[Messari AMA] Ted Livingston, Founder of Kin and Tanner Philp, Technical Advisor to the CEO at Kin

Messari hosted a public AMA with Kin's founder Ted Livingston and his technical advisor Tanner Philip in the Messari community group. This is a transcript of the conversation.

Messari: Ted and Tanner, thanks so much for joining the group to field some questions about Kik this afternoon. We have a bunch of great questions in the queue, and I'm excited to see how many we can get through. Thanks for chatting.

Ted Livingston: Great to be here. Thanks for having us.

Messari: Before we jump into some of the submitted questions, can you give us a TL;DR on your background and the history and mission of Kik before Kin was first discussed?

Livingston: Yes, happy to do that. Here is a copy and paste to get the conversation started:

Kik is a chat app I started 10 years ago. Today it is one of the most used chat apps in the world. Millions of users. Industry leading engagement. The appeal is that it’s the best place to be yourself and form new friendships with people from all over the world. Our challenge was how to make money. Advertising is the only option for most consumer apps. But advertising is dominated by a few big companies, and advertising is something we are philosophically against. We and 1000s of other devs were looking for a different business model.

My crypto journey began when I learned about Bitcoin in 2011. Realized it could be the new business model we were looking for. Instead of trying to extract value through advertising, we could grow demand for a cryptocurrency of which we owned a piece. We did a lot of work to validate the idea between 2011 and 2017. In 2017 we launched Kin. Kin is money for the digital world. A currency that people can earn and spend across many different apps. With Kin most people’s “first job” in the digital world is selling their attention to advertisers. Most people’s first spend is unlocking digital content, like items in a game or stickers in a social app. From there you have the foundation of a new economy. People start to build out more ways to earn and more ways to spend. An example in Kik is users starting to offer expertise in various interests (cooking, travel, etc) in return for Kin. Kin works because it enables frictionless, global, micro transaction payments between people in the digital world.

Developers are adopting Kin because of what we call the Kin Rewards Engine. This is similar to the Bitcoin Block Reward, except instead of incentivizing miners to secure the network the Kin Rewards Engine incentivizes consumer app developers to get their users earning and spending Kin. It’s working. Today Kin is being used as Money in 40 different apps. In the las month 1mm+ people earned Kin in those apps, and 400k+ people spent Kin in those apps. These stats are posted at kin.org/stats

For us this is just the beginning. Our goal is to get a billion people using Kin as Money. This would make Kin one of the most used currencies in the world, up there with the dollar and the euro, only more open and more programmable.

Messari: Thanks—a lot to unpack there. The first question related to some of that is: Can you elaborate on what the conception of Kin at Kik was like and exactly what you describe as pioneering messaging app tokens is like at Kik?

Livingston: Kik was unique because most of our competitors were funded by a wealthy parent company (iMessage, FB Messenger, or Whatsapp) or a wealthy individual (Telegram). Like Kik, none of them made money, but for them that was ok. For Kik it was not. We didn't have a wealthy parent company or sponsor, so we needed to find a business model that worked for private chat. This is where we go excited about crypto in 2011, that by creating "our own bitcoin", and owning a piece of that cryptocurrency, we could create a new business model that we and many others needed.

We launched a test economy around that in 2013 (the currency was called Kik Points) and in 2014 we were doing 5 times the number of transactions per day as Bitcoin. This gave us conviction that crypto could work as the business model we needed, so in 2017 we launched Kin. What is interesting today is that Telegram, Facebook, Line, and Kakao are all now launching their own cryptocurrencies, which we think does validate the concept and the business model. What is exciting about Kin is that we have been in market for almost 2 years already, and are seeing things really start to take off, with 2mm monthly active earners and 500k monthly active spenders across 40+ independent apps

Messari: Relatedly, we have a couple about Kik’s claims that Kin is one of the most-used cryptocurrencies to date. Two-part question: Can you ELI5 the Kin token and then elaborate on the current usage a bit (and share links to some of the data)?

Livingston: Sounds good. I was talking to the CEO of a top 25 coin yesterday. We talked about a number of things, but one of the things we talked about was the growth of Kin usage, where more and more developers were adding it to their apps as "money for the digital world". I told him about some of the metrics and he was a bit taken back. He said "that would mean you guys are the first project in crypto to crack mainstream adoption" (his words, not mine!)

I told him about kin.org/stats, where you can see the different charts and apps. He suggested we should figure out who could help us verify the data, because that would be really exciting for all of crypto. He actually suggested that maybe Messari could help with that. I thought that was a good idea, so maybe you guys can! We know they are big claims and so we would appreciate any help from the community to either prove or disprove them.

Tanner Philp: Further to that, we just published a new expanded dashboard with:

- Daily/Monthly active spenders

- Daily/Monthly active earners

- Daily/Monthly total earns and spends

You can filter these numbers by each individual app in the Kin ecosystem

Livingston: The reason consumers are using Kin is because it is a global, frictionless microtransaction currency - anyone in the world can send anyone else a fraction of a penny with zero fees. This is something dollars can't do, and is enabled by the Kin Blockchain, which is a custom fork of Stellar, with high scale and no transaction fees (security is done in a different way). Developers are adopting Kin because of the Kin Rewards Engine. The KRE is like the Bitcoin Block Reward, except instead of paying miners to secure the network, it pays developers to get their users earning and spending Kin

Messari: A couple final questions about the token and protocol specifically: one question about Kin’s view on building for interoperability between messaging platforms and another about referral programs within the Kin ecosystem for on-boarding more users. Do you have thoughts on either of these ideas?

Livingston: We fully believe in interoperability. This is why we launched Kin, where the name of course comes from "family" - in our case a family of users and developers all working together to build this new digital economy. We want people to be able to earn Kin in one app, and then take it and spend it in another. It is almost like a digital "euro", where the different "countries" are apps like Kik, Tapatalk, Nearby, Rave, and many others. This is why we call Kin "money for the digital world"

For the other question, this is the whole idea of the KRE! The KRE pays developers for getting their users earning and spending Kin. So now developers can monetize their apps without needing to take all of their users' attention and data

Messari: We'll hold you to that, Ted.

Livingston: We'd love to work with you on this! All the data presented above is just a viewer of the open data coming off the blockchain. Maybe we got something wrong. If so we would like to know! Here’s a post from earlier in the year introducing the first iteration of the KRE.

Also, one of the Kin developers published a short post recently highlighting the connection across the ecosystem and the incentive to do so. Here is a link to that one.

Here is another visualizer for data coming off the Kin Blockchain, made by someone in our community. It gives you a good sense of how much is happening. And this doesn't yet include many of the bigger apps that have integrated Kin, which are currently mid migration to the new Kin blockchain.

Messari: We have several questions about the SEC's suit, as you might expect. An interesting one asks if Kin has seen any effect on developers in the ecosystem from the suit. Have you?

Livingston: It has created a challenge with developers, but we are quickly getting past it. The SEC, not just with Kin but with most of crypto, has created a cloud of uncertainty over what is allowed and what is not. When the lawsuit came most of the developers in the Kin ecosystem were expecting it, but it still did have an impact. The SEC in their complaint went out of their way to make the project look bad. For example, they characterized Kin as a last minute Hail Mary, when in reality it was in development since 2011.

They also talked about how I promised profits, when in reality I was describing the generic economics of any cryptocurrency and how that created a new business model. So at first this did cause some concern, but as developers have been able to dig into the claim, they see just how misleading the SEC is being, and that has emboldened many developers to dig in even deeper and work that much harder to build this amazing future we all see.

Messari: We all understand that fighting the SEC isn’t a quick or inexpensive endeavor, and we have a couple questions from the group about Kin's plans to sustain this fight as it could become very long and expensive. Can you speak to this a bit?

Livingston: I can't get into too much detail here, but I can say that we are confident we will have the funds to fight this to the end. That said these things are long and expensive. I think what a lot of crypto is missing is that this is just the first one. There will be more. Jay Clayton, chair of the SEC, has said every crypto that has done a token sale has done an illegal securities offering in his view. That’s Ethereum, Kin, IPFS, Brave, and many others.

That said the SEC's complaint against Kin has had the effect that I think the SEC was hoping it would have: it would position Kin in a negative light so people would think "oh well they probably deserved it". We will move quickly to correct the facts, but in the meantime I think we need to come together and defend crypto. Otherwise we will continue to be divided and conquered.

This is one of the best articles I have found on why token sales are not offering of securities. I suggest you all read it

Messari: Relatedly, we also have a few specifically about Defend Crypto. Outside of resolving Kin’s specific suit with the SEC, does Kik have larger goals for the Defend Crypto initiative?

Livingston: We think the SEC v Kik lawsuit is just the tip of the iceberg. Exchanges are increasingly pulling out of the US. Tokens are increasingly being delisted. While the SEC has said they want to help, in the last 10 years they have only given out a single no action letter related to crypto, which was for a closed loop coupon system that didn't need a no action letter. When you put the pieces together it feels like the SEC is working increasingly quickly to shut down crypto in the US. We don't know how that will continue to evolve, but we are increasingly confident that it will become important to band together to defend crypto.

Philp: Just to add to Ted’s last comment as well. Given how foundational this is for the industry, it is important to us that everyone in the space has a chance to be part of the discussion. Defendcrypto.org is a place that we will continue to update as this case progresses and share valuable resources. We recognize Kin will not be the first, so we want to make sure everything happens in full transparency.

Since the site went live we’ve had a number of other projects in the space reaching out to say they are dealing with the same thing behind the scenes but have been too afraid to go public. Many others see the timeline of events, can see themselves on different points of that timeline and see how it can evolve. It’s been a big step forward for crypto to now have this out in the public as new regulation is formed.

Messari: Last question about the SEC: What are the best and worst case scenarios for Kin with regard to the suit? And what are Kik’s expectations?

Livingston: Best case: a jury finds that the sale of Kin in 2017 was not a security. That gives clarity to Kin and 1000s of other projects. Worst case: a jury finds that the sale of Kin in 2017 was a sale of securities. That most likely results in an offer of recision and a fine. That becomes a hammer for the SEC to go after all the other projects that did a token sale. That said, this is probably ok for Kin, because in their complaint the SEC has made zero comment about how Kin is being used today. To us this suggests that they think Kin is now "sufficiently decentralized". So it is full steam ahead. All of this said, our expectation is that we will win.

Messari: I realize we’re approaching the one hour mark, so only two more (hopefully) quick questions looking to the near-term future of Kin. The first question asks, “Would you launch an ICO in US again?” But I’ll expand that question a bit and ask: if you could do one thing differently about the Kin launch, what would it be?

Livingston: No, we wouldn't. And that would be a major shame. We think crypto is going to be a major force of positive change in the world, so we think every consumer and developer should be part of that. The US shouldn’t get left behind.

Messari: Last question(s) are about the short term roadmap for Kik, liquidity, partnerships, and general growth for the Kin ecosystem. At a high level, and SEC suit aside, what does the rest of 2019 look like for Kin?

Livingston: Our two focuses: 1) Keep growing Kin. Kin is working, and the network effect is taking hold. We need to pour gas on the fire, with more and more developers joining Kin, and more and more consumers using Kin. 2) Get liquidity. Liquidity is an important piece of what makes the whole ecosystem work - if Bitcoin miners couldn't sell their Bitcoin, then no one would mine Bitcoin. Unfortunately it seems that the SEC knows this too. We are hearing more and more stories of them pressuring exchanges behind the scenes to not work with us. That has made it challenging, but we are going to keep hammering at it until the wall falls down - it is a big world out there. It is interesting to us that of all the cryptocurrencies the SEC could have gone after, they chose to start with the one that people are actually using.

Messari: Thanks so much for chatting; this has been hugely informative, and we greatly appreciate your time. Before we officially conclude, can you share the best ways to continue these conversations and keep up with Kin developments?

Livingston: Thank you for having us.

Philp: Thanks for having us.

Livingston: Join our subreddit. We communicate publicly as an ecosystem there. We don't take down negative comments or critiques, so it doesn't look as "managed" as some other subreddits, but we think honesty and transparency are an important part of this movement, even if it makes us uncomfortable or look bad sometimes. This is Kin. This is a movement we are building together.