But all is not well.

After 18 months of working with the SEC the only choice they gave us was to either label Kin a security or fight them in court. Becoming a security would kill the usability of any cryptocurrency and set a dangerous precedent for the industry. So with the SEC working to characterize almost all cryptocurrencies as securities we made the decision to step forward and fight.

While we are ready to take on the SEC in court, we underestimated the tactics they would employ. How they would take our quotes out of context to manipulate the public to view us as bad actors. How they would pressure exchanges not to list Kin. And how they would draw out a long and expensive process to drain our resources.

Instead of selling some of our Kin into the limited liquidity that exists today, we made the decision to focus our current resources on the few things that matter most. So today we are announcing three things:

1. We will shut down the Kik app
2. We will reduce our headcount to an elite 19 person team
3. We will focus on one thing: converting Kin users into Kin buyers

These are hard decisions. Kik is one of the largest apps in the US. It has industry leading engagement and is growing again. Over 100 employees and their families will be impacted. People who have poured their hearts and souls into Kik and Kin for over a decade.

Together these changes will drop our burn rate by eighty five percent, putting us in position to get through the SEC trial with the resources we have.

But no matter what happens to Kik, Kin is here to stay. Kin operates on an open, decentralized infrastructure run by a dozen independent companies. Kin is a currency used by millions of people in dozens of independent apps. So while the SEC might be able to push us around, taking on the broader Kin Ecosystem will be a much bigger fight. And the Ecosystem is close to adding a lot more firepower.

Today most cryptocurrencies rely on speculative demand from exchanges to fuel their crypto business models. But Kin isn’t available on most exchanges, so we can’t rely on speculative demand. Instead we need to become the first project that creates real demand by getting people to buy Kin to use it. Achieving this will open up a never-before seen source of demand that will be available to everyone in the Kin Ecosystem.

We are close. Kin has over 2,000,000 monthly active earners, and 600,000 monthly active spenders. While losing Kik will have a big impact on these numbers, the continued growth of the Kin Ecosystem has more than made up for it.

Going forward our 19 person team will be focused on one goal: getting millions of people to buy Kin to use it. We aim to achieve this goal by executing a three part strategy:

1. Moving the Kin blockchain forward to support a billion consumers making a dozen transactions a day with sub 1 second confirmation times
2. Accelerating the adoption, growth, and success of all developers in the Kin Ecosystem
3. Building a mobile wallet that makes it easy to buy Kin, exciting to use Kin, and seamless to explore the Kin Ecosystem

We are all in. And despite these hard decisions my confidence in Kin only continues to grow. Together we will show the power of the Kin Ecosystem. Together we will get millions of people to buy Kin to use it. And together we will build a new economy that offers equal opportunity to billions of people. Together we will win.

Disclosure: I have no inside knowledge of Facebook’s plans. This post is based on 10 years of experience in messaging and crypto. We think Facebook could be on a path to replace the US dollar as the global reserve currency. This post outlines how that might happen. We hope this post leads to a broader discussion on the impact Facebook and crypto could have on society, and what we might do about it

Mark Zuckerberg recently wrote a long post outlining Facebook’s shift from open sharing to private communications. It makes sense. People are waking up to the anxiety and depression caused by open sharing and are moving to smaller and more intimate online spaces instead. Facebook has no choice but to change course.

But this shift begs one important question: how will Facebook make money?

Making Money with Private Communications

Social apps have historically made money by adding public broadcasting, putting those broadcasts into a feed, and then putting ads into that feed. Facebook has the news feed, Snapchat has stories, and Twitter has the timeline.

We never added broadcasting to our chat app Kik. We worried it would encourage people to focus on putting on their best show, instead of just being their true self. Today Kik is used by millions of people who spend more time in Kik than Snapchat, Twitter, and Instagram. People love hanging out in a world free of broadcasts, feeds, and likes. But without a feed to put ads in we’ve had to think of other ways to make money.

After ten years of searching the only good way we’ve found is with a cryptocurrency. By creating a cryptocurrency that is used as a medium of exchange in our app we can create something valuable like Bitcoin or Ether. This allows both us and our users to make money by selling pieces of the currency as the economy grows and the currency becomes more valuable.

In 2017 we launched Kin, a cryptocurrency for the digital world. We created 10 trillion Kin tokens. We sold 1 trillion tokens for $100 million, we allocated 3 trillion tokens for Kik, and we allocated 6 trillion tokens for other app developers who wanted to use Kin as a new way to make money too. Last month 80,000 people spent Kin across 40 different apps. Kin is one of the most used cryptocurrencies in the world.

We now know that Facebook is going to launch their own cryptocurrency too. But instead of creating a currency for the digital world, it looks like Facebook is going after something much bigger. It looks like they are going to create a currency for the physical world. And they have a proven playbook to get people to use it.

The WeChat Playbook

In 2014 I published a post The Race to Become the WeChat of the West. Nine months later WeChat invested 50 million dollars into Kik at a billion dollar valuation. The WeChat playbook is clear:

1. Make it compelling for people to bring their money into the messenger

2. Make it easy for them to move their money around

3. Create more and more reasons for them to keep their money inside the messenger

In 2014 WeChat used the cultural phenomenon of red envelopes to get people to bring their money into WeChat. Instead of waiting to hand out envelopes of cash at special occasions, people could send virtual envelopes right inside their chats. Soon millions of people were bringing their money into WeChat, putting them into virtual red envelopes, and sending them all over the country.

WeChat allowed people to take their money out at any time, but they also added more and more reasons for people to keep their money inside: paying hydro bills, buying food, booking vacations, and more. Soon no one was taking their money out.

Today 900 million people use WeChat for daily transactions, totaling nearly $10 trillion of payments per year. In China WeChat replaced cash.

Executing the Playbook

Facebook is about to have all the pieces needed to execute the three step WeChat playbook.

First, the compelling need: remittances.

Every year people working in foreign countries send hundreds of billions of dollars home to family and friends. Today this process is slow, expensive, and complicated, with an average fee of $14 to send just $200. If Facebook could offer people a way to send money home for free it would be a game changer for tens of millions of people.

Second, moving money: the blockchain.

One of the key breakthroughs of the blockchain is that people can move money digitally without needing to trust a third party. This was impossible before the blockchain. This allows Facebook to enable payment functionality in their apps without needing to become a bank. So instead of working with regulators like WeChat did in China, Facebook will be able to roll out a global financial system without needing to go through the time intensive process of working with banking regulators country by country.

Third, keeping money inside the system: the platform.

By adding the ability to remit money inside their apps, and by using the blockchain to power those remittances, Facebook can quickly roll out a ten times cheaper solution to a problem experienced by tens of millions of people. But what will people do when they receive those remittances?

Initially they will cash them out for life’s daily expenses. But just like what WeChat did in China, Facebook will add more and more ways to spend money directly inside their apps: paying utility bills, getting food at restaurants, topping up phone minutes, and more. New ways of spending money through the app will become simpler and more powerful than the previous alternatives. Soon enough there will be no reason for anyone to take their money out.

How It Could Play Out

Right now we already know quite a few things about Facebook’s plans. We know they plan to offer stablecoin powered remittances. We know they plan to start with Whatsapp. We know they plan to start in India.

This makes perfect sense. India receives more remittances each year than any other country in the world. Whatsapp is the most popular app in India. And a stablecoin allows money to move on the blockchain without the risk of it becoming more or less valuable than the local fiat currency.

So what could come next?

Let’s call Facebook’s stablecoin “Facecoin”. Facebook could allow people to buy Facecoins right inside of Whatsapp and send them home to family and friends in India for free. People in India could convert their Facecoins into cash, but Facebook could create more and more reasons to just spend Facecoins using Whatsapp. Just as WeChat replaced cash in China, Facebook could soon replace cash in India.

As India gains momentum Facebook could look to expand. First into other countries where remittances are popular. Perhaps the Philippines and Egypt, followed by Mexico and Vietnam. To get adoption in more developed countries Facebook could combine Whatsapp, Instagram, and Facebook Messenger together, allowing Facecoins to move across all three services. Facecoins could start to replace cash in each of those countries, becoming the primary currency for billions of people.

The End of the Dollar

People who understand crypto might argue that this doesn’t matter. That because the value of a Facecoin is pegged to the value of a dollar, they are essentially just dollars that run on a blockchain. To me this is the most important part. Not that long ago the world’s reserve currency was gold, where the value of a dollar was pegged to the value of gold. But then one day the US decided to unpeg the dollar from gold, paving the way for the dollar to replace gold as the world’s reserve currency. So here is my question: what will stop Facebook from doing the same?

Today the Wall Street Journal published an article about the SEC’s upcoming decision on whether or not to file suit against Kik for our 2017 token sale.

This comes after SEC Chair Jay Clayton said “I believe every ICO I’ve seen is a security.” That includes almost every cryptocurrency, from Ethereum on down.

This is the thing that everyone in the industry is dealing with, but nobody wants to talk about. For all of us to be able to continue hiring, innovating, and competing, we need to change that.

We first heard from the SEC a few days after our token sale had already started, four months after we first announced it. It was a friendly contact for information, which we happily responded to.

Since then, our conversations slowly ramped up — first with more questions, then with subpoenas over the winter, and then formal testimony in Washington over the summer. This process culminated with them issuing us a Wells Notice on November 16, 2018. This notice outlines why the SEC thinks there has been a securities infraction.

On December 7, 2018, we submitted our Wells Response. This response outlines the many reasons why we think there has not been an infraction. We have published a copy of that notice and our response here.

The next step is for the SEC staff to take these two documents and decide if they want to make a recommendation to the four SEC commissioners to authorize a case against us.

This situation is not unique to Kik. There are dozens of projects at a similar point with the SEC. We all believe that this industry needs regulation, but we also believe that this is not the way to get it.

There are many reasons why Kin and others do not satisfy the Howey Test, which you can find in our Wells Response that includes many examples from case law.

But there is also a simpler reason. On page 11 of the 1934 Securities Exchange Act, the very act that created the SEC, it explicitly states that the definition of a security “shall not include currency.”

Today you can earn and spend Kin in over 30 apps live in the Google Play and iOS App Stores. Already, hundreds of thousands of people have exchanged Kin for goods and services. Kin is one cryptocurrency that truly is a currency.

Crypto is set to usher in the next wave of widespread innovation. If we want that innovation to include the United States we need to start talking about what is happening behind the scenes. We are all in this together.

To receive updates about this case, subscribe to our mailing list at Kin.org.

Four Commissioners at the SEC are About to Vote on the Future of Crypto in the U.S. was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

It’s been one year since the Kin token distribution event. Since then we have been following a three step strategy to make Kin the most used cryptocurrency in the world:

1. Create a scalable blockchain
2. Launch Kin inside Kik
3. Expand the ecosystem to other apps

We have made great progress on all three.

Create a scalable blockchain

We iterated through a number of options, starting with Ethereum, then Stellar, then combining Ethereum and Stellar, and then combining Ethereum with our own custom fork of Stellar. Getting to this latest step has unlocked the scale and usability necessary to unblock step two and three of the strategy, allowing developers like Kik, Kinit, Perfect365, and the 40 developers in the Kin Developer Program to start building mainstream consumer applications.

That said, there is still work left to do: independent federation nodes need to come online, the anti spam system that allows for zero transaction fees needs to launch, and the atomic swaps that combine Kin on Ethereum and Kin on our Stellar fork needs to be perfected. Once this is complete, the Kin Blockchain will support the scale and simplicity that developers need, while allowing Kin to be seamlessly and securely bought, sold, and used across the Kin Ecosystem.

Launch Kin inside Kik

We launched the first utility at the conclusion of the token distribution event last year, allowing users in Kik to use Kin to unlock exclusive stickers based on their balance. We then moved to allowing users to earn and buy stickers. However, this quickly crashed the Ethereum network, which is when Kin decided to move app transactions to Stellar.

Kik helped support scalability studies, with Kik users creating test transactions from hundreds of thousands of real devices. Kik also helped co-create the Kin SDK that used the Stellar fork and launched premium chat themes.

Chat themes have helped test the boundaries of reliability and usability (such as transactions times, and backup and restore), something that large and valuable app communities need to see before rolling out features to their millions of users who expect seamless experiences. As these scalability and usability challenges get worked out, expect to see more mainstream Kin features from Kik and others.

Expand the ecosystem to other apps

We launched Kinit, a way for brands to pay you for your attention, becoming the first iPhone app in the world to get approved by Apple for earning and spending crypto. This, combined with Kik users, gave Kin more active users than all Ethereum dapps combined.

Kin worked with large partners, like Blackhawk Network, IMVU, Perfect365, and Unity, who are excited about the Kin vision and business model. Like Kik, they need a blockchain and SDK that is scalable and reliable with out of the box features such as backup and restore. Expect more integrations as these features are built and proven. This is also what is needed to unblock launching with platforms like Unity.

Finally, Kin has also launched the Kin Developer Program, selecting 40 developers to participate in the program. Because the Kin Blockchain doesn’t yet have the anti spam measures in place to protect itself, only developers who are accepted into the program can work with the Kin Blockchain. Once the anti spam system is in place, this will change. And once these 40 developers are live, it will also create enough usage and diversity of transactions to start rolling out the Kin Rewards Engine.

Don’t Hate the Player, Change the Game

What has also become clear in the past year is how much the world needs Kin. We have seen consumer companies increasingly struggle to compete. We have seen acquired founders get pushed out after being promised independence. And we have seen consumers creating even more value, but continuing to see none of it.

We need to change the game. We need a way where developers can compete on a level playing field. A way where consumers and developers are put on the same team. A way where we can all win together by working together.

When we first created Kik it took almost two years of building before Kik went viral. We had to develop the right components and get the right pieces in place. Some days, we made more progress than others. But then one day in 2010 it all came together, and seemingly overnight, Kik became the fastest growing app in history.

Today it feels like we are in a similar place. Problems are being solved. Pieces are getting put in place. But step by step we are getting there, creating a new game. A game the world needs. A game we can all win at together.

Kin, One Year in was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

• Build a scalable blockchain
• Launch Kin in Kik
• Expand Kin beyond Kik

I’m happy to report that we’re on track with all three steps. In some areas, we’re already ahead of plan, specifically in our efforts to build a scalable blockchain.

In May, we announced our intention to create the Kin Blockchain. This decision allowed us to get the best of both worlds: the Ethereum blockchain for liquidity and security, and our custom fork of Stellar for scale. So far we have been getting great results. In June, we were able to reach 1.2M transactions per day. And we already have live consumer experiences running on the Kin Blockchain: new earn and spend opportunities inside of Kik, and the Kinit Beta app.

We’re doubling down on the Kin Blockchain and are investing more heavily in our internal development team and our blockchain solution. As such, our current plans for Kin no longer include working closely with Orbs or migrating to the Orbs blockchain. We continue to wish the team at Orbs all the best as they continue to move their project forward.

Doubling Down on the Kin Blockchain was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Many people believe that Bitcoin has limited utility and that its high price is based solely on speculation. Others say that the only exciting thing about Bitcoin is how the blockchain will help us track items through the global supply chain or tokenize pieces of art or facilitate financial audits. While these arguments are interesting, they miss the point of what makes Bitcoin so transformative.

Only a small part of the power of Bitcoin is its decentralized application (or DApp) to move value around. The real power of Bitcoin is the decentralized incentive platform (or DIP) that makes it all work. This DIP empowers millions of strangers from around the world to win together by working together.

Bitcoin achieves this by combining three unique properties.

The first is the ability to create a digital asset of guaranteed scarcity. Before Bitcoin, you could have a physical asset with guaranteed scarcity, like gold, but it was a pain to move around. Or you could have a digital asset that was easy to move around, like a currency for a game, but whoever owned that asset could create more of it whenever they wanted. For the first time ever Bitcoin let you have both: it’s easy to move around and it guarantees that there will never be more than 21 million bitcoins.

The second unique property is its ability to algorithmically reward people. The platform relies on people contributing their computing power to run the system that lets everyone else move their bitcoins around. To achieve that, the software guarantees that anyone who contributes computing power in a specific way will be given their own bitcoin.

The third unique property is that the only way to use Bitcoin is to pay with Bitcoin.

When you put these three things together — a cryptocurrency, an incentive, and a use case — you get something incredibly powerful: a decentralized incentive platform. Today, people from all over the world contribute to Bitcoin, and their combined computing power is now a hundred thousand times more powerful than the world’s top five hundred supercomputers combined. To achieve this, the platform has dispensed 17 million bitcoins to contributors. The demand is now so high that the collective value of those bitcoins exceeds $100 billion.

This is the power of a DIP: you can get millions of people working together to solve a problem by offering guaranteed compensation for permissionless contribution. You don’t need permission to contribute, you don’t need to trust that someone will compensate you for that contribution, and you don’t need to hope that the value of that compensation won’t get diluted. All those things are guaranteed. All you need to do is contribute.

But Bitcoin is only the first decentralized incentive platform. There are many other problems we can work together to solve in a similar way, with the benefits being shared fairly among all participants. This is what gets us excited about Kin — using a decentralized incentive platform to create a digital sharing economy of equal opportunity. If this sounds interesting to you we hope you’ll join the discussion.

The World Changing Idea Behind Bitcoin Isn’t What You Think was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

You’ll recall that the CoinTree team worked with Kik as an advisor throughout our token distribution event. Kik continues to have a strong relationship with CoinTree and has hired four members of their team to lead our blockchain efforts in Tel Aviv. In order to accelerate learning and development, we decided to co-locate the Kin and Orbs blockchain teams in the same office space in Tel Aviv. Our Kin team members and the Orbs team members are contributing to each other’s projects and learning from one another.

While the possibility of moving from Ethereum to Stellar is exciting, Kin could also quickly hit the limits of Stellar, too. By working closely with the Orbs team the goal is to maximize the odds that Kin will have the blockchain it needs by the time it needs it, where the Orbs project could be a solution to Kin’s scalability and production needs to support mainstream digital services.

Kin and Orbs was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

I imagine millions of people sitting down with their phones each morning, providing value to the world and getting compensated. The value they provide would come in many forms, such as offering advice, hosting experiences or creating content. And the compensation would come in the form of Kin, a cryptocurrency to facilitate a digital sharing economy of equal opportunity.

I imagine developers creating thousands of digital places where people can go to provide value to each other. But instead of requiring developers to figure out how to extract value from consumers, the Kin Rewards Engine would automatically compensate developers for facilitating the exchange of value between consumers. It’s like building a digital Lyft, where people drive for each other, or a digital Airbnb, where people rent to each other. But instead of requiring these developers to figure out how to take a fee from each ride or rental, they can let consumers keep everything. The developers would instead be rewarded with Kin for helping to build the Kin Ecosystem. As developers create more of these places, more people come, and the value of the reward increases — thus attracting even more developers to create more places for more people.

I imagine a day when there are thousands of different places where people can go to share their unique talent with the world, and thousands of different places where people can go to enjoy the unique talents of others. In these places, the Kin people receive will be blind to their age, country, and race. Instead, it will be based solely on their passion and skills.

This is an ambitious vision. We want to create a digital sharing economy that doesn’t exist today. Why not start with something simpler? Why not just make Kin an alternative payment method like Bitcoin? Why not just work with retailers like Starbucks and let people pay with Kin?

The answer is that the physical world already has a currency — dollars — and for most of the physical world, dollars work quite well. Starbucks buys its coffee beans with dollars, pays its rent with dollars and pays its employees with dollars. If one day the company decides to accept Bitcoin, and Bitcoin’s value suddenly drops, Starbucks is in trouble. As a result, Starbucks could immediately convert any Bitcoin it receives into dollars, avoiding the exchange risk. But then what would be the point of using Bitcoin in the first place?

This is why the digital world is such a compelling place to launch a new cryptocurrency. Billions of people are already providing value to society in digital places — they just aren’t getting paid. They’re on message boards and in games. In social apps and chat rooms. And in this digital world, dollars don’t work. If I wanted to pay a small amount of money to get someone’s fashion advice, it would be difficult for me to send them a fraction of a dollar, but it would be easy for me to send them 10 kin.

This is the vision for Kin: a digital sharing economy of equal opportunity. It would be a world where millions of people are compensated for the talent they provide through their phones, and a world where developers get compensated for creating amazing places for consumers to provide value to each other. It would be a world where people win together by working together. It would be a digital world built on Kin.

The Vision for Kin was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Kin token distribution event (TDE) is now complete. We share the same sentiment as our board members, our advisors (specifically CoinFund and CoinTree), and industry leaders — Kin is a success, and we’re building something very special together. More than 10,000 people from 117 countries participated in the TDE, and we raised nearly $100 million to build a decentralized ecosystem for digital services.

The Kik team is humbled by the amount of support we’ve received from the community throughout the token distribution event.

Thank you.

People who participated in the TDE will receive instructions to access a Kin wallet in Kik. We are also doing a Gmail style rollout of Kin inside of Kik, starting with 1,000 of our users. We will take a measured approach to our rollout, gradually increasing both functionality and the number of users who can access Kin as we solve the scalability and usability challenges that come with the blockchain.

Stay tuned for updates and announcements. This is the start of an exciting journey.

Thank You for Your Support was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

This decision comes after weak guidance from the Ontario Securities Commission. Despite setting up Kin to have one of the most fair TDEs to date, and despite our best efforts to work with the OSC, they have failed to give us clear direction on when Canadian securities law will or, more importantly, will not apply. Our Kin project needs to move forward, so to avoid risks arising from this uncertainty, we, a Canadian company, have decided to move forward without Canada.

We are going through an amazing, transformative period in history — a technological revolution — and Canadian companies are in a position to lead. If innovation is to play an important role in Canada’s economy, we can’t afford to let this innovation go elsewhere.

To all our Canadian family and friends, we appreciate your support and are sorry. Given the nature of crypto, you will be able to join the project later in the secondary market, but you will not be able to be there from the start. If you want to share your point of view, we encourage you to contact the OSC Launchpad at the Ontario Securities Commission: email: osclaunchpad@osc.gov.on.ca; Twitter: #OSCLaunchPad.

Canadian Residents Excluded from Next Week’s Kin TDE was originally published in Kin Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.