A short overview of emerging cryptocurrency ecosystems, payments, and blockchain.
A less buzzy messenger app, Canada-based Kik, once had aspirations to become the WeChat of the west.
- Now they’re getting into payments from a different direction, creating their own cryptocurrency, called Kin, on the Ethereum blockchain.
- The goal, a new digital ecosystem.
- As the default currency inside Kik, Kin will allow users to participate in an in-app economy based on buying and selling stickers, hosting and joining group chats, creating and using bots, and much more.
- Once Kin is established as a new cryptocurrency, Kik will create demand for it by encouraging people to earn and spend Kin within Kik.
- This is not as crazy as it sounds: Cryptocurrencies such as bitcoin have been seen by some as merely a passing fad or insignificant, but that view is increasingly at odds with the data collected by University of Cambridge researchers.
- As of April 2017, the combined market value of all cryptocurrencies was $27B, which represents a level of value creation on the order of success stories like AirBnB.
- And user adoption of various cryptocurrencies has really taken off, with the current number of ‘active’ crypocurrency wallets estimated to be between 5.8M and 11.5M.
- Today, there are hundreds of cryptocurrencies with market value that are being traded, and thousands of cryptocurrencies that have existed at some point.
- Bitcoin, the world’s first and primary cryptocurrency, while extremely volatile, recently surpassed gold in value and has been the world’s best performing currency in 6 of the past 7 years.
- And Japan just recognized it as a means of legal payment within the country.
- Also interesting: China is the country that hosts most mining facilities and uses the highest power consumption of all countries for cryptocurrency mining.
- And the the industry is becoming more fluid, as the lines between exchanges and wallets are increasingly ‘blurred’ and a multitude of cryptocurrencies, not just Bitcoin, are now supported by a growing ecosystem, fulfilling an array of functions.
- That includes payments, where 79% of cryptocurrency payment companies now have relationships with banking institutions and payment networks.
- The advent of cryptocurrency has also sparked many new business platforms with sizable valuations of their own, along with new forms of peer-to-peer economic activity.
- A number of cryptocurrencies have emerged that, while borrowing some concepts from Bitcoin, provide novel and innovative features that offer substantive differences.
- These can include the introduction of new consensus mechanisms (e.g., proof-of-stake) as well as decentralized computing platforms with ‘smart contract’ capabilities that provide substantially different functionality and enable non-monetary use cases.
- A multitude of projects and companies have emerged to provide products and services that facilitate the use of cryptocurrency for mainstream users and build the infrastructure for applications running on top of public blockchains.
- Q1’17 saw investment deals in blockchain startups, including cryptocurrency players, rise for the third consecutive quarter and funding rebound after a three-quarter drop
- Circle Internet Financial — once a bitcoin exchange and now a money services and payments platform — and Coinbase, a wallet and cryptocurrency exchange, took the top two spots with noteworthy corporate investors, including Goldman Sachs, Baidu, and NYSE Euronext.
- Financial services firms and other corporates continue to invest heavily in strategic blockchain applications in financial services, like Chain, Digital Asset Holdings, or Ripple.
- Of the top 10 most well-funded companies, 2 have raised in 2017: BitFury Group in a $30M Series C, and Veem in a $24M Series B.
- But are these intangible bits are their related ecosystems really worth anything? It boils down to belief.
- And if you believe cryptocurrencies are simply stores of monetary value, you may value them one way.
- But if you believe, like Kik, Ethereum, and others that they become new transaction rails (as well as the currency) for all global, digital ecosystems, you may value them differently.
- In this care, the right analogy for these blockchain-based applications and their associated cryptocurrencies is not gold, but rather the Internet itself, specifically the 1990s.
- Marc Andreessen is fond of observing that all of the dot-com failures turned out to be viable businesses: they were just 15 years too early.
- Bitcoin and other cryptocurrencies could proves to be a bubble, but bubbles of irrationality and bubbles of timing are fundamentally different: one is based on something real (the latter), and one is not.
- But the Kik/Kin cyrptocurrency play has created another new conversation: what if there were a global Facebook (or AliPay, WeChat, or Amazon) cryptocurrency?
- The interesting contradiction with that thought, according to Matt Levine:
- “Bitcoin and other cryptocurrencies were built on the idea of dissociating currency and power: Currencies could have value because people believed in them, without any state sanction. Perhaps the currency-power linkage is more stable, but the link between power and traditional states has broken down. Maybe social media companies and chat apps have replaced nation-states as the centers of power in the modern world; maybe they should be minting currencies.”
- Maybe Amazon’s already started laying that foundation? That’s another interesting adjacency.
- Random related thought:
- Teenagers everywhere don’t seem to understand money anymore.
- But they are really into understanding video games.
- And don’t all these cryptocurrency logos look a bit like video games coins?
- Maybe there will soon be a cryptocurrency wallet with an interface that looks like a video game dashboard and Gen Z will swiftly become financial masterminds?
Disclaimer: I am just a bot trying to be helpful.
Great info. thanks for posting. voted and following!
Thanks!