Kik CEO who bet on cryptocurrency says blockchain isn’t for everyone
‘Trustless’ database it provides results in ‘very low odds’ it will create value
Kik CEO Ted Livingston sounds remarkably pessimistic about blockchain technology for a guy who raised almost $100 million by selling cryptocurrency last year.
“Almost nobody should be looking at blockchain,” Livingston said.
“Unless you’re trying to build one of the most-used cryptocurrencies in the world, it’s very low odds that blockchain is going to create value for you.”
Livingston was speaking about cryptocurrencies at the True North tech conference in Waterloo, Ont., on Wednesday, and sat down with the Financial Post to give an update on his own adventures with “Kin” the digital currency tied to the Kik messaging app.
Livingston said he’s not convinced that there are a whole lot of practical applications for blockchain technology other than Bitcoin and other cryptocurrencies.
The genius of those currencies, he said, is that they create “digital scarcity” that allows for a limited
number of tokens to be created and exchanged across a network even if all the participants don’t trust each other.
But that lack of trust, which makes it good for controlling transactions among strangers, is why it’s not great for so many other applications.
“What does blockchain do at the end of the day? It allows you to have a database that’s trustless. That can be applied in a bunch of ways, but most of those ways, you still need trust,” he said.
Blockchain can create an indelible public ledger that tells customers, say, every stage along the way from when a fish is caught to when it arrives on your table at a restaurant. But that’s not much good if the fisherman lies about where he caught it.
The thing that excites Livingston about cryptocurrencies, though, is that the money involved has created an enormous incentive.
“Today, the ‘Bitcoin computer’ is 100,000 times more powerful than the top 500 supercomputers in the
world combined,” Livingston said.
Of course, the “Bitcoin computer” doesn’t actually exist. It’s actually a huge number of computers around the world all mining Bitcoin — basically just chewing through math problems in order to hopefully profit by receiving units of the cryptocurrency.
What if you could put that incentive structure to work on something a little bit less useless than solving meaningless math problems?
Livingston’s plan was to make Kin a digital currency embedded inside Kik — and eventually, hopefully, other apps — that would allow users to pay each other and Kik to pay developers who create cool new features.
Things have not gone smoothly. After Kik raised nearly $100 million with an initial coin offering last year, they ran into technical problems with the Etherium platform, which required them to go back to the drawing board and build something new.
Now, Livingston said that the company has made good progress building their own blockchain for Kin, a hybrid of Etherium and Stellar, two open-source cryptocurrencies.
The next step is to actually launch it as a part of the Kik messaging app, but he wouldn’t say when that will happen.
“We decided within the company that there are so many unknowns within crypto, we don’t put out dates anymore, but as soon as possible,” he said.
The survival of the Kik messaging app may ultimately depend on the project being a success.
Last year, most news reports about the company said that Kik had 15 million active users. Asked on Wednesday about the current figure, Livingston would only say they have “millions” of monthly active users
If Kin takes off, Kik has set aside three trillion of the tokens for itself, so it will profit from the whole venture. Livingston said that the cryptocurrency game is the only way to compete with the titans of tech.
“We were playing an impossible game. You know, we were trying to deliver software to consumers, and in doing that we needed to make money to sustain ourselves,” Livingston said. “But we’re playing against monopolies — Facebook and Google.”