Messaging apps have been considering launching their own cryptocurrencies as they seek new monetization models. One of the main prevailing debates is about making cryptocurrencies available and easy to use by millions in everyday life. Various projects have come up that try to make this a reality. For example Earn says its mission is enable millions of people undertake simple tasks online such as filling questionnaires and be paid in cryptocurrencies such as Bitcoin. Payments especially in small denominations such as $10 is cheaper and more convenient that using payment gateways such as Visa. earn.com says in future, hundreds of millions of people with smartphones will be able to earn from whatever location they are in by simply conducting simple tasks on their phone.
Messaging apps transitioning into crypto have also an opportunity to have a high adoption because they already have existing users. Telegram and KIK are making foray into the crypto ecosystem by launching cryptocurrencies. KIK was the first in 2017 with the launch of KIN, that raised $98 million through ICO. Telegram also raised $1.7 billion in private sale in early 2018. Furthermore, Japanese largest messaging app, LINE, with over 200 million users launched its own cryptocurrency in 2018 called LINK.
What these messaging apps like Telegram and KIK are trying to do is leverage their existing userbase to adopt a new model based on native tokens. The monetization model for messaging apps has been unclear. Telegram has not had revenue since its forming and so does KIK. Whatsapp has also been seeking to adopt a favorable revenue model for years.
No ads allowed
Placing ads is dominant revenue model in the digital ecosystem but it is facing a lot of criticism and challenges. Telegram founder has been categorical that he is not a fan of that revenue model and is currently self-funding its operations (he made his billions from sale of VK, facebook of Russia). Brain co-founder of whatsapp is also not a proponent of ad-free model and he even left Facebook over disagreement on revenue model for whatsapp and even advocated for ‘delete facebook’ movement.
Subscription model is a viable alternative, whereby users get to pay depending on the level of usage. Telegram and KIK have gone for the third option: cryptocurrency.
native cryptocurrency tokens
So in my opinion, for Telegram and KIK, the thesis seems to be this: can we leverage existing user base and pursue a more unique revenue model? digital tokens in form of cryptocurrency seems to be the answer.
let see how this might play out:
KIK messenger formed Kin: a decentralized ecosystem for digital services. To give KIN value, it is integrated into the existing KIK ecosystem as native currency/payment system for the ecosystem. The existing KIK messenger becomes just one part of the bigger ecosystem. Basically tokens are used a medium of exchange. For KIN it says that developers who build apps that are used by people on the platform are rewarded by KIN. According to the KIN medium page, this model is more sustainable than the current model whereby a developer who builds an app has to rely on Google or Apple store and run ads on the app to monetize it. However, this messes the user experience, furthermore, Google and Facebook take much of the revenue because people are rarely paying for apps on small applications.
Users who do specific tasks on the platform are rewarded with KIN. For example, creating VIP groups, premium user generated content, shoutout messages (in-app advertising) and bot monetization. Also, similar to earn.com above, KIN will also enable brands to reward users with KIN for undertaking simple tasks such as filling surveys.
This is an interesting model. However, they have 10 billion tokens and about 60% will be released gradually as rewards for the ecosystem. It will require a lot of growth in terms in usage and developers.
Telegram: on the other hand, Telegram has not yet launched its mainnet product after the pre-sale in 2018 but it could be something close to what KIN is trying to achieve. Not much official information has been released about how it will wors but much of the media reports have hinted that it will have Gram, a native digital token to power the TON (telegram open network) ecosystem. Apart from messaging, There will be payments, file storage, decentralized apps among others.
Basically what is happening here is search for new revenue models for internet economy. Placing ads has mainly been the dominant model. However, ads are becoming not only disturbing but in the era of ad blocks, more specialized strategies have to be used. Use of native digital tokens that act as a form of currency seems to be a viable option to pursue. It is still early and the jury is still out on how this will unfold. However, if it works as speculated this model could power new digital economy in a way that the current model does not.
some key unique features being proposed:
- developers will not need ads in order to earn from the apps they build.
- If a platform is decentralized, developers will not need to worry about the owners changing the rules midway
- creates better user experience
- Incentivizes more people (users of the platforms) to undertake specific tasks instead of spamming. eg through better content creation and curation.
- a currency model that is in-built and not based on payment systems and gateways. users can use tokens to pay for goods and services or exchange tokens with other cryptocurrencies such as bitcoin and use in different ways.
- more participation globally.
As the internet economy evolves in the ear of blockchains, digital tokens could prove to be lifeline for digital economy. A reward system enables users to do more than just send messages, could prove useful in years to come.