Daily Archives: August 8, 2017

Do u kik? Jamie Squire/Getty Images

Kik is giving teenagers a wallet and an allowance.

For the unfamiliar, Kik is one of the largest messaging apps in the world, though tiny compared to services like WeChat, Facebook Messenger and WhatsApp. Anyone who has scrolled through the bikini-heavy corners of Instagram (dont look at me)have probably seen something like Kik: b1ancAAAHor ~kIk Me~ in user bios. Its an invitation to connect personally, for chatting in private. Kik today is what BBM was to young Gen Xers or old Millennials.

With someones Kik ID, the app gives users a way to chat, send GIFs or do whatever the kids do these days, as long as whoever sent themessageseems cool; otherwise, they get blocked. Simple.

Fred Wilson thinks Kik is cool. The Union Square Ventures partner has backed the company, which has now attained a valuation of over a billion dollars, putting it in the unicorn club. According to App Annie, the company has had 30 million downloads on iOS and Android, and Android users have consistently logged about 5 hours per month on Kik.

As weve previously reported, Wilson has long believed that cryptocurrency could kickoff the next great leap forward for the web by making money native to the internet. That said, I dont think many people were expecting the companys announcement today: Kik is creating a new cryptocurrency, called Kin, running on the Ethereum blockchain.

They are going to decentralize Kik and use a new cryptocurrency called Kin to build a business model around a decentralized Kik and, hopefully, attract other developers to build decentralized communities using Kin as well, Wilson wrote on his blog.

With Kin, developers could earn money when users actually pay for services. Today, developers kill themselves building apps for Facebook and Google, and generally they can only monetize users attention in the form of ads. It takes a huge hit to earn anything.

So, the Toronto-based companyis giving a cryptowallet to several million young people and developers a strong incentive to make up ways for them to spend money in that wallet. If the internet has digital money moving at high volume, there will be new ways for companies to earn money besides selling out their users to Google and Facebook.

Ted Livingston, Kik co-founder. Noam Galai/Getty Images

Digital advertising is a $72 billion market. It grew by 20 percent last year, and nearly the entirety of that growth went to Google and Facebook, as Fortune reported. The two companies already control nearly two-thirds of the market. In a lot of ways, advertising is the currency of the internet, so online its as if the Federal government retired the dollar in favor of the Facebeso and the Groogble.

As Kik put it in the Kin whitepaper:

The reliance on advertising for digital media revenue has resulted in advantages for companies whose products reach mass audiences. Such companies can leverage network effects and economies of scale to apply intense pressure to smaller competitors while also stifling competition by providing their services free of charge.

By putting digital money in the hands of lots and lots of its users, Kik thinks it can create a new way for developers to make a living off their talent, but the key is teaming up.

Any one app that tries to take on these behemoths is going to lose, Ted Livingston, Kiks co-founder says in the announcement video for the new currency. Cryptocurrency is decentralized. If Kin takes off, there will be no new center of gravity. Instead, there will just be a Kin economy.

Kin will create 10 trillion units that it will parcel out over time. It will have an initial coin offering where ten percent of all Kin will be distributed. This should establish an initial value for the coins. Then it will begin distributing coins out to users and developers. The incentives at the start will be geared toward generate turnover. The more people are actually exchanging Kin, the more they should be worth. The more they are worth, the more developers will build new apps to generate more turnover.

Every day, new Kin will be released, and they will be distributed proportionally to apps based on how much Kin they move. In a way, it makes the rich get richer, but it also creates a strong incentive for techies to make stuff that people want to pay for.

To keep money flowing, users will be able to earn Kin without putting real money into the system. Everybody will get a wallet in their app. This could be important, because it allows young people to get into the idea of digital currency and really start using it. In the future, users will be able to earn Kin by providing value to other members of the Kik digital community through curation, content creation, and commerce, the white paper explains. Its vague, but the basics are there.

If Kin gets to be worth enough, we might see people, for example, pay for their Spotify subscriptions using money they earned posting funny photos on Kiks inevitable Snapchat Stories ripoff. Thats real value.

The white paper lays out several use cases in a Kin-economy. Users might use Kin to pay for access to exclusive, members-only groups around a celebrity. They might use Kin to buy exclusive content from an artist, such as a song download. And, of course, users will be able to tip people they like in Kin, such as webcomic artists working in a mobile-friendly format.

So that all sounds pretty nice. It also sounds like a nice ecosystem for porn stars, but whos judging?

Kik permissions, from the Google Play store. Screenshot

Though both porn stars and developers will have the same question:how easy will it be to turn Kin earned into actual money? Developers arent going to have an incentive to build great services that earn Kin if they cant pay rent with their earnings. Only a small portion of the Kin supply will become liquid in the near future, as most of the Kin supply is reserved for the Kin Rewards Engine, the white paper states.

So for an entrepreneur, that leaves them uncertain about if people will use Kin, if volume will be high enough, if it will be worth anything in fiat money and when they will be able to sell Kin for real money. Thats too much uncertainty for teams to start putting new Kikapp ideas onto whiteboards just yet.

Privacy is another big question mark. I went to download Kik to my mobile, and it asked for every possible permission, from access to my contacts to access to my microphone and camera. In its privacy policy, the company admits that it uses data collectors like Google Analytics and Nielsen (though there could be more), and users should look at those companies privacy policies to find out what they do with information gathered inside Kik.

So until Kik manages to knock Google out of its placeat the helm of the digital economy, itsstill making dinner off scraps that fall from the Mountain View gravy train.

UPDATE: Added data from App Annie. May 25, 2017 6:16 PM.

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Its a marvel to me to witness what is happening on planetEarth as it regardscryptocurrencies. Satoshi Nakamoto, whoever or whatever he/she/zhe is, began a revolution as big as the wheel and the printing press and the Internet that came before it, or so it seems to me.

With cryptocurrency, nobody can implement their preferred change arbitrarily.

MichaelWuensch / Pixabay

Over $93 billion dollars, and counting,have poured into the cryptocurrency market since Bitcoin wasreleased in 2009. Millions of individuals have come together without central direction to build this worldwide phenomenon.

Changes are happening every day that have global ramifications, all of which are happening without permission by governments, and often in spite of governments supposed authority to control other people. That is trulyawesome.

There is governance, to be sure, as it regards cryptocurrencies, but such governance is without centralized structure. Cryptocurrency manipulation must follow specific rules, and changing those rules requires popular acceptance by users and stakeholders of each given cryptocurrency. Nobody can implement their preferred change arbitrarily. The only thing arbitrary about cryptocurrencies is ones desire to get involved in the hundreds of different systems, and once involved, they must follow the rules.

Nobody can implement their preferred change arbitrarily. The only thing arbitrary about cryptocurrencies is ones desire to get involved in the hundreds of different systems, and once involved, they must follow the rules.

I think theres a model here for political governance, or in others words, governance around the idea that people have rights, and those rights should be protected, with physical violence if necessary. While people mostly agree that behaviors such as murder, rape, robbery, assault, and battery are undesirable and we all should be protected from them, theres a lot of disagreement on the smaller stuff, like whos entitled to what, provided by others that havent themselves committing any of the foregoing behaviors (ie. crimes). Thats not to say that people dont disagree on the big stuff, but the disagreement is morea matter of definition than of undesirability.

The only thing arbitraryabout cryptocurrencies is once involved, one must follow the rules.

Who should decide which entitlements should be enforced? The current model says that for a givenarbitrarily-derivedgeographical area, one entity should decide, even when a party to thedispute and that entity may be influenced in any number of ways. In other words,one size fits all, like it, leave it, or hope you get enough popular support to change it.

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What Cryptocurrency Can Teach Us About Political Governance ...

Oaktree's Howard Marks sounded a general alarm last week about the state of stock markets, private equity, credit markets and for good measure new digital currencies like bitcoin and ethereum. Essentially, he wrote in his letter to investors that everything is overvalued.

On the cryptocurrencies, he went further. He stated several times that they're "not real." Furthermore, he said, they are "nothing but an unfounded fad (or perhaps even a pyramid scheme)."

Cryptocurrencies may indeed be in the biggest valuation bubble since the dot-com era.

At the same time, there is undeniable excitement about their potential today among the top tier of venture capital investors.

Former PayPal COO David Sacks, who was also an early investor in Airbnb, Facebook, Palantir, SpaceX and Uber, tweeted last week that cryptos are the best candidate we've had for the next big thing in Silicon Valley (Web 3.0):

When I read Marks' comments about bitcoin not being real, I thought back to an interview I did with the CEO of McEwen Mining four years ago:

Any currency exists only because at least two parties (a buyer and a seller) agree that it represents value. So, what constitutes money? On a South Pacific island, we might agree that chicken bones are a currency. In prison, we might agree that cigarettes are a currency. Today, while we all use fiat or paper currencies as money, a medium of exchange, there is a growing concern about the value of these pieces of paper.

I don't see why Bitcoin can't also grow and become another viable currency, an internet based currency. If enough people accept it, it will be used. It seems to have momentum behind it and it's intriguing how it's truly separate from any country or central banks' manipulation and control.

There will be growing pains, like the guy who lost money out of his electronic wallet because he left his computer on all night. Also, Bitcoin will spawn competitors, alternative digital currencies. I think it's a mistake to write off this currency as a bubble or fad.

Will it threaten gold? I don't think so. I think the two will grow in tandem as alternative currencies to fiat currencies.

In the dot-com era of the late '90s, there were many warning signs of a huge bubble that was about to pop including:

By contrast, few people are quitting their jobs to start cryptocurrency companies (yet). Day trading is rare. Taxi drivers aren't asking about bitcoin.

If cryptocurrencies are a bubble, we're still in the early innings.

But there are signs of frothiness:

Bitcoin in 2017 is as real as Amazon or Priceline was in 1999.

Both those great companies had their stocks get killed when the dot-com bubble burst, but they used the nuclear winter they faced in the next few years to make themselves more profitable and take market share that they would never give back.

Amazon dropped from $76 per share (in today's post-split share value) at the end of 1999 to less than $6 after the Sept. 11, 2001, attacks. Amazon trades now over $1,000/share.

Priceline went from $283 a share at the end of 1999 to less than $8 three years later. Today, it trades above $2,000.

No doubt many of this year's batch of ICOs, as well as dozens of other existing cryptocurrencies, will disappear in the coming years as things settle out.

But if you listen to Marks' advice and tune out the crypto space, you'll miss the ICO equivalents of Amazon and Priceline. Will ethereum be the next Google? Or the next Lycos?

More importantly, what will be the magnitude of growth from here? Bitcoin has grown from nothing to nearly $3,000 today (after a big pullback when it first hit $1,000 a few years ago). But where will it be in five, 10 or 15 years from now? And will it pull back to below $1,000 again before it breaks out to new highs?

To discard all cryptocurrencies as Marks did in his letter would be a big mistake. There is real value in these digital currencies.

Commentary by Eric Jackson, sign up for Eric's monthly Tech & Media Email. You can follow Eric on Twitter @ericjackson .

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Cryptocurrency skeptics warn of another dot-com bubble, but remember: That's where Amazon and Google started - CNBC

A foreign sanctions bill signed into law by U.S. President Donald Trump included a little-noticed provision on cryptocurrencies.

The U.S. Congress cleared thebill late last month imposing sanctions on Russia, Iran and North Korea. It was a politically controversial development, given ongoing investigations into Russian interference in the 2016 presidential election, and the stated opposition of the Trump administration to the legislation.

Trump ultimately signed the bill into law last week, though he sharply criticized the measure in an accompanying signing statement.

Notably for the blockchainindustry, however, is that the billincludes a mandate for the development of a national security strategy aimed at "combating the financing of terrorism and related forms of illicit finance."

One provision, which focuses on research into "illicit finance trends," mentions cryptocurrencies asan area of study.

The textcalls for:

"[A] discussion of and data regarding trends in illicit finance, including evolving forms of value transfer such as so-called cryptocurrencies, other methods that are computer, telecommunications, or internet-based, cybercrime, or any other threats that the Secretary may choose to identify."

The initial draft strategy is due to Congress within the next year, according to the bill's text, and is set to include input from US financial regulators, the State Department and the Department of Homeland Security, among others.

In some ways, the new billechoes anothersubmitted in May as part of a wider Department of Homeland Security legislative package.

That measure, as CoinDesk reported at the time, calls for research into the potential use of cryptocurrenciesby terrorists. Like the DHS bill, the new sanctions law doesn't constitute a shift in policy, but rather indicates that Congress is taking steps to explore the issue more closely.

Donald Trump imagevia Shutterstock

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Controversial US Sanctions Bill Calls for Cryptocurrency Research - CoinDesk