In the world of social media networks, it is incredibly difficult to get an edge on the major players like Facebook (FB) and Snapchat (SNAP). Nonetheless, the rising network Kik has at least one trick up its sleeve that may give it an edge over Facebook, its largest and strongest competitor. Kik is about to launch its own Ethereum-based initial coin offering (ICO), which will make it the first mainstream social network to include a cryptocurrency as a part of its core services. What could this mean for Kik and for the larger field of social media networks in general?
From Point System Interactions to Cryptocurrency?
Kik initially made a name for itself with its points system, which rewards users for interactions with other users. This generated a friendly competition among users and helped to grow the social network to 15 million monthly active users, according to Kik representatives. At the same time, Kik has earned more than $100 million in venture capital. All of this suggests that the network is primed for the adoption of a cryptocurrency, which would fit in nicely with its points incentive system.
However, Kik is not the first social network to think of adopting a cryptocurrency, and, while 15 million monthly users is an impressive figure, it nonetheless represents a decline from Kik's report of 200 million registered users a couple years ago.
Succeeding Where Facebook Failed?
One of the most prominent examples of a social network attempting to adopt a cryptocurrency was Facebook. In 2013, Facebook closed down its Facebook Credits program after not even two years. For this reason, Kik is being cautious and attempting to learn from Facebook's mistakes. CEO and fo-counder Ted Livingston has set up a 2.5-year experiment that is called Kik Points, according to Coin Desk. This experiment is designed to see if Kik users will be willing to use a credit or point system in this way.
The results of the trail experiment were published last month, and Livingston believes that there is potential. He said, "if we can make this work, we can build one of the largest, most adopted cryptocurrencies in the world, just by integrating this into Kik, and putting Kik Points on the blockchain."
Results of the Experiment
Kik Points was launched in 2014 as a means of measuring demand for a product which allows users to charge one another for a set of basic services. The experiment also sought to determine how users would behave when engaging in these transactions. Kik shut down the system on March 11th of this year. According to the published results, Kik users completed 253 million offers for points, spending those points on 74 million purchases. 300,000 transactions occurred on an average day. Livingston believes that a digital currency could incentivize opt-in advertising and that it could build an economy on Kik.
The next step is to determine whether the general Kik user's perceived willingness to use a cryptocurrency-like system can be adapted to an actual cryptocurrency. Facebook had seen success in some respects with its Credits program but still ended up shuttering it. Now, Kik is aiming to use its native currency, Kin, along with the ERC-20 standard which has facilitated Ethereum-based ICOs.