The popular Kik messaging app has announced it will fork the Stellar blockchain to create its own zero-fee cryptocurrency. Kik provides free instant messaging by using WiFi, which is very useful for people without phone plans and has hundreds of millions of registered users.
Kik initially launched its native cryptocurrency, Kin, in a successful initial coin offering (ICO) which raised USD 98 million. Kin was issued with an Ethereum ERC-20 smart contract, where investors deposited Ethereum and received the newly-issued token in return. ERC-20 provides an easy mechanism to create new cryptocurrencies that use the Ethereum blockchain, making them highly secure since there is an immense amount of mining power maintaining Ethereum, as it is the second most valuable cryptocurrency by market cap.
However, the developers of Kin decided to move their cryptocurrency off the Ethereum blockchain due to high transaction fees and slow confirmation times. Kik CEO Ted Livingston said that “Ethereum is the dial-up era of blockchain”. To solve this problem it was originally decided that Kin would be moved to the Stellar blockchain, where transactions are confirmed in only a few seconds and fees are much lower.
Stellar transactions cost a tiny amount of money which is paid in its own digital currency, Lumens, so if Kin were a Stellar token it would require paying Lumens for each transaction. The Kin team originally planned on subsidizing the Lumens needed by users to send Kin, and this was not a problem since Stellar transaction costs are so low. However, malicious spammers could attack Kin by spamming it with unnecessary transactions to burn off the subsidized Lumens.
Kin developers have now decided to fork Stellar and create a new blockchain with zero fees to avoid any issues associated with subsidizing transaction fees. This would allow users to send each other micropayments of a penny or even smaller, stimulating the growth of a digital economy where photos and stickers are exchanged between users. Zero transaction fees could also promote a tipping culture like that seen on the Dogecoin subreddit.
The Kin Foundation has set aside a large amount of coins for the Kin Rewards Engine which will reward entrepreneurs on a daily basis according to how much economic activity its app produces.
Since there are going to be zero transaction fees, there will be no reward for maintaining and securing the Kin blockchain. However, nodes will still be required for the blockchain to function. The Kin Foundation will maintain the first node, and it expects business partners to run nodes out of the shared interest of seeing the Kik economy succeed.
Image Source: https://commons.wikimedia.org/wiki/File:Kin_Logo.svg – Wikimedia Commons under MIT License
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