The news that Facebook is set to launch its own cryptocurrency for Whatsapp at some point this year has sparked speculation as to whether social media companies might usher crypto into the mainstream. But Facebook is, by some metrics, already late to the party, and although its huge user base may propel it to the top regardless, there are already established players who hope to become the de facto crypto partner for younger, nimbler apps that live outside the Facebook ecosystem.
Kik, the anonymous messaging app from the Canadian company Kik Interactive, launched its own cryptocurrency Kin late last year. Kin has since been spun off into its own entity, and has gone on to partner with a raft of small social apps, such as Tapatalk, a community platform that reportedly has a user base the size of Reddit, and Vent, an anonymous social diary platform.
The VP of product at Kin, Alex Frenkel, says that the decision was taken by Kik because the company felt that it had exhausted the possibilities of its traditional business model. It found that the ‘data mining and personalised ads’ model pioneered by Google and Facebook was an inappropriate means of monetising their 300 million users. “They realised that blockchain and crypto could provide an intelligent business model,” says Frenkel.
How? "The fundamental property of crypto is that there is a finite supply, so as demand for the currency grows, so too does the value," says Frenkel, explaining that developers holding Kin will see its value increase over time, and allow them to trade it in to fund operations and growth.
Now, users of Kin apps can obtain the currency in-app, or earn Kin by creating value for other users or by completing small tasks such as helping with brand consumer research. For example, Kin users can be rewarded in crypto by fellow users for their contribution to a particular forum.
He says that a user's ability to choose data privacy and to engage with brands only if they want to - rather than being bombarded with ads - are potent draws.
Although Kin was initially built on the Ethereum blockchain - launching an ICO as an ECR20 token - the currency later moved to its own blockchain, a custom fork of the Stellar network. The cryptocurrency is not completely decentralised. Instead, a group of pre-selected and verified validators process the transactions on the blockchain. Right now, this offers the network greater speed of transactions than a fully decentralised system, although the company signalled in early 2019 that complete decentralisation is still the end goal.
The most important KPI for the currency is monthly active spenders, which reportedly numbers in the 100,000 range right now. However, given that the network effect is a strong driver of currency usage, Kin is hoping to integrate with as many apps as possible.
“When I look at developers like Medium, or many other big platforms, I think that they will integrate the currency," says Frenkel. "Only currency that has value across many different platforms will be successful, because that's the only way those developers will be able to compete with big monopolies in terms of the value that can be created.”
Frenkel says that since Kin launched, many other platforms in the social media sphere have approached the company. In fact, he says they will be announcing a partnership with a big player in the space - counting more than 60 million users - in a couple of weeks time.
Social media giants like Facebook can afford to create their own blockchains and cryptocurrency, however Kin hopes to appeal to those not quite at that level. “When I look Snapchat, and other companies, I don't think they will create their own currency," says Frenkel, "that just doesn't make sense."
Gaming is another potentially vast market for crypto, given most games already incorporate some form of in-game currency. "We have a partnership with Unity, which is the biggest games engine, and we're going to announce a folder for game developers that integrate Kin very, very soon," says Frenkel.