Recap: AMA with Ted Livingston

Last week, Ted took some time to respond to our community on Reddit. A lot of excellent questions were brought up, ranging from the project’s future developments to Kik’s outlook on its case with the SEC. There were also questions regarding liquidity and exchanges. Ted was able to iterate on the importance of growing our ecosystem and creating real value.

I’ve included the questions from our community members and Ted’s responses to each question in this recap of the AMA.

Ted, thanks for coming back to the AMA scene, I hope it continues. We are seeing a lot of activities and apps joining the ecosystem. However the elephant in the room is that our liquidity is horrible and we don’t have a very healthy and scalable spending forefront. What are the plans to address these concerns from the foundation, are we still relying on developers alone for the spending options? (u/GSEDAN)

I agree that the liquidity for Kin is low, and part of that is exchanges, which we are working on adding. That said I think the more painful thing is that the price of Kin is low. This is especially painful when you look at other projects ahead of Kin on CMC. That said, when I step back, it also makes sense, at least for now. Let me explain.

The price of any asset is a function of supply and demand. Supply for most cryptocurrencies is limited, so the price of a cryptoasset is roughly a function of demand. Demand can come from two places: speculative demand, and real demand. Speculative demand is created when traders go to an exchange to buy a cryptoasset because they think it will be more valuable in the future. Real demand is created when consumers or developers go to an exchange to buy a cryptoasset because they want to use it.

Kin’s challenge has been that one one side it hasn’t been playing the speculative demand game, but on the other side it also doesn’t have real demand yet either. So we are caught in between, and with little speculative demand and limited real demand the price will go down.

That said, every day the Kin ecosystem is getting closer to generating real demand. Real demand per month is a function of the number of spenders of a currency multiplied by the number of dollars bought per spender per month. Today Kin has 375,000 spenders in the Ecosystem, more than any other cryptocurrency. But today those spenders are roughly buying $0 of Kin per month. And 375,000 times 0 is 0, so today there is small real demand for Kin as well.

That said, we are getting closer to making it easy for consumers to easily buy Kin. So for example if each of those spenders bought $1 of Kin per month, that would be $375,000 of real demand for Kin per month. If we could achieve that it would be one of the first times in the world that there was real demand for a cryptocurrency — people actually buying it to use it. And of course, the Ecosystem could grow both those numbers from there: more spenders buying more Kin each month.

Focusing on real demand vs speculative demand has taken a lot more work and a lot more time, and for now Kin is being punished by the market for that — everyone else is working to drive lots of speculative demand, which Kin hasn’t, and yet Kin doesn’t yet have real demand either. But if Kin is able to create real demand it will be one of the first cryptocurrencies in the world to achieve that, which economically speaking should raise the price. This is what the Ecosystem is focused on, even though it means we have to go through a painful period in the meantime.

We’re now 2 years deep into this project since the $100m TDE, please share some detailed information about the project’s financial position and what is your outlook for this given that the project / Kik is funding highly expensive legal and litigation costs? (u/asparagusm)

Today at market prices Kik’s 30% of Kin, which Kik has not sold a single Kin of yet, is worth roughly $45mm, and the Kin Foundation’s 60% of Kin, some of which has now been given out, is worth roughly $90mm. Kik, like other developers in the Ecosystem, also has its own reserves of dollars as well. We also have insurance for things like the SEC lawsuit.

Kin has been up and running since the date of the TDE — it was an ERC20 token that anyone could use or integrate. So even if Kik and the Kin Foundation disappeared on that day, Kin would continue to work. That said, like most ERC20 tokens, Kin on the Ethereum blockchain was also difficult to use, for both developers and consumers. Since then Kik, as a large holder of Kin, has been working to make Kin easier and easier to use both for itself as well as the rest of the developers in the Ecosystem. That has made Kin easier to use for Kik, other developers, and consumers. As part of this effort, as well as the effort of the 45 other apps in the Ecosystem, Kin is now the most spent cryptocurrency in the world.

Hi Ted, First of all — Please keep up the good work you guys are doing. Most people don’t see what’s happening in the background but at least as devs we get a tiny peek. My question:

What can you tell us is on the horizon in the next 3 months, and what are you most excited about? (u/kidwonder)

First off, kidwonder, let me say that your bubbles visualizer has become one of the first things I show people when talking to them about Kin. It shows just how much is happening in the Ecosystem, and it blows people away. So let me take a moment and say thank you for that!

Kin today is still early, but it is working. In terms of our original three-step strategy, we have achieved all three steps: we have a scalable blockchain, people are using Kin inside Kik, and people are using it inside 50 other apps as well.

The goals for the Ecosystem now are to:

1. Grow the number of apps in the Ecosystem

2. Grow the number of spenders in Ecosystem

3. Grow the number of buyers in the Ecosystem

This should allow Kin to create more Real Demand than any other cryptocurrency has today. This should have a positive impact on the price of Kin, which is obviously what Kik and every other person and developer in the Kin Ecosystem wants.

With Kin becoming more and more open and robust, it is allowing more and more people and companies to contribute to each of these goals. At a high level that is what is most exciting to me — Kin truly is an Ecosystem bigger than just Kik, and the snowball is really starting to roll.

On the Kik side, I am particularly excited about starting to test converting spenders into buyers (Not SoonTM), sharing the Kin story more broadly with the world, and correcting the misleading story the SEC told about Kik and the Kin TDE.

Hi Ted.

Glad to see you back in an AMA. As you know, we all want an update on the work against exchanges. You said earlier, that your focus is against Asian exchanges, does this mean that exchanges like Coinbase in the US and/or Binance in Europe are out of the question, and can we expect a large trustworthy exchange in the near future?

Good luck with all your amazing work. (Dr_Boyjoy)

The short answer is: we don’t know. We are talking to most major exchanges around the world. Most of these exchanges have a policy of “not giving you any advance notice of when you’ll be listed” to mitigate the risk of people trying to front run the market. This makes sense to us as the right and fair thing to do, but it also means we are in the dark. So the best I can do is share my assessment of the situation.

In the US with all the uncertainty in regulatory, and now with the SEC action, it is hard for US exchanges to list Kin. That is painful because most of the US exchanges are quick to agree that Kin is used more than any other currency on their exchange, and so if it weren’t for the SEC of course they would list us. So while none of them have closed the door on Kin, I also can’t blame them for being cautious — they have a business to run.

There is a lot of regulatory uncertainty in Asia as well. Tanner and I just got back from a trip to Seoul and Beijing where we spent time with many exchanges. The law in Asia is unclear as well, so most operate with a “school of fish” mentality — if everyone lists, so will they, but nobody wants to be first. This has made it challenging to get Kin listed in Asia. That said, we are hopeful that this will get fixed, and that Asian exchanges will list Kin. How long that will take is unclear.

All this said, Kin can be on as many exchanges as we want, but unless people are buying, the price will still be low. This has been the real challenge. Most projects spend a lot of energy getting traders to go to exchanges to speculate on their currency. We haven’t done that yet and don’t plan to. Instead, we want Kin to be the first project that gets millions of mainstream consumers to go to exchanges to buy Kin because they want to use it.

So while exchanges are important, that alone won’t yet increase the value of Kin. It is only when people want to buy it as well. And that is where Kin is playing a much more difficult game, but a game that should be much more impactful when we get there.

Hi Ted,

Can you give some clarity around the “60 Million User partner” that (I guess) was supposed to be announced by now? There have been rumors floating around that this partner dropped out when the SEC lawsuit storm started.

What is the current situation, can we still expect this 60m partner?

Thanks! (u/drummerboy_sthlm)

This is why we don’t pre announce things — when it comes to developers adopting Kin there are so many factors outside of the control of Kik, the Kin Foundation, or any other developer in the Ecosystem. Until they are live, anything can change. Even after they are live, things can change too. The only way to know what another developer is thinking or going to do is to ask them or watch them.

That said, this particular developer continues to be interested in Kin. They even have Kin ready to go in their app. But the SEC does create new risk, so that needs to be evaluated, which is what they are doing. There are also many other developers who continue to be interested in and playing with Kin, and the number of apps in the Ecosystem continues to grow. The price of Kin for some of these developers is important, but the real opportunity is what % of Kin you are able to own, because there will only ever be so much. This is like being an early miner of Bitcoin — if you believe in the vision then it doesn’t matter what the price is today, only what % of it you are able to mine and own.

Hi Ted,

There have been rumors and statements about KIN looking into Asian markets. Does the phrase Asian market entail only exchange listings or is there the possibility of negotiating with Line, KaKao, WeChat, and WhatsApp on the drawing board as well? (reptar2015)

Good question. Most chat apps are now launching their own cryptocurrency: Kakao, Line, Telegram, and Facebook/Whatsapp. This makes sense because, as we were the first to identify years ago, it seems to be the best way to make money in private communications. That said, none of these other messengers have gone live yet. Meanwhile Kin has been live in market for almost 2 years now, and is starting to scale.

What has been exciting is that other developers are starting to realize that they may be too late, perhaps only a few months ahead of Facebook, and so it may be better to team up with another cryptocurrency rather than go it alone. From our point of view there is a big win-win if developers team up, which is the whole idea behind Kin, so it is something we are exploring in Asia as well.

Hi Ted,

Quite simply why did KIN decide to fight this with the SEC rather than go down the route of a No Action Letter / Settlement (which from reports seems that the SEC were pushing for?)?

There must be a degree of confidence of winning to do this?

Thanks (u/voycey)

We are confident, but we are also pragmatic.

The most important thing is that Kin is able to operate and grow as a currency. The SEC was unable to give us or anyone else formal clarity on that — even the BTC and ETH comments have been hedged in “this is just an individual view and not legal guidance”. So we had no choice but to fight them in court.

Ted, you must’ve had dozens of talks with potential partners who might be hesitant to join the ecosystem for whatever reason.

Ever since the announcement of Libra, have you heard back from any of these companies, saying they see the importance of joining forces now more than ever?

In other words have you’ve seen a change of heart in these apps? (u/Santos1986)

We have. Libra has been a huge gift for Kin. It has validated everything we have been saying at the highest level: the big opportunity here is Money 2.0. When Libra was announced a number of people reached out to us who used to be skeptical. They are finally convinced that crypto is going to be the next big thing.

That said Kin and Libra are different. Libra is money for the physical world, while Kin is money for the digital world. Libra is a stablecoin that doesn’t have any upside but eliminates volatility, making it good for the physical world. Kin is a cryptocoin that doesn’t have stability but has upside, making it good for the digital world. So while Libra has created a lot of credibility for Kin, it is also different, allowing the two to both win their own race and coexist.

Hi Ted,

You anticipated ‘The race to become the WeChat of the West’ and Facebook’s inevitable copy and crush attempts and said something along the lines of ‘not this time, by the time Facebook realises what’s happening, it’ll be too late’.

My question is, what are your current views on this race? (Facebook have realised what’s happening now, are they too late? Are we too late? Or what?) Please explain how you now see things and your reasons for your views.

Thanks (u/DanielCKin)

It’s interesting. Facebook didn’t just copy us this time. They did something similar, but also something different. And this makes sense. Facebook has billions of users, so they are best positioned to try to replace the USD as the global reserve currency. It is the biggest opportunity out there. Meanwhile Kik and other digital apps have big communities, so we are all well positioned to create the dollar of the digital world.

So it is nice. Facebook has validated the space which will help Kin move even faster, but Libra and Kin are different so each Ecosystem can run their own race.