Chat App Kik Plans Debut of Ethereum-Based Cryptocurrency

Ted Livingston, founder/chief executive of messaging app Kik, is a Bitcoin enthusiast — so much so that he plans to debut his own cryptocurrency, dubbed Kin and based on the Ethereum network, later this summer. The company plans what is called an initial coin offering (ICO), which lets startups create their own digital money, raise funds via crowdsourcing, and thus develop their own cyber economies. Livingston had previously launched another cryptocurrency, Kik Points, in 2014, which ended its run in the fall.

Fortune reports that, despite the failure of Kik Points, “the company is betting that the time is now ripe to introduce a new digital token based on Ethereum, considering how far Ethereum has recently risen.”

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Livingston’s rationale for creating Kik is to empower startups, in an environment in which the big companies, such as Facebook and Google, garner the majority of advertising revenue and “copy and crush the few [startups] that do break through, leading to a future where a very few number of companies own and control the vast majority of digital services we use every day.”

Livingston, who calls that “bad for society,” believes that cryptocurrency will engender a “meritocracy wherein users can hold something akin to an equity stake,” and “those people who contribute the most — whether by designing successful apps or by creating the most-viewed content — are rewarded with more cryptocurrency.”

Kik will generate 10 trillion total Kin tokens, “a percentage of which will be doled out on a daily basis as rewards to developers and users through a separate non-profit foundation called the Kin Foundation.” To avoid hacking, Kin tokens will be distributed in a “centralized and discretionary manner.” The community that “forms organically” after Kin’s debut will determine leadership of the independent body, which will own 60 percent of the tokens.

A smart contract — software that “automatically executes business dealings through a blockchain — will handle distribution of rewards. “We believe cryptocurrency is the next important business model innovation in tech,” said Kik board member Fred Wilson, who is a Union Square Ventures partner and cryptocurrency advocate. “Kik will be the first mainstream application to integrate a cryptocurrency. This could be a watershed moment for the blockchain sector.”

Other companies involved in cryptocurrency include Coinbase, a cryptocurrency broker that built chat-and-payment app Token, also based on Ethereum, and ad-blocking web browser Brave, which plans a sale of Ethereum-based Basic Attention Tokens, for paying publishers through micro-transactions.