum is now experiencing. There is a solution, Casper, in the works, but no release date has been given yet.
The Kin network presents two problems to the Ethereum blockchain. First, as stated before, Kin’s predecessor, Kik Points, experienced 300,000 average transactions a day or three times the volume as Bitcoin. Currently, there are an average 100,000 daily transactions on the Ethereum blockchain, with an average confirmation time of 17 seconds. If Kin were to depend solely on the Ethereum network, they would quickly surpass its throughput capabilities.
Second, the Ethereum network also requires fees or “gas” to be paid. This creates “onboarding friction” and prevents users from adopting the system.
These problems are solved with a hybrid on-chain and off-chain transaction service. This allows Kin to settle its transactions on the Ethereum network, and at the same time “(1) improve user experience due to latency, (2) avoid network fees when transacting between users, and (3) avoid stress on the public network due to large transaction volumes.”
During the initial distribution, 1 trillion (yah that’s right) tokens out of the total 10 trillion will be put up for sale (10%). Another 3 trillion are reserved for the Kik team and subject to a long vesting schedule and the remaining 6 trillion tokens will be kept in the secured smart contract. 20% of these secured coins will be released each year to fund the Kin rewards program, marketing and operational costs. New coins will be issued to users who complete certain actions. The goal is to create “strong economic incentives” to continue to earn and use tokens on the platform.
STRENGTHS AND WEAKNESSES
The most valuable component to Kin will be its network. The more users, the greater the number of connections and the higher the value. This principle is known as Metcalfe’s law, which sets out that the value of a network is proportional to the square of the number of connected users of the system. In Kin’s case, this will be the largest offering of any crypto currency ever. Not even Bitcoin has the reach that Kik already commands. The addition of this currency will be the corporate world’s first major foray into the blockchain. Until “Zuckercoin” comes out, no other platform will engage as many users and provide value and opportunities through use of their token.
Kik has made it a key part of their philosophy to establish a decentralized network, free from the constraints of the corporation and give users governance control. Hopefully, this standard is accepted by other centralized companies who want to enter the blockchain community in the future.
I’m a bit blinded by the whitepaper. It’s hard for me not to be very excited about this coin. I’m sure there are minor issues about its deployment, coin issuance, etc. But the fact that Kin will be available to so many young people who have already been exposed to and embraced crypto is beyond comparison in my view. I don’t care what anyone says, the leverage they have will make this a top ten coin. No other platform has been able to say this from the beginning and no other will until Zuck decides its time for FB to join the crypto boom.