Kindred Spirits: Why Hardcore Early Adopters Are Dead-Set on Kik’s ICO
“I’m long-term bullish and short term I have no idea.”
That’s how Fred Wilson, a partner at Union Square Ventures and one of the most widely respected VCs working today, answered a question about the crypto market in general and specifically his outlook for Kin, the soon-to-be launched token created by the messaging app, Kik.
Wilson made the comment in a small event space on Prince Street in Manhattan, sitting in front of 28 people that Kik had flown in from 13 countries (including Japan, India and Australia), and all of whom seemed to be holders of Kik’s ethereum and stellar token.
Kik had brought them together to serve as the first wave of ambassadors for the new token, serving on Reddit, Telegram, Kik groups and anywhere people might want to talk about it.
So, when Wilson expressed that mix of confidence and uncertainty, he wasn’t just giving the latest market’s hot take; he aligned himself with a prevailing sentiment in the room, hope mixed with some confusion. A part of his role there seemed to be to induct Kik’s guests into an ever-widening circle of the true believers backing the new model for monetizing digital experiences enabled by kin.
“I wouldn’t say it was my idea, but I would way I was one of a group of people who collaborated on coming up with it,” Wilson told the room. “Obviously, I think it’s a great idea.”
Wilson spoke during the last fireside chat of the day, in conversation with CoinFund CEO Jake Brukhman.
CoinDesk had been invited to the event to interview Kik CEO Ted Livingston as the the two day event opened. During that conversation, Livingston described himself as a wreck two years ago, as the company lost marketshare to Facebook-owned products.
In Wilson’s telling, he helped bring his fellow investors in the company around to a crypto-led strategy, so that now Livingston could say:
“Our investors are very supportive, but it took us a while to get there.”
Faced with what he saw as the impossibility of monetizing a messaging app with ads amidst the Facebook-Google advertising duopoly, Livingston elaborated, “Our new plan was to develop a new economy around a new currency.”
An economy is, of course, one form a community takes, which helps to explain why Kik has invested in forging bonds between its early advocates, expanding the cadre from that early circle that sold the Kik board to a larger one that can sell lots of people using services online.
Here’s the funny thing about it’s early advocates, though: by and large, they don’t use Kik. During our interview with Livingston, we asked the crowd whether or not they were big Kik users before Kin came along. Only five or six raised their hand.
It’s remarkable because when Kik first unveiled this idea, many people viewed its existing audience as its unfair advantage over potential social crypto competitors.
Livingston volunteered, “Our users of Kik are largely unaware.”
Crypto Summer Camp
Arriving at the gathering on Prince Street felt a little like coming back to summer camp, with lots of people chatting with that peculiar spirit of reunion. Only it wasn’t a reunion – these people hadn’t met face-to-face before, they had spent a lot of time talking online.
And it was clear that certain levels of rapport had been established. This particular hit home during the (not really necessary) ice-breaking round when one community member in particular introduced himself. “Hi, I’m Dillon,” Baltimore’s Dillon King said. Everyone broke into applause. “And I don’t actually look like Yoda.”
Later we would learn that King is one of the most active voices on kin’s Telegram and Reddit channels. “I kind of play the role of the educator,” he told CoinDesk.
King was dressed like a lot of the guys at the gathering (it was very nearly all men), in a purple t-shirt and a black-zippered hoodie, apparently in tribute to Livingston, who wears those two things nearly every day. He said was glad to finally get to meet people from the Kik staff in a setting where they didn’t have to constantly speak as if cameras were rolling he said.
“In general I just wanted to meet everybody,” he explained.
We have known for a long time that people can build real bonds and relationships online as well as offline, but there’s other ways in which online life is not as much like the real world as it could be. And that’s the impetus behind kin: deepening digital reality.
“We want mainstream consumers to use cryptocurrency and we think the hardest problem with that is setting up a system, setting up an economy, in a place where they would actually use it,” Livingston told the room. That place is the internet, buying and selling for purely digital goods and services.
Livingston said they had focused on picking ambassadors who understood that there was a real opportunity in creating entirely digital markets. In fact, he took it so far that he said he hopes to see such robust digital markets that people quit thinking in kin-dollar or kin-yen terms, and instead thinking fiat terms in real life and kin terms online.
Just like people don’t think about exchange rates when they buy lunch from the corner burrito place.
As we spoke to ambassadors on the floor, it was clear that they still had questions about how a stable economy could rest on unstable crypto. “There’s things I don’t understand,” Australia’s Will Gikandi told CoinDesk.
Gikandi took advantage of every Q&A to pepper each speaker with questions. It was clear that he wants to believe it could all work, but he still doesn’t quite see how.
Probably the biggest applause line of the whole day came when Livingston said:
“I’m not in this for a money, though I do think kin is going to be very valuable.”
It helps here to step back and revisit what Livingston believes is so big about the kin idea. He saw himself surrounded by peer companies that had successfully built communities but couldn’t make money. The idea of kin is to create a way for all those companies to monetize without ads or user fees.
Livingston describes that economy as having two pieces: a cryptocurrency and a software platform that can reward developers for creating active markets for that cryptocurrency.
The strangest part of this whole kin idea is that second part, called the Kin Rewards Engine (KRE), controlled by the non-profit Kin Foundation. The idea is that developers will try to build apps that encourage users to exchange kin with each other.
“We don’t want developers to charge consumers,” Livingston said. “We want to set up is what we call a consumer-to-consumer economy.”
So, someone might build an app where users send artists photos and pay them in kin to make drawings of them. The artist would keep all her earnings, but the KRE (which holds 60 percent of the kin that will ever be created) would pay the app’s developer every day relative to the amount of economic activity it created within the whole kin economy.
Wilson said that there’s lots of companies in his portfolio who would probably benefit from jumping on the KRE once its built, but he thinks there’s more opportunity with developers just having their first glimmer of an app idea now.
That said, USV is so convinced that in the future tech companies will earn so much in tokens that its begun negotiating what it calls “token exchange agreements” with the companies it backs. In these agreements, it would have the option to exchange its equity for tokens a company has earned from doing business (not what they generated by issuing them in an ICO).
One member of the audience wanted to know when developers could begin building business models around the KRE?
Livingston wouldn’t commit, but he did give his interlocutor a standard by which to hold him accountable. There’s three ways Kik has to lead, he argued. It has to have a blockchain that can support a million users, it has to have lots of regular consumers actually earning and spending in crypto and it has to have a functional incentives system (like the KRE).
If any other company starts to show traction in any of those three areas, that’s when kin backers should start getting angry.
“Who’s in first place. We have no idea. Nobody knows,” Livingston said, concluding:
“The race hasn’t even started yet.”
Photo of Ted Livingston welcoming kin supporters courtesy of Kik.
Written by CoinDesk.com
Bitcoin in Brief Friday: That Green Candle (Fomonomics)
Bitcoin Makes a Move
After days of stagnation, bitcoin finally made a move on Thursday and it was a biggie. The largest green candle witnessed in a month, big enough to wipe out a slew of shorts in an instant. When bitcoin wants to it makes like the wind, treating hodlers to all the thrills of riding the world’s giddiest roller coaster. In a single hour, a record $1.2 billion of BTC was traded. Previous bitcoin breakouts have proven to be damp squibs, so while optimism remains, traders aren’t holding their breath.
Cryptographic researchers claim to have found vulnerabilities in a group of privacy coins that includes zerocoin and PIVX.
Coinsheets writer Dmitriy is tweeting 100 days of shitcoins in which he appraises a bunch of alts in a tweet apiece.
EOS has been one of this week’s big gainers, and is one of the few coins to be up in 2018. A number of reasons have been postulated for its sudden gains including an upcoming airdrop and imminent mainnet launch.
One critic who’s not feeling those EOS vibes is Jackson Palmer, who complained: “People don’t seem to realize that there is no actual EOS “network” that the ERC-20 tokens can be redeemed on. They’re just releasing the code and there will be *multiple* networks/blockchains you can then hopefully redeem some sort of other token on. It won’t be “EOS” though.”
Crypto Scammers Are Getting Smarter
How’s this for an ingenious way to load up on gas?
Bittrex Reopens Registrations
This week Bittrex reopened new user registrations. Then it closed them again after being swamped by demand. And now it’s opened them again, this time for good hopefully.
Finally, crypto has a new word: fomonomics, the art of studying Google search trends to identify when the masses are about to FOMO into bitcoin again.
Written by CoinDesk.com
Indian Exchange Coinsecure Claims Insider Job in $3 Million Bitcoin Theft
Indian bitcoin exchange Coinsecure has disclosed a theft of 438 bitcoins, valued at approx. $3.4 million at press time, from its wallet in what is the country’s biggest cryptocurrency theft to date.
Delhi-based cryptocurrency exchange Coinsecure has accused its own CSO of stealing the coins from the company’s wallet in an FIR (First Information Report) filed with the police on Thursday. In an announcement on its homepage, the exchange said some of its bitcoin funds had “been exposed” and “seem to have been siphoned out to an address” that is beyond its own control.
Coinsecure insists its own systems haven’t been compromised nor hacked. Instead, the exchange points to the unconvincing claim of its CSO, Amitabh Saxena, who contends the theft occurred during a separate “exercise to extract BTG (Bitcoin Gold)” to distribute among its customers.
Our CSO, Dr. Amitabh Saxena, was extracting BTG and he claims that funds have been lost in the process during the extraction of the private keys.
According to the police complaint (pinned below), Coinsecure CEO Mohit Kalra, who holds the private keys for the company’s wallets along with the CSO wrote: “On 9th April 2018, we were informed by our CSO, DR. Amitabh Saxena, that 438.318 bitcoins (worth INR 19 Crores – Approx.) were stolen from our company’s bitcoin wallet due to some attack.”
Notably, he added in the complaint:
As the private keys are kept with Dr. Amitabh Saxena, we feel that he is making a false story to divert our attention and he might have a role to play in this entire incident. The incident reported by Dr. Amitabh Saxena does not seem convincing to us.
In a separate statement to the Times of India, the chief executive revealed that the private keys were exported online. “It looks like a crime committed intentionally,” he added. “We have shared our suspicions with the Cyber Cell and contacted specialists to find out the source of the hack and trace the bitcoins.”
Coinsecure recruited Saxena as its Chief Scientific Officer in September 2017, citing credentials as a professor of Computer Science in Australia and previous tenures at Hewlett Packard (HP) and Accenture. “Doc comes with an extremely strong understanding of the crypto space and has a lot of ideas and implementations that he will be bringing to Coinsecure,” the exchange said at the time, pointing to his scientific research articles on the blockchain space.
In his complaint, chief executive Kalra also stressed that the CSO might be a flight-risk, asking the police to seize his passport to keep him from flying out of the country.
Meanwhile, Coinsecure insists it will recover and reimburse customers who have seen their funds stolen.
The exchange said:
Irrespective of funds being recovered, we re-assure all our customers that you will be indemnified from our personal funds.
Written by CCN.com
Beyond Banking: R3 Is Expanding Its Vision for Global Blockchain
R3 may have started as a consortium of banks looking to use blockchain technology, but it’s broadening its ambitions.
Now a startup whose staff numbers in the hundreds, R3 is proposing its distributed ledger technology platform, known as Corda, be used to link together a wide range of businesses, not just financial ones. The core idea is similar to the one originally pitched: if companies share data and assets with each other on Corda, they can ax duplicative processes and trust that they are all on the same page about who did what.
In an example offered by R3 CTO Richard Gendal Brown, airlines, travel agents and hotels around the world could reach consensus on which plane seats and rooms have been booked, knowing that the data being shared is the same for everyone all the time.
Taking this idea further, R3’s platform lead Mike Hearn claims Corda would power a future “automatable economy” where bots help to run supply chains.
“When we stepped back and looked at what we had built, we saw something that was far more broadly applicable,” Brown told CoinDesk, adding:
“It’s the freedom and power that comes from knowing that what you are looking at either as a human or a business or even some sort of futuristic robot – is not only correct, but it’s current, and it is shared with your counterparts.”
While Brown said Corda has attracted interest from a variety of industries (“people in insurance, people in healthcare, people in government, energy – you name it”), the new positioning of the platform comes at a time when the dust appears to have settled after 2016’s hype about corporations exploring blockchain.
All eyes are now looking for delivery.
Meanwhile, rivals such as the Hyperledger consortium, with the help of IBM, are courting seemingly every sector and business line with some flavor of enterprise blockchain solution.
For R3, it’s a pivotal time, as the startup is finalizing the first commercial distribution of the open-source Corda platform, targeted for the end of the second quarter. This paid product will be widely available to businesses, beyond consortium members.
Open, but private
While R3, one of the first companies to promote the idea of members-only blockchains, is moving toward a more inclusive model, it’s not going whole hog.
Rather, Brown describes the vision as “an open shared network – but still private, secured and permissioned.”
The R3 Corda team were inspired by ethereum’s goal of participants all running the same business logic while getting rid of silos and friction between different applications, he said.
However, the global broadcast design of public blockchain networks, while perhaps necessary in a trustless system like bitcoin, is unpalatable to enterprises.
“My critique of some of the enterprise blockchain platforms is that being originally inspired by a full broadcast system, I would argue that often they share too much,” Brown said.
To address this problem, the governing Corda design sought to minimize the amount of data that has to be shared among participants, while convincing someone that something is true.
Corda will not show data up front, Brown said, but will send a piece of evidence to convince the other parties about a fact or set of facts, regardless of whether it’s to do with banking, hotels or airlines.
Aside from keeping data private within the Corda network, sharing it via the internet presents another, more immediate problem. Most companies have their own highly secured data centers, and run their existing applications on their own infrastructure behind lots of firewalls.
“The data that actually matters, the data that you want to bring into consensus, is hidden deep inside data centers of banks and large firms,” Brown said. “This necessarily involves the opening of connections between these firms and sharing data, over the public internet.”
Simply putting an enterprise blockchain node on the internet, as one would do with a bitcoin or ethereum node, is insufficient at best and possibly hazardous, he said.
“Firstly, it’s nowhere near the corporate data, and second what happens if it gets hacked? That’s a big attack surface.”
To reconcile this, the Corda node, which needs to be close to the systems of the bank or the manufacturer or the airline, runs there on existing servers or on cloud infrastructure owned by that firm, securely managed in a way that these firms know how to do, Brown said.
But a small part of the node that needs to be able to connect to the other firms and receive connections from them has to be visible on the internet.
“We take a tiny bit of the node – we call it the float – and allow it to float out away from the main node and just sit out in the demilitarized zone as they call it,” Brown said.
This piece of the node is “very small, very hardened, very protected,” Brown said, adding:
“That’s the bit that is exposed to the bracing winds of the internet,”
In this way, Corda nodes are connected yet stay protected.
“The main business logic runs where it matters inside the organization and a tiny highly secured piece floats out onto the internet and is responsible for all communication,” Brown said.
‘Working insanely hard’
Ahead of the commercial release of Corda expected this quarter, R3 has just shipped version 3.0 of the free open-source version, which features what Brown calls “wire stability.” This gives developers the same certainty about their data that API stability did for their code.
“One version of a Corda 3 node deployed to a network will be compatible with any future version of Corda, so that you don’t have to upgrade the whole network,” Brown said.
Asked if he has detected any loss of appetite in the enterprise blockchain space, Brown said: “No, not really. Of course you might expect me to say that. But here’s why – because what I see is developers working insanely hard” in response to demand.
“Regarding the commercial version of Corda we are offering, I am being asked every day when is that going to ship,” he added, concluding:
“Maybe this is not visible from the outside, but the people who are preparing to launch major initiatives and go live, they are so heads down on delivery and execution they are not making much noise yet externally.”