Through its own digital currency, Kik messenger moves into payments
- Kik messenger is getting into payments through its own cryptocurrency, Kin, which will be created on the Ethereum blockchain.
- Kik's move is seen as a natural evolution of the platform, though doing so through a cryptocurrency could prove costly and difficult to scale.
Kik’s making its own currency.
On Thursday, the messenger platform that claims to have 15 million monthly active users (57 percent of whom are aged 13 to 24), launched Kin, a currency of its own that will let users earn and buy things from inside the app.
“It is becoming increasingly difficult for companies in our space to continue to differentiate through innovation,” said Erin Clift, chief marketing officer of the Waterloo, Canada-based company.
Kin is a digital currency that will be created on the Ethereum blockchain, an open-source public ledger. “The blockchain and related technologies present an opportunity to create a fair and open ecosystem that preferences diverse participation and innovation,” Clift said.
Although Kik’s user base pales in comparison is small compared to its competitors — WeChat had 889 million monthly active users last year, while as of March of this year, Facebook had 1.9 billion monthly active users — Kik is hoping to break the dominance of established players by creating its own payments ecosystem.
While Kik said Kin will be the first “open and sustainable alternative ecosystem of digital services for our daily lives,” the idea of a digital currency within a messenger platform has been tried before. For example, WeChat’s parent company, Tencent Holdings, launched Q Coins for QQ messenger in the mid-2000s.
“Unlike cash or fiat currencies, cryptocurrencies enable decentralization,” said Clift. “In other words, blockchain technology enables the creation of a custom digital economy to align a large number of participants in a single ecosystem.”
Kik said its users will be able to earn Kin from both within and outside of the app, and its platform will be open to brands that could create their own payment bots. The company said the pivot towards a digital currency was in response to strong user response to a pilot program in 2015 and 2016, Kik Points, that sought to assess interest in a digital currency.
“This [pilot] resulted in a daily transactional volume three times higher than the global daily transaction volume of Bitcoin, and millions of our users participated in this pilot,” said Clift. “Kik learned there is a substantial audience inside of the messenger application for an economy built around chat.”
The company, which has been called an aspiring ‘WeChat of the West,’ has raised over $120 million in venture capital funding so far, including $50 million from Tencent Holdings. The company’s CEO, Ted Livingston, told Reuters 10 percent of the token would be offered up in a public sale to investors through an initial coin offering.
To one analyst who watches the evolution of mobile payments, Kik’s foray into payments is more of a way to solidify Kik’s user base against the prospect of growing competition. “This is a way to lock in their customers, because if there’s a competitive product that comes out there, it could potentially lose them,” said Michael Moeser, director of payments at Javelin Strategy and Research.
While Kik’s move to messenger payments can be seen as a natural evolution of platform, Moeser said achieving success with a digital currency may be challenge given the strength of the competition.
“Adding a cryptocurrency is going to be an extremely difficult and expensive endeavor and I don’t know if it’s ultimately going to be successful,” he said.