In their July 17th article covering the launch of the Kinit beta app on Android, CCN author Jake Sylvestre wrote that during his interview with Kin’s VP of Communications, Rod McLeod, he had concerns over the existence of a business model for Kinit.
After explaining Rod’s point of view on bolstering a decentralized ecosystem, Jake wrote:
“Despite the app’s claims of a decentralized business model, I’m still convinced [sic] that this app will be profitable when it launches out of beta.“
(Although it is clear from the rest of the article that he meant to say he is “NOT” convinced)
The first thing I have to concede here is that is quote is 100% accurate. Kinit is not a profitable app in beta, and there is a very good chance that it won’t be a profitable app when it is out of beta.
But, even asking the question of “Is Kinit profitable?” shows that there is something that CCN fundamentally missed.
Before we can discuss that specifically, we have to be firmly on the same page on what Kin is and what the Kin Foundation’s goals are.
What is Kin?
Kin, as a cryptocurrency, hopes to be the digital currency exchange on the internet for non-physical goods. It will initially distribute via the Kin Rewards Engine (KRE), rewarding content creators and network participants for the value they add to the digital ecosystem.
In this regard, Kin is fundamentally just like the US dollar, except its aim is to be used for digital products in apps and on the web.
Right now, Kin is run by Kik, the company that created it. But, the long term goal is to pass control of Kin over to the non-profit “Kin Foundation.” Kik will still be an ecosystem partner like any other developer, but, the currency, blockchain and strategic roadmap will be managed by the Kin Foundation.
This distinction is fundamental to the long term health of the ecosystem. Kik has the goal of being a profitable growing startup. Their best interests may not always be the best interests for Kin (although they’ve tried to align themselves by holding a stake of Kin and vesting it over 60 years.)
What’s the goal of the Kin Foundation?
Simply put, the goal of the Kin Foundation is “to make Kin the most used cryptocurrency in the world.”
If Kin is the equivalent of the US dollar, then the Kin Foundation is kind of like the US Federal Reserve Bank. (Cue rage from crypto hard-knocks who hate federal monetary policy)
In the US monetary system, the Federal Reserve isn’t tasked with making a profit. Instead, the Federal Reserve aims to help set monetary policy, manage economic challenges of the currency, and manage the circulation and supply of the US dollar.
The Kin Foundation is responsible for adoption, development and maintenance of the Kin blockchain and the Kin Ecosystem.
As a non-profit, they aren’t looking to create a profit producing venture. Instead, their actions only need to be either self-sustaining, or even performed at a revenue loss for a short period of time if it helps the over all health of the ecosystem.
Why is this the Kin Foundation’s focus? At the end of the day, a currency is only as valuable as its use cases. If no one adopts Kin, then Kin has no value.
What Problem does Kinit Solve?
Kin is a radically new concept. With a few pillars:
- Reward users for value added behavior.
- Let users redeem their value either in my app, or in the offers ecosystem.
- As a developer, be rewarded by the KRE for the amount of value I create by bringing new users and transactions into the ecosystem.
This is very different from the setup that most developers know today. It isn’t about driving users to IAP purchases, subscriptions or ads, and it isn’t about thinking about monetization in terms of your own app in isolation. Instead you have to think about how to create value, retain users, and retain them within not just your app, but the larger ecosystem.
Couple that with the fact these are tokens on a blockchain, and a lot of app developers are left scratching their heads as to how this all works. That’s where Kinit comes in.
The Goal of Kinit
In previous live AMA’s with Kin founder Ted Livingston, Kinit has always been touted as “an example integration for the Kin Ecosystem.”
The goal of Kinit is not to make money on the price difference between their ad earnings and the cost of gift cards. In fact, Kin has stated that they are *drastically* subsidizing the cost of the gift cards in the Kinit app.
The goal of Kinit is to show an example integration of Kin within an application, test the network, and get approval by large publishing partners like Apple.
With that in place, it is much easier for the Kin Foundation team to go to other partners and say “Hey, look. This is the kind of stuff you can build with Kin, and we know it works and we know Apple will approve it.”
Kinit is an example, a demo that the Kin Foundation is happy to spend money on because it makes the onboarding to the ecosystem easier.
Kik and the Kin Foundation hold reserves in Kin, and so their vested interest isn’t in making short term revenue off of the Kinit app. Their goals are focused on making sure many developers and users adopt Kin, which has a compounding effect on the value of the Kin they hold.
Will Kinit Disappear One Day?
With Kinit being noted as a “sample” application it may seem almost inevitable that one day, once the ecosystem is more robust, that the Kin team would remove Kinit from the app stores.
However, it’s clear that Kinit has a much larger role to play long term.
In a decentralized ecosystem, one of the largest challenges is what we call the “identity layer”. Any time I open up an app that uses Kin it would have the choice of doing one of two things:
- Creating me a new wallet that is disconnected from all my other wallets and Kin.
- Finding someway to verify my identity and use a main Kin wallet without me sharing my private key.
#1 is obviously a no-go as it creates a terrible user experience. But, #2 is a challenging problem, and it’s one we continue to face on the internet, where we each have hundreds of accounts with various websites and no real central identity.
The most successful “identity layer” we’ve seen previously is the “Login with Facebook” button that Facebook strategically used to dominate the internet. Since users had a Facebook profile and were often already logged into Facebook it created an easier way to manage centralized identity.
Kin has closely watched Facebook over the years, and has always commented on how their tactic is to “copy & crush” their opponents. But, it seems like when it comes to the identity layer problem, Kin is likely to take a lesson from the pages of Facebook and create a “Login with Kin”/”Login with Kinit” for apps.
This would allow users to use Kinit as a centralized wallet to securely hold their funds for use in different applications, as well as to manage their identity across multiple applications without having to trust third-parties.
This smart play reduces the “sign-up funnel friction” in ecosystem apps, and creates a visibility loop. If users need to download Kinit to connect their apps for multiple wallets, then these apps will drive lots of downloads to Kinit. Kinit in turn becomes a top downloaded app on both app stores, and within, Kinit promotes apps in the ecosystem that use Kin. Driving these downloads to the apps that use Kin would cause them to become top downloaded apps as well, which are discovered by new users, who now need to download Kinit and thus the loop continues.
So What is the Business Model?
Kinit does have a business model. It’s not one of making profit margin off of their top line revenue, but instead, creating an example to onboard ecosystem partners and a viral adoption loop to rapidly grow the user base of the Kin ecosystem.
And that is far more valuable than $0.10 surveys.