Kin (KIN) is a cryptocurrency that is built upon rewards points. Kin is based on a Rewards Engine that pays rewards points to users of digital products such as video games.
Rewards Points can generate tremendous amounts of value; Warren Buffett used a defunct loyalty points scheme called the Blue Chip Stamp Company to build his Berkshire Hathaway (NYSE: BRK.H) empire. Starbucks (NASDAQ: SBUX) to make its payment app the most used digital wallet in the United States with 23.4 million users, eMarketer estimated.
The organization behind Kin; the chat service Kik, has had a lot of experience with rewards points. Its Kik Points rewards program generated 109 million transactions in 2016, the Kin whitepaper claimed. Kik Points attracted around 1.7 million users a day in 2016.
What is Kin?
The hope of Kin is to create something like a Blue Chip stamp program for digital services and products. The program will operate through the Ethereum blockchain and utilize an ERC20 protocol (Ethereum-compatible) cryptocurrency called KIN.
Kin will be a hybrid on-blockchain and off-blockchain or sidechain service to generate scalable transactions that will be settled in the Ethereum (ETH) blockchain. The Kin team thinks they can achieve this by building a centralized off-chain ledger with an API (application programming interface). The KIN token is a bookkeeping tool that will be used keep track of transactions and facilitate payments through the ledger.
The technical challenges to building such a solution are daunting because Ethereum can only process around 8.5 transactions a second. That works out to 510 transactions a minute, 30,600 transactions an hour, and 734,000 transactions a day. That means Ethereum would be incapable of handling the transaction volume of the existing Kik Points program.
This is the infamous blockchain scalability problem; there simply is not enough room in existing chains like Ethereum to process all the transactions a rewards program would generate. Kin claims to have partially solved it by building an off-chain solution.
The Kin team believes that they can lower transaction fees, speed up transactions, and increase the volume of transactions with such a ledger. Such a hybrid solution will create a semi-centralized system or the Kin Ecosystem.
The Kin Rewards Engine
The Kin Ecosystem consists of the Kin Rewards Engine, an integration with the Kik chat system, and the Kin Foundation. The Kin Foundation is a nonprofit organization that will build, operate and maintain the Kin Ecosystem.
The Rewards Engine will generate and distribute the rewards points. The points will be distributed to users in groups of digital services called clans. The more digital services a person uses, the more KIN he or she can accumulate.
Capitalists (speculators) will be able to buy, sell, and trade KIN on secondary markets. The major role of the “capitalists” will be to add liquidity or value to the Kin Ecosystem.
Entrepreneurs or digital service developers add value to the Kin Ecosystem, by distributing rewards points for activities such as chat, video streaming, gaming, photo sharing, etc. A truly smart move for Kin would be to be to integrate the ecosystem with e-commerce providers, or delivery services.
A clever move would be a grocery delivery service like Instacart where users accumulate points for each purchase order. The points might go towards a discount or free delivery. A good model for such a service would be Kroger’s (NYSE: KR) hugely popular rewards point program which gives customers a 1¢ on the dollar discount on fuel for every $1 worth of groceries they order.
A very smart step for Kin would be to integrate its Rewards Engine with Kroger or Safeway’s rewards points program. Another would be to team up with a video game platform like Yumerium (YUM) or 777.Bingo (777).
KIN vs. TON which is better?
KIN will remind a lot of investors of Telegram’s planned initial cryptocurrency offering (ICO) TON. The TON effort has reportedly become a mess possibly because it is too big.
Telegram was trying to raise $1.7 billion in order to support its Gram cryptocurrency, Techcrunch reported. That effort is apparently mired in confusion because of the huge volume.
Kin has the advantage of having concluded a successful token sale the raised $100 million from 10,026 investors in 117 countries in September 2017. That leaves the Kin team free to build its ecosystem and the money to accomplish the work.
Like TON, Kin is an unproven product because the Rewards Engine has not been launched yet. The launch is scheduled for 3rd Quarter 2018. The Kin team is seeking digital services to add to its Ecosystem.
Is the KIN Cryptocurrency a good Investment?
Currently KIN is a speculative investment but it is a pretty good altcoin. KIN can be converted into Ethereum (ETH) the second most popular and valuable cryptocurrency because it employs the ERC20 protocol.
KIN is also part of the Bancor Network which is designed to ensure liquidity by making it easy to convert cryptocurrencies. KIN tokens were trading at 0.00192¢ on the Bancor Network on 30 May 2018. That should ensure value for KIN.
Coinmarketcap gave KIN a Coin Price of 0.000193¢, a Market Capitalization of $146.154 million, and a Market Volume of $1.020 million on 30 May 2018. That came from a Circulating Supply of 756.098 billion KIN and a Total Supply of 10 trillion KIN on 30 May 2018.
Something I like about KIN is the realistic token price. What I do not like is KIN’s nature it is basically designed as a marketing and bookkeeping solution for Kik’s rewards points program. That can lead to a lot of value if it can achieve a high volume.
The problem here is that Kin has not demonstrated the capability to handle that volume. Speculators would be well advised to avoid KIN until the Kin Foundation demonstrates the capability to issue large amounts of rewards points through its ecosystem.
Still, Kin is better than TON because it is trying to leverage existing technology. It is based on a historically successful business model, it is employing proven technology (Ethereum) and the team behind it has real-world experience with the service it is operating.
That makes the Kin Ecosystem far better than the average blockhain venture, which is not saying much. If you want to make a speculative long-term investment in an ERC20 coin, KIN would be a good choice.