Let me make it easy for you; Why should you use your time to read this post at this exact moment in time?

Kin, being one of the few ICO’s (Initial Coin Offerings) I see as actually credible compared to the hundreds of 40-page white papers who have raised more than $1.2 billion in the past six months, announced a few days ago their Token Distribution Event (TDE) on September 12. Participants for the TDE must therefore register by September 9, 9:00 am ET. which is the reasoning behind this writing. Having made previous minor investments in the Blockchain protocol Ethereum, this is the first time I’m investing in an application. This post explains what Kin is, my reasoning behind the investment, and a guide how to invest in Kin. Happy reading!

David vs Goliath

Many of us remember the bully from the school yard who, because of his early-growth corpus and lack-of-self-esteem-turning-into-a-dominance-mentality, always pushed you around and stole your lunch money. I personally didn’t have one bully — I had three. And with guarantee they were targeting me in the daily snowball fights during Denmark’s two months of snow. Maybe that’s the reason why I find intrinsic motivation in the ecosystem I’m about to introduce to you. Because this bully has now taken a new shape and form — a digital, almost goddess one consisting of 2 billion people who supports this bully everyday with their time and attention…Facebook.

The kid I’m referring to being bullied, in addition to yours truly, is the message application Kik. Kik is part of the messaging app family with a few of its siblings being Facebook Messenger, Whatsapp, and Viber. Though Kik’s core user base is US teen. Of Kik’s 15m monthly active users 57% is 13–24 years old with 64% of the total user base living in the US. Even though 15m is a fraction of Facebook’s 2bn users, the usefulness of the app for Kik’s users is unequivocal. On average, Kik users spend 37 minutes on the platform compared to Messenger’s 9.36 minutes. And this has made Facebook take its eyes on Kik, which now faces the same destiny as Snapchat, Instagram, Whatsapp, Periscope, Foursquare, and Oculus. Get bought by Facebook or get crushed by Facebook. The latter outcome even has a name for it: Facebook’s “copy and crush” playbook. But with Facebook’s biggest competitor, Chinese Tencent, having invested $50m in Kik’s latest fundraising round, Kik is taking up the fight in the arms race trying to replicate WeChat’s incomparable Chinese success story in the West — creating the one app to rule them all…And the kid being bullied around might have found a way to outsmart the bully.

Welcome to KinLand

Imagine for a second the current landscape of all the digital services you use everyday being an amusement park called KinLand (*disclaimer* it’s a name I just made up). KinLand consist of games, apps, chatbots, news articles, videos, blogs, e-books, podcasts, VoIP, messaging, emojis and stickers, even group chats with celebrities — the rides and entertainment of KinLand is limited only by your imagination. What’s different from any other amusement park is that KinLand has no single owner. It’s owned by everyone…by you, the other guests, and the creators and developers of the rides, content, and services of the park. That is KinLand: A decentralized ecosystem of digital services for everyday life. An important character in the group of KinLand’s shareholders is the independent, nonprofit, and democratic Kin Foundation whose purpose through open governance is to grow the open ecosystem of KinLand with the future prospect of being replaced by a decentralized autonomous organization (DAO) when the time is right. Additionally, there’s Kik who gets respectfully compensated for being the visionary and founder of KinLand.

Some of KinLand’s rides are free to use, while others charges tokens called Kin. So we can add to our definition of KinLand now being a decentralized ecosystem of digital services for everyday life fueled by the open source, general purpose cryptocurrency called Kin. Important is it that the tokens used in KinLand cannot be bought. You can only earn them by performing valuable actions — Vague? Agreed. But I believe Kik is using this hazy definition to keep any and all opportunities open for how to create the right incentive mechanisms for the users.

The nickels and dimes of Kin

With Kin, Kik has embarked on a well-trodden journey of micropayments used to pay for the rides in KinLand. Micropayments are a historical failing innovation tried by iTunes and latest the Dutch startup Blendle. A proposed reasoning behind the failure of these attempts is what Nick Szola, the inventor of Ethereum’s Smart Contracts, call mental transaction costs: the cost of translating one’s own knowledge and preferences into buying decisions. Consumers dislike micropayments because of the cognitive load of having to decide whether to click and pay. But since 2014, Kik has successfully experimented with a prototype of Kin and micropayments. The experiment called Kik Points were a system where you could earn tokens by voluntarily watch ads and redeem them on user-generated stickers and emojis. The experiment resulted in an average 300,000 transactions per day — nearly three times that of the Bitcoin network.

This proved that the incentive from the users were solid. What made Kik Points, and what might soon be Kin, successful is the fact that you cannot buy or sell the token with a real-world currency (in KinLand, the only connection to real-world currencies such as US dollars is the daily payout to the developers of valuable services in the ecosystem through the Kin Rewards Engine). Therefore the cognitive load of micropayments is less intrusive because of the token-based currency and at the same time is consistent across all the services of the ecosystem.

Network, network, network

One of the key drivers of Kin is the naturally integrated network effects. Here’s my assumption how it will play out:

(O.) Firstly, because of the hype generated around Kin, shareholders such as you and me get financial invested in Kin through the Token Distribution Event. As the initial supply is limited to one trillion Kin, the demand for the token will drive the price up. And here the feedback loop starts:

With the increased value of the token, entrepreneurs, developers, and content providers turns towards Kin as they recognize building and offering a successful service in the ecosystem will provide them with a token that gets more and more valuable. The services created in the ecosystem will draw new users to the Kin ecosystem as the utility of the ecosystem increases. As users need tokens to get access to some of the services in the ecosystem, the demand will further increase the value of the token. At the same time, the existing financial invested shareholders will hold onto their token because of the increasing value, further constraining the supply. The increased price of the token will attract more entrepreneurs, developers, and content providers to the ecosystem and the loop repeats itself.

This feedback loop is outlined by Union Square Ventures’ Joel Monegro, who wrote a highly recommended piece to read on Fat Protocols.

“Okay, we get it. KinLand is the s***! But let’s get real…”

What I believe can happen to prevent Kin in reaching the potential is three things:

There’s simply not sufficient initial interest to increase the token’s value or attract service providers to the ecosystem, kickstarting the network effects. Though I believe this is highly uncertain because of the huge interest in ICOs and the trustworthiness of Kin because of Kik. The bully being Facebook or some third party observes the move of Kik and strikes back with brute force in an effort to copy and kill it. Neither I likely see this will happen as it’ll cannibalize Facebook’s existing revenue sources. Most eminent I believe is the importance of getting Kin to the mass market. Currently Kik is more or less exclusive for US teens and only a somewhat moderate success for Kin can be facilitated in such a market. To reach mass market in the Western world, the intrinsic value and utility of the Kin ecosystem has to be so prominent that users are willing to obtain the switching cost. As adults has a much higher focus on time management and might not be as intrigued as teenagers to watch ads, they might rather want to just pay for the services than have to earn it in exchange for their time.

A quickie on ICOs

ICO is an acronym for Initial Coin Offering where a company can offer a cryptocurrency related to their business to the public. As a fundraising process, ICOs is similar to the IPO (Initial Public Offering) — the important difference is that in an IPO you buy shares of the company while in an ICO you buy an asset as a central part of the overarching network of the company. ICOs and crypto has grown from being a niche idea into an increasingly normal fundraising process for Blockchain-based (and may soon other) startups. We even see nations such as Estonia, Sweden, and China developing prototypes of cryptocurrencies for their citizens.

So what can you actually get out of buying Kin?

As for all other mechanisms of trade, supply and demand determines the price. Even though I believe we’re in an ICO-bubble, a state of a Lemon Market, where tokens are traded at values highly above the fundamental value of the respective token because of information asymmetry, skewed incentives, and lack of disclosure, I believe Kik is too big to let Kin die out as a haux. This is make-it-or-break-it in Kik’s effort to compete with the Facebook juggernaut. If Kik just do it to cash out, they could perform a better exit in other ways. No, I predict there’s something to be earned here for the early believers in Kin, especially if you can resist the temptation of cashing out early. But even if you’re not in it for the long-run (which I heavily recommend if you’re looking to invest in something like Ethereum), there might still be a nice profit to be earned short-term.

What’s important to know before investing?

Invest in businesses you understand (further readings about Kin at the bottom).

Don’t invest more than you can afford to lose.

Don’t put all of your eggs in one basket.

Start out small and increase your position as you grow comfortable.

And most important: This is just my opinion. Create your own!

Thanks for tuning in! Would be awesome to hear others’ thoughts of Kin. If so, leave a comment! And as always, sharing is caring. 👏

Further readings