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Popular Canadian messenger app Kik is diving into the complex world of digital cryptocurrencies.

Popular Canadian messenger app Kik is diving into the complex world of digital cryptocurrencies (think Bitcoin) in a bid to introduce the technology as the preferred payment system for its millions of teen users.

Ted Livingston, CEO of Kik Interactive Inc., will announce the creation of Kin, a cryptocurrency built on blockchain software developed by Ethereum, in a white paper posted on Kik's site. The currency will be earned by Kik chat app users for everything from hosting a group chat to creating a shareable digital image "sticker." It could be traded for other digital goods or services, and even converted to cash on an open cryptocurrency exchange.

"This is something we've been experimenting with since 2014," Mr. Livingston said in an interview. "This is the right time for us and the right time for the ecosystem."

The news comes as the most popular cryptocurrency, Bitcoin, hit an all-time high on Wednesday, trading for $2,400 (U.S.) per Bitcoin. At the same time, there are more cryptocurrencies than ever – more than 500 – and most trade for fractions of the market leading tokens or cryptocurrencies, which themselves are largely held by speculators and hedge funds hoping to profit from future growth.

Mr. Livingston also revealed for the first time that Kik has 15 million monthly active users (mainly U.S. teenagers), which means that once those users have their Kin accounts activated, Kik could very rapidly become one of the largest sources of "wallets" for any cryptocurrency. There are currently almost 14 million Bitcoin wallets, according to open-source Bitcoin trackers, though due to its decentralized nature the number of actual human users is far harder to estimate (even Bitcoin-focused sites guess anywhere between two million and 14 million).

"Kik will be the first mainstream application to integrate a cryptocurrency. This could be a watershed moment for the blockchain sector," prominent venture capital investor Fred Wilson said in a statement released by Kik. Mr. Wilson is an early investor and board member with Kik and is a partner in New York City's Union Square Ventures. Kik has raised $120-million in venture capital since it was founded in 2009, most recently from China's Tencent Holdings in late 2015.

The concept of a self-issued cryptocurrency isn't new, according to Julie Maupin, senior fellow with Waterloo's Centre for International Governance Innovation and its International Law Research Program, who studies blockchain's impact on the financial services sector. Ms. Maupin likened it to a loyalty points system such as Air Miles, but with the ability to offer peer-to-peer transactions.

"The number of companies that could be successful with that model is relatively limited," Ms. Maupin said. "Amazon, Tencent, Alibaba, there are less than 10 companies worldwide with the user bandwidth to do that."

Kik, though large, is not one of those 10 companies.

Snapchat, for instance, has more than 160 million daily active users, and Facebook Messenger has more than a billion monthly users. WeChat has seen a boom in messenger-based transactions since it began incorporating payment tools that tap user bank accounts through its chat app: In late 2016 the company reported it had more than 846 million monthly users who are utilizing the app to process more than $50-billion in bank transfers per month.

Mr. Livingston believes great scale won't be necessary to make Kin a success. He argues that unlocking the power of decentralized currency could offer a better path for the middle class of apps and services to become economical in a digital marketplace controlled by enormous companies like Facebook Inc. and Alphabet Inc. that suck up most of the available advertising dollars through scale and data collection of their users.

By early next year Kik plans to open Kin up to third-party developers and will begin distributing $100,000 a day among the apps that drive the most Kin transactions. Mr. Livingston expects that number could rise rapidly depending on the valuation of Kin. Kik will also establish an arm's-length governing body to oversee the currency's development.

"Kik is in a very unique position, we're not committed to more traditional business models," such as advertising, he says. "We are the biggest company that could attempt to do something like this."

Mr. Livingston's vision has long been to incorporate every part of your digital and physical life through a chat app, much as China's WeChat does, to allow for banking, buying a hot dog, shopping for a new phone, or ordering a beer to your seat at a stadium. What was missing was a way to get money into its system, as users are often reluctant to add a credit card to another app to buy things they could literally just use existing payment options for.

Time may be his toughest enemy though, as there's almost nothing stopping a larger player from coming in and doing the same thing. "Ultimately everything in software is copyable," Mr. Livingston said. "We're going to move as fast as we can."

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