Kik unveiled plans for an initial coin offering,a process by which it sells tokens, called 'Kin', that can be used to buy services on its platform
Toronto: Messaging app Kik Interactive is the latest and potentially most well-established company to delve into a quirky new form of fund-raising—creating its own digital currency.
Kik, based in Waterloo, Canada, unveiled plans for an “initial coin offering," a process by which it sells tokens that can be used to buy services on its platform. The idea is that as more and more people use Kik, the value of those tokens, called “Kin", will rise in value.
Interest in coin offerings is high, thanks to surging prices of bitcoin and other virtual currencies. Called ICOs, they give a wide range of people the chance to invest in a company or any other endeavour early on. While unregulated, they have proved popular, with investors spending around $330 million on tokens over the past year, according to data compiled by cryptocurrency blog The Control. Earlier this month, cloud-storage start-up Storj raised almost $30 million in five days via an ICO.
Kik, which has raised about $120 million (in real money) from investors including Tencent Holdings Ltd, could serve to add a new layer of legitimacy to the process.
“Kik will be the largest install base of cryptocurrency users in the world," chief executive officer Ted Livingston said. “Kin, on day one will be the most-used cryptocurrency in the world."
The move comes as Kik finally reveals how many people actually use its app regularly each month: 15 million. That’s a far-cry from the 300 million total registered users number it was sharing around this time last year.
Kik has traditionally been most popular among teens because, unlike Facebook Inc.’s Messenger or WhatsApp, they don’t need a phone number to use it. Growth has been tough in the past few years though, as teenagers get smartphones earlier and Kik users switch to Facebook apps once they leave high school.
Kik plans to gift a certain amount of Kin to each user. They’ll be able use the new currency to buy games, live video streams and other digital products. The company’s goal is to attract new merchants to sell on the platform, creating a snowball effect where Kin becomes more valuable and more sellers pile onto Kik, increasing its popularity.
The app already uses an in-game token system, which customers can use to tip each other or buy new games and features. Kin will replace that system.
“We will create an economy where millions and millions of mainstream consumers are earning in a cryptocurrency for the first time ever,’’ Livingston said. “They’re going to want to spend in that same cryptocurrency as well.’’ Bloomberg
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