Social networks and cryptocurrencies have a long story of close relationships. A lot of cryptocurrencies have become popular only thanks to social networks. Perhaps, even bitcoin wouldn’t become so famous if there was no haven like BitcoinTalk.
Cryptocurrencies no longer live in the shadow of small forums and tech-savvy communities. They are becoming the subject of discussion in the mainstream media and social networks. The audience of blockchain projects is constantly growing, but cryptocurrencies remain a niche asset.
At the same time, many companies, including social media giants, have begun to discover cryptocurrencies, trying to adapt them to their businesses. The idea of integrating cryptocurrency into a social network or messenger is mainly aimed at empowering users, attracting a new audience, monetizing it, and optimizing certain business processes.
Some social networks and messengers already have experience in developing crypto projects. And they have one important advantage over native cryptocurrencies — they don’t start from scratch and already have a large audience. It takes their tokens to another level. Therefore, regulators may look at these projects differently that can complicate their launch. Here are some examples.
Stablecoin pegged to uncertainty
One of the most famous attempts to create a social media token is Facebook’s Libra. Libra was announced in the summer of 2019 and was planned as a “stable global cryptocurrency”.
Operators of the validator nodes were supposed to be such large companies as PayPal, Visa, Mastercard, Uber, and other well-known corporations. It was also planned that the new coin could be bought in a special Calibra wallet which was supposed to be used for sending Libra tokens via Facebook Messenger and WhatsApp.
But regulators around the world criticized the project, seeing it as a threat to the financial system due to Facebook’s audience of 2.5 billion users. Companies began to leave the Libra Association, so Facebook went along with the regulators and greatly changed the project’s concept.
Instead of a “stable global currency”, there are now plans to create several stablecoins that would be pegged to different fiat currencies — US dollar, euro, British pound, and Singapore dollar.
However, it remains unclear what the final concept will be and when it will be launched, as regulators still see Libra as a threat despite all the changes.
Crypto Kik Points
Talking about cases that were able to overcome the regulator’s disfavor, it is worth remembering Kin cryptocurrency from Kik messenger. Kik has been experimenting with various forms of money in its own services for a long time.
For example, from 2014 to 2017, the so-called Kik Points were available. They could be earned by watching ads and spent on special themed stickers and smileys. The experiment was successful, so a decision was made to switch to blockchain and digital money.
In 2017, Kik raised $98 million in an ICO to develop the Kin token and create an ecosystem for this cryptocurrency. But in 2019, the SEC accused Kik of selling unregistered securities. Unlike Telegram, Kik was able to reach an agreement with the regulator to pay a $5 million fine and continued developing Kin cryptocurrency.
Just like Kik Points, Kin empowers developers and content creators to increase engagement. In addition, Kin enables free transfers between messenger users and lets users give something more meaningful than a like. Kik was originally an ERC-20 token on the Ethereum blockchain but then the decision to migrate to Solana blockchain was made due to a growing user base.
Wallet in the messenger
There is also a social media company that has not only its own crypto but also its own blockchain and wallet — KakaoGroup. It is an operator of a top messenger KakaoTalk with over 50 million active users and 96% penetration in South Korea.
In June 2019, KakaoGroup launched mainnet for its own blockchain called Klaytn. Some of Korea’s most powerful conglomerates joined Klaytn’s governance council and it already has 27 members.
Then Kakao decided to integrate the Klip wallet in KakaoTalk messenger, allowing its users to get access to 11 digital assets, including the Kakao-issued Klay token.
The wallet supports tokens of Klaytn partners that have their own coins. The wallet service allows KakaoTalk users to store digital assets acquired from Klaytn-based blockchain apps for social media, game, or shopping, and to send them to KakaoTalk friends.
One of the reasons why Klip wallet and Klay cryptocurrency haven’t met with significant resistance from regulators is that it was originally launched only for South Korea. Users outside of South Korea didn’t have access to the wallet in the messenger right away. Kakao aims to expand into other markets with its cryptocurrency and wallet, but how long this process will take is unknown.
So even if a social network launches a cryptocurrency with no regulatory hell, it is already a success. Also, projects can be considered as successful if tokens find their application outside the platform.
Social network tokens become more like a native cryptocurrency if it becomes available for trading on global cryptocurrency platforms such as CEX.IO.
For example, the above-mentioned Kin and Klay can be bought on crypto exchanges, while Libra most likely will not even appear on them and the final concept will be a little like cryptocurrency.