The March to One-Cent Valuation – Crypto Keeper – Medium
It has been over a year since I’ve written about cryptocurrency but now the warm crypto spring has brought me forth from my hibernation.
Right now I love three cryptocurrencies, but I’m only going to briefly mention the first two. The gambler in me loves Bitcoin, because speculation and greed. The intellectual in me loves Ethereum for its beautiful smart contracts and functionality. But most of all, I love Kin, or at least the vision of what Kin could come to be, for all the reasons I’m about to tell you. If Kin does achieve what it has set out to, it will be the investment of the century.
For those who are unfamiliar, Kin is a cryptocurrency developed by the Kin Foundation, an offshoot of the Kik messaging app. It is designed to be a currency for the digital world, specifically for mobile apps. Kik itself has over 300 million users, but Kin is not meant to be kept within the confines of the Kik app; there are currently nearly 40 apps that have integrated Kin, and the list is growing.
How each app chooses to integrate Kin is highly variable. Most include “earn opportunities,” and “spend opportunities.” One rewards users based on the distance they walk each day, tracking their step count. One pays users for “pausing” their phone for a set amount of time for the sake of productivity. Others allow users to answer a short survey to earn a small reward. Others allow users to “tip” other users on various social media forums, including Reddit. The Kin earned or spent in each of these apps will eventually be fully transferable back and forth from one app to another, or simply to a wallet or directly to other users. For now, the spend opportunities are somewhat limited, but this will change as the ecosystem evolves.
For most apps, the inclusion of Kin requires minimal change to their UI. For example, to the left see the screenshot from Swelly, an app that where users post a set of 2 photos and allow other users to vote on which photo is best. Note the small blue Kin logo towards the bottom; clicking it allows users to tip other users if they enjoy their photos.
Why would a developer choose to integrate Kin into their app? Two big reasons. First, it is a way of enriching their app, and attracting new users. For example, I myself ended up downloading an app called Perfect365, a makeup and beauty app, in hopes of being able to earn Kin within it. As a male who does not use makeup or beauty products, this would not have ever been an app that I would have downloaded if not for Kin. Unfortunately Kin is not yet available on the iphone version of that app (more on this later), so my efforts went unrewarded. Regardless, I sought it out because I knew it had Kin, and presumably other users will as well, some of whom will find the app useful. Likewise other apps that integrate Kin can expect to draw in new users. Keeping those users engaged
The second reason a developer would choose to add Kin to their app is something called the Kin Rewards Engine (KRE). In a nutshell, the Kin Foundation has set up a system that keeps track of how often Kin is used in each app. Every month a pre-determined amount of Kin is distributed to the developers, and the distribution is proportional to each app’s Kin activity. For a more in-depth explanation, read here, but the bottom line is that developers are rewarded if their users use Kin. The first KRE payout has already happened.
Where does the Kin come from to make these distributions? When Kin was created, the Kin foundation set aside 60% of the total supply (6 Trillion Kin, more on this later as well) to use it for the KRE.
In summary, Kin is designed to become a true currency for the digital world- something that can easily be used to buy and sell goods or services, and something that can be easily transferred from one party to another. Up to this point, despite the fact that there are hundreds of crypto “currencies,” none of them have truly achieved mass adoption as a currency. Kin specifically strives to be functional within digital apps, and the Kin team is making it easy for developers to integrate.
There are certainly some significant challenges to overcome if Kin is to reach mass adoption. Allow me to outline them here, and then I’ll address each of these items again in a separate section below where I describe why I think Kin will overcome these challenges.
1) The SEC
In Nov. 2018 the SEC served Kik with a Wells Notice, essentially a formal notice that they are looking into whether or not there have been any securities infractions with the way Kik handled the ICO (“initial coin offering”). Kik has chosen to challenge the SEC’s assertion that Kin tokens are securities, setting up a potential legal battle. Thus far the SEC has not formally brought a case against Kik; they are deciding whether or not to do so. If the SEC does bring a case against them, and then rules that Kin is a security rather than a currency, there will likely be significant legal consequences that undermine the entire project. It is also possible that there is some kind of middle ground- the SEC could find that Kin met the requirement for a security at the time of the ICO but has since evolved into a currency. This would likely result in a fine, which I anticipate would not be serious. See here for a blog post by Ted Livingston, CEO of Kik, which outlines some of this information.
Most apps have 2 versions, the Android version and the iOS (Apple) version. Apple is being much more stringent about what they will allow in their apps. Specifically, there are rules relating to “in-app purchases.” Essentially, whenever anyone buys something within an app on iOS, Apple gets a 30% cut.
I’ve run into this problem outside of the crypto-realm. I listen to audio books, and I use Audible as my source of audiobooks; it is a subsidiary of Amazon. The Audible app on my iphone works great- all my books show up there and I can search and browse for new books there. However, if I find a book I want to purchase, I cannot. There are frustrating options to let me “sample” the book, but then nothing that gives me the option to buy or that explains to me how to buy.
The way to buy, of course, is to close the app, open Amazon in a browser window, and find that book and buy the audiobook version within the browser. it will then show up in the Audible app. But Audible refuses to sell their content within the app because they don’t want to pay Apple 30%, and Apple’s guidelines forbid them from pointing out to users that they can buy the content if they do so in a browser rather than the app. The whole system is a bit messed up, but it is what it is for now, and the Kin team are actively working on solutions.
3) The apps
As I mentioned previously, there are now almost 40 apps that have integrated Kin- amazing, right? Well, kinda. The truth is that 25–30 of these are indie apps with little to no userbase, trying to cash in on the KRE. This isn’t BAD. But this lineup alone won’t cut it if Kin is going to succeed. See below for more comments about this.
4) The exchanges
In order to succeed, Kin needs to have seamless ways for people to buy and sell it using fiat (dollars or other traditional currencies). As of now, Kin is not listed on any exchange you should entrust with significant amounts of currency. Getting listed on major exchanges is going to be a high priority; however for the immediate time being, during this latest crypto pump, I’m glad Kin isn’t listed just yet- explained below.
Now, allow me to explain why I think Kin will overcome these hurdles, or why they aren’t actually problems.
1) The SEC
While I don’t want to downplay the potential seriousness of the SEC situation, the fact is that Kin is in an almost envious position due the SEC attention. The SEC is looking at them specifically, and will make a ruling about them specifically. It’s true that, if the SEC outright rules that Kin is a security, the results will be disastrous. However, on the flip side of that, ANY other decision would be a home-run victory for Kin. There are so many projects out there who fall into the same grey area of security vs currency vs utility token. Kin has the blessed privilege of absolutely knowing their place in this world according to the SEC, once the SEC makes their decision. In light of recent remarks about crypto projects by an SEC commissioner that seem to indicate open-mindedness and a willingness to adapt- I like Kin’s chances of surviving this SEC inquiry.
This issue I describe above has recently come to a head. The Supreme Court just ruled against Apple on this issue. That does not mean that this will be resolved anytime soon, but it appears that Apple may have to be more flexible, and this is good for apps integrating Kin.
Secondarily, it is salient to point out that worldwide, Apple has a much smaller share of the smartphone market than Android. So in a worst-case scenario, apps integrating Kin might only be useable on Android devices, or alternatively would have some restricted functions on iOS devices.
This issue does remain a challenge, but it seems the tide is shifting against Apple, which is great for Kin.
3) The apps
As I mentioned in the “downside” section, the quality of apps currently integrating Kin is somewhat lackluster. That is not to say that there are not some gems, but the lower 2/3 of the list are unremarkable.
I do not take this as an overall negative. The Kin team has rolled out their SDK, the set of tools developers use to integrate Kin into their app, and the experience they gain by helping these smaller indie developers will only help them when it comes time to land the big fish.
Along those lines, it appears that there are some bigger fish in the pipeline. They’ve already announced a partnership with Bigfoot games, which is significant. The Kin team has prioritized creating a toolset for Unity, the platform on which 50% of all new mobile games are created.
I see mobile gaming as being one of the major draws for Kin, and most likely will provide one of the necessary “sparks” to bring Kin mainstream. There are other Unity partners in the pipeline, and it will be exciting to see how they use Kin.
Additionally, it has been semi-formally announced that Kin is partnering with a social media entity that has over 60 million users. Who that is exactly is not yet known publicly, but there have been hints that an announcement is imminent. Medium roughly fits that user number, and as someone who (obviously) writes on Medium, I would be excited to both give and receive Kin here on this forum.
4) The Exchanges
I am ecstatic that Kin has not yet been listed on a major exchange during this pump. I strongly hope that BTC returns to a $10,000 valuation before Kin is on a major exchange. I believe that the fact that Bitcoin has rallied so much will help Kin in the end. There is a certain psychology to owning a “lot” of one thing, and if the USD price of Kin remains stable while BTC pumps, all the better once Kin is listed somewhere reputable. I believe people will be excited that 0.1 BTC can buy them 20 some-odd million Kin. Psychologically, most people would rather have 20 million of something rather than 0.1 of something.
Kin has been listed by Coinbase custody, a service for institutional users and high net-worth individuals. This is a good indication that Kin will be listed on Coinbase’s other platforms soon as well, giving access to retail buyers. Additionally, Kin was added to Trust Wallet, Binance’s official wallet, implying a possible listing at least on their new decentralized exchange, if not on the main exchange. The Kin team has mentioned that they are in talks with these major exchanges, and I think it is only a matter of time until a big listing is announced.
In summary, Kin has some significant obstacles to overcome, but if they can overcome them, the rewards will be significant. Kin has the chance to become the mainstream currency I always hoped Bitcoin would be (but never will be due to the high fees and clunky transaction times).
If the Kin team manages to overcome the obstacles I’ve mentioned, I believe that a $0.01 valuation is realistic. This represents about a 200x return from todays price. This will obviously not happen overnight, but if it is going to happen, I foresee it happening in the next 6–18 months. Buying Kin right now definitely falls into the high risk/high reward investment category, and I like what I see from the team in terms of progress enough that Kin is now my largest crypto position.
Some might see this as foolish; I see it as a calculated gamble. Bitcoin’s only value proposition is pure speculation. Kin has that too; obviously I’m doing some speculation here, but Kin also has the value proposition of potentially creating the world’s most used and useful cryptocurrency, and to me that is worth a lot more.