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Why does Kik need a decentralized cryptocurrency to handle payments for digital goods? They can do it with virtual credits on their own servers a million times

by pdog 9y ago

Why does Kik need a decentralized cryptocurrency to handle payments for digital goods? They can do it with virtual credits on their own servers a million times more efficiently.

almostApatriot1 9y ago
Because they can have an ICO for their coin and basically have other people fund the development + probably make money on the side.
cocktailpeanuts 9y ago
It's a change of business model. Instead of ads they're making a bet on cryptocurrency as a way to profit.
- almostApatriot1 9y ago
  Sort of, but not really. The whole kik points system model is to allow you to earn stuff for watching ads.
  - cocktailpeanuts 9y ago
    Yes, but the difference is, with the currency approach they are trying to raise their value through the coin price. They may employ ads and other "tactics" to make money in the process, but that's fundamentally different from previous approaches where you just give away everything for free and hope to get enough eyeballs to monetize via ads. And ad driven businesses are going through difficult times, and probably not the future of the Internet. They gotta start from somewhere, and the only business model that's familiar enough is the model you mentioned, and that's why they start out this way. It can succeed or it can fail, but if it succeeds they will probably branch out to other ways of making money outside of ads.
corry 9y ago
Because doing it as a decentralized cryptocurrency would allow it to one day be more significant than just an internal token systems. There is power in the combination of anonymous identity / messaging + bona fide cryptocurrency.
- s73ver 9y ago
  But, and this is the important thing, how does that help kik make more money?
  - benjaminmbrown 9y ago
    By owning 90% of a digital ecosystem
petertodd 9y ago
There are very rarely technical justifications for creating a new cryptocurrency. For starters, even if you need a token for technical reasons, you can always use a proof-of-burn token creation mechanism, and that proof-of-burn mechanism can enable two-way-trading(1) to ensure the coin doesn't become a separate asset. Another major problem is that we frequently see perfectly good ideas whose technical architectures are wrecked by the need to add an inefficient and unscalable consensus system to support a new cryptocurrency. For example, the original Ripple concept is a really good one, proven by the success of the analog equivalent, Hawala. Ripple could have continued on that basis - found investors for the standard open-source business model - and made a potentially useful system that at minimum would have represented good accounting software for banks (international banking is not unlike a very large scale, regulated, Hawala). Instead they decided to raise money via a token, XRP, and because of that token they needed to add a global consensus blockchain. The result was a system that had all the scalability problems of Bitcoin, and since they didn't use proof-of-work, an ill-defined consensus model that's secured in practice by a handful of private keys, all Ripple-controlled servers(2). If we're going to go down that route, why not just do it properly and have an actual legal contract with the people in charge? And with that legal contract, why do we need XRP? Why not just pay for the service with an existing currency? Frankly, I think most of these ICO's are transparent attempts to raise money while avoiding securities regulations. I'm sufficiently libertarian to have a mostly "buyer beware" attitude to that, but I sure as heck wouldn't want to be closely involved with one - very high risk the SEC will put a lot of people in jail over this, and the ethics of many of these schemes are very dubious. 1) https://petertodd.org/2014/setting-the-record-proof-of-publication#proof-of-publication-needs-scamcoins-like-mastercoin-and-counterparty https://petertodd.org/2014/setting-the-record-proof-of-publi... (read that URL link as 'Myth: Proof-of-publication needs “scamcoins” like Mastercoin and Counterparty' 2) https://github.com/petertodd/ripple-consensus-analysis-paper/blob/master/paper.pdf https://github.com/petertodd/ripple-consensus-analysis-paper... Written by me under contract for R3CEV (they were considering buying Ripple apparently, and I was doing due diligence for them and their members).
avip 9y ago
For VCs.
ftxrcc 9y ago
It's trendy. I don't see any reason why a chat app like Kik should make a crypto currency, other than "it's trendy and hip".

by pdog 9y ago

Why does Kik need a decentralized cryptocurrency to handle payments for digital goods? They can do it with virtual credits on their own servers a million times more efficiently.

almostApatriot1 9y ago

Because they can have an ICO for their coin and basically have other people fund the development + probably make money on the side.

cocktailpeanuts 9y ago

It's a change of business model. Instead of ads they're making a bet on cryptocurrency as a way to profit.

almostApatriot1 9y ago
Sort of, but not really. The whole kik points system model is to allow you to earn stuff for watching ads.
- cocktailpeanuts 9y ago
  Yes, but the difference is, with the currency approach they are trying to raise their value through the coin price. They may employ ads and other "tactics" to make money in the process, but that's fundamentally different from previous approaches where you just give away everything for free and hope to get enough eyeballs to monetize via ads. And ad driven businesses are going through difficult times, and probably not the future of the Internet. They gotta start from somewhere, and the only business model that's familiar enough is the model you mentioned, and that's why they start out this way. It can succeed or it can fail, but if it succeeds they will probably branch out to other ways of making money outside of ads.

corry 9y ago

Because doing it as a decentralized cryptocurrency would allow it to one day be more significant than just an internal token systems. There is power in the combination of anonymous identity / messaging + bona fide cryptocurrency.

s73ver 9y ago
But, and this is the important thing, how does that help kik make more money?
- benjaminmbrown 9y ago
  By owning 90% of a digital ecosystem

petertodd 9y ago

There are very rarely technical justifications for creating a new cryptocurrency. For starters, even if you need a token for technical reasons, you can always use a proof-of-burn token creation mechanism, and that proof-of-burn mechanism can enable two-way-trading(1) to ensure the coin doesn't become a separate asset. Another major problem is that we frequently see perfectly good ideas whose technical architectures are wrecked by the need to add an inefficient and unscalable consensus system to support a new cryptocurrency. For example, the original Ripple concept is a really good one, proven by the success of the analog equivalent, Hawala. Ripple could have continued on that basis - found investors for the standard open-source business model - and made a potentially useful system that at minimum would have represented good accounting software for banks (international banking is not unlike a very large scale, regulated, Hawala). Instead they decided to raise money via a token, XRP, and because of that token they needed to add a global consensus blockchain. The result was a system that had all the scalability problems of Bitcoin, and since they didn't use proof-of-work, an ill-defined consensus model that's secured in practice by a handful of private keys, all Ripple-controlled servers(2). If we're going to go down that route, why not just do it properly and have an actual legal contract with the people in charge? And with that legal contract, why do we need XRP? Why not just pay for the service with an existing currency? Frankly, I think most of these ICO's are transparent attempts to raise money while avoiding securities regulations. I'm sufficiently libertarian to have a mostly "buyer beware" attitude to that, but I sure as heck wouldn't want to be closely involved with one - very high risk the SEC will put a lot of people in jail over this, and the ethics of many of these schemes are very dubious. 1) https://petertodd.org/2014/setting-the-record-proof-of-publication#proof-of-publication-needs-scamcoins-like-mastercoin-and-counterparty https://petertodd.org/2014/setting-the-record-proof-of-publi... (read that URL link as 'Myth: Proof-of-publication needs “scamcoins” like Mastercoin and Counterparty' 2) https://github.com/petertodd/ripple-consensus-analysis-paper/blob/master/paper.pdf https://github.com/petertodd/ripple-consensus-analysis-paper... Written by me under contract for R3CEV (they were considering buying Ripple apparently, and I was doing due diligence for them and their members).

avip 9y ago

For VCs.

ftxrcc 9y ago

It's trendy. I don't see any reason why a chat app like Kik should make a crypto currency, other than "it's trendy and hip".