In October 2008, when the global financial crisis fired from American Subprime Mortgage Crisis were spreading in the air, a short 9-page article was published right after a website bitcoin.org has been made. The title of the paper said “Bitcoin: A Peer-to-Peer Electronic Cash System.”
Cryptologists and developers went wild to the idea and possibility of the currency transfer that could be done without mediation from financial institutions. On January 3rd 2009, the world’s first cryptocurrency ‘Bitcoin’ brought by voluntary engagements of developers came into the world for the first time in history.
The inception of Bitcoin opened a new phase of cryptocurrency and new ecosystems derived from cryptocurrencies. As The Dutch East India Company has opened the door for the stock corporations, stock exchanges emerged and lead the renaissance of stock corporations. And then today’s stock corporation systems has been formed in market economy organization-centric way.
Very similarly, around a year later, the cryptocurrency ecosystem initiated from Bitcoin accelerates its growth pace from February 2010, when cryptocurrencies started to be traded in markets just like the stocks in stock market at bitcoinmarket.com.
Following after the Bitcoin that has served much of currency’s features such as store of value and means of exchange, Ethereum emerges in July 2015, and improves the cryptocurrency into the next level.
The concept of smart contract dramatically improved the functionality of cryptocurrencies, and it became a lot easier to develop Ethereum based ERC-20 tokens, which allowed the Initial Coin Offering (ICO), much-like the IPO stock market, to be activated from 2016.
And then the hyperextension of ICO market emerged. In early 2018, the Telegram messenger has raised 1.8 billion in funds; and with its unique ICO funding style, EOS raised over 4 billion dollars from its ICO sale.
LINK, September 2018
LINE Messenger first rolled out with its motto “CLOSING THE DISTANCE” in June 2013, and it rapidly grew into a service platform that has over 187 million worldwide MAU by closing the gap between people, information, and services. We can’t appreciate enough on how much support and contributions from hundreds and millions of users took to accomplish LINE’s fundamental growths.
LINE has been deliberating in how to give back for the user contributions since late 2017. For that, we’ve also been following trends in blockchain and token economy. We kept these questions in our mind — how can we reward our users with blockchain and tokens? How can we better develop LINE with them? The answer to those questions came to a conclusion to LINE’s general-purpose cryptocurrency, “LINK.”
LINE prepared the entry to blockchain market in steps. On December 2017, we built a blockchain product development organization ‘Blockchain Lab’ within LINE Plus, the token economy business organization ‘unblock’ in April 2018, and then blockchain mainnet development organization ‘unchain’ in the following June. Soon after founding these three organizations, and because the product, service, business, development sectors could organically and agilely work together, we could quickly launch LINK’s mainnet ‘LINK Chain’ and create its first ‘Genesis Block’ on August 23rd, 2018. And we could never forget how thrilled we were when we first engraved the following phrase onto the genesis block:
THE BEGINNING: LINE TOKEN ECONOMY.
Following after that phrase on Genesis Block, we also wrote down the names of over 300 people who made contributions to the launch of LINK. Roughly after 10 days, on September 4th, LINK started to be distributed to public via LINE’s own exchange BITBOX.
The user reward, and the experiment with NO ICO
LINK is LINE’s single cryptocurrency used as rewards to acknowledge user contributions.
Though it is devised to encourage participation to ecosystem by allocating wallets to mass users instead of small set of investors, a plan to issue token in a large scale with no ICO was still was a challenge even back by then.
But since we witnessed the advent of corporations that grew from user contributions, and blockchain-based rewards, we were very convinced with this newly rising perspective in users: the service users are less likely to be deemed as mere ‘users’ who appreciate the services for free, but rather as ‘contributors’ who show contributions and engage in the service growths. Though we were more than convinced by this idea, we had both anticipations and anxiety for the outcome to come since our experiment was very challenging.
LINK kicked off with $4 range when it first was listed at BITBOX Exchange in October 16th, 2018. But it also bottomed to $1 range during the crypto market slump in late 2018 and we were about to fret about the market situations. However, from the early 2019, when the crypto market was yet to get recovered, LINK price started to recover against Bitcoin’s price volatility, and then it started to go above $3 in February and it is currently swinging around $10 range.
The idea and purpose to distribute coins as user rewards are great. But at the same time, it requires much efforts to form the value when LINK is being distributed to users, not the industry investors from the start. It’s because even the issuers of LINK cannot control coins that’s already been listed in the market, and we can only rely on the market demands and expectations at the beginning phase of the ecosystem. In this respect, the current price of LINK has proven that our experiment and hypothesis were not false.
Well, but there are 436 million LINK circulating. It’s somewhat embarrassing to admit that the current market capitalization of LINK is around 45million dollars (as of 2019.06.28). We certainly did not build LINK to see such size and impacts.
Right now, purchasing LINK in Japan, one of LINE’s most influential market, is not allowed yet. Nonetheless, because we have our missions and hypothesis to acknowledge our users, we will not stop putting our best efforts to make LINE Token Economy complete.
What defines the ‘Popular’ dApp Service?
There was an interesting bet started from the Consensus 2019 held in New York last month. The very front runner of decentralization and Bitcoin’s core developer Jimmy Song, and the co-founder of Ethereum Joseph Lubin had a head-on collision for whether dApps can settle into regular people’s lives. This $500K bet has the following terms designed to verify dApp’s success in future.
Due: after 4 years (May 23rd, 2023)
Criteria: The DAU (Daily Active Users) and MAU (Monthly Active Users) of Ethereum Blockchain
Conditions: Joseph Lubin wins when more than 15 dApps achieve over 10K DAU or 100K MAU; Jimmy Song wins in the opposite case — if there are less than 15 dApps achieving those conditions after 4 years.
How does that sound to you? The 10K DAU and 100K MAU can look like a joke when they’re applied into mobile services. Since the numbers even indicate the prospective results in 4 years, it can look even more depressing when we think about the realistic mass adoption of blockchain-based services.
Ironically, the bet only challenged us to beat the odds. Those numbers are quite reasonable considering the limitations of Ethereum the public blockchain, and the absence of preexisting mass users base as well. Right?
Well, we already had 187 million MAU in mind when we were building LINK? And we have built our own mainnet LINK Chain already? And we have decent LINK dApps available in the market because the developers and planners could build them? Let’s face it and correct me if I’m wrong. Is there any other global service providers in the world that has insights in their main targeting market (in case of LINE, it’d be Japan, Thailand, Taiwan, and so on).
Transactions, and Wallets
What will be the most correlated and meaningful variable that can affect the value of a cryptocurrency project? After the long research on cryptocurrency ecosystem, we concluded that the variables are transactions and wallets. The market capitalization (the total value of cryptocurrency ecosystem) is formed according to the network activation. And for the network activation, the number of transactions and users of wallets are the direct variables.
Based on the calculation on the three major platform coins (ETH, EOS, NEO), the ecosystem value is formed at 33.5 times of the daily transactions. And the value of one active wallet is estimated at $76.7. That is, in order to raise the platform’s ecosystem value, it takes more people to hold cryptocurrency in wallets and generate transactions.
Kakao corp, the Korea-based messenger corporation has announced that it will support wallets in its messenger to make remittances easy. Also the social media giant Facebook founded Libra Networks in Switzerland and planning to launch the stable coin project. Sidenotes: Facebook is also a messenger giant servicing WhatsApp and Facebook Messenger.
It’s clear that combining daily-used messengers and cryptocurrency wallets, and user-prioritized UI/UX can advance the cryptocurrencies’ mass adoption.
Yet, the number of the wallets in major platform coins still stays small. For Bitcoin it’s 66 million, Ethereum 28 million, and 7 million for EOS. It shows that the size of cryptocurrency market is still small, and has a lot of room for popularization.
Currency, and the Influence
As of June 2019, there are 195 countries in the world. Out of those countries, a total of 180 currencies are in circulation. Excluding the pegged-currencies like Dollars or Yuans, there are 130 currencies that has its own exchange rate. Yet we are not much aware of currencies other than Dollar, Euro, Yuan, Yen, or else.
How about the cryptocurrency market? There are 2,292 coins listed at Coinmarketcap as of the late June 2019. There have been too many coins generated compared to the market size and usages. Most cryptocurrencies are predicted to fade out into history and only the small set of main cryptocurrencies will remain, looking just like the fiat market. If many, there are likely to be 130 cryptocurrencies eventually remaining in the market just like what current fiat market has.
And how about the awareness and impact of cryptocurrencies? Surely Bitcoin and Ethereum has more awareness and impact than the fiat currencies from lesser-known countries. The market cap of Bitcoin is $178B (as of June 28, 2019), and it is nearly at the same level as the 2018 GDP of Greece ($219B) and Algeria ($180B), ranked at around 50th in the world.
At the same time, currencies used within the economically and conditionally unstable regions like Argentina, Venezuela, Iran are not fulfilling the features as currency due to the high inflations. In such cases, cryptocurrencies — most commonly represented as Bitcoin — could replace the role of current domestic fiat currencies to perform as stable currencies.
Let’s look at how frequently currencies are being used. How many people are actually using currencies excluding the ones with the highest demands (Dollar, Euro, Yen, Yuan)? That is, how many DAU (Daily Active Users) that those other currencies have? This cunning (?) question started from Hanju Lee, the CEO at a global cloud service corporation Bespin Global.
The concept of DAU actually should be familiar to people engaged in mobile/Internet services. And the DAU of fiat currencies in Korea and Japan can be estimated as the population of each country: 126 million in Japan, and 51 millions in Korea. The estimate covers all age ranges from infants to seniors. And what is the latest available information on Facebook’s DAU? As of 1Q 2019, it is roughly 1.5 billion.
Let me ask, how much of currencies are being held by people today? Before we take a look, we need to get familiar with the term ‘Reserve Base (or Monetary Base).’ The reserve base is defined as “the sum of the eligible balance sheet items (in particular liabilities) that constitute the basis for calculating the reserve requirement of a credit institution.”
Based on the average balance measured at December 2018, the reserve base of Japan is leveled at $455B, and Korea $145B. If those numbers are divided by population of each country, the per-capita are $36.1 in Japan, and $28.3 in Korea. Considering the economically active population, the practical holding amount can be doubled as well.
Let’s apply this into the case of Facebook (and Libra). Suppose that one Facebook user’s holding of that stable coin has a value of $30 — the number has been derived from the previous calculation of average per-capita holding amounts of Japan and Korea. The monthly average holdings of Libra can be calculated at $45B, which accounts for 31% of Korea’s reserve base. Besides, the Facebook users are scattered at dozens of countries, which can also enable international transactions. Libra may have more stability compared to national currencies from countries suffering from a large financial loss or unstable international/domestic situations.
Forward to LINK 2.0, after LINK 1.0
10 months has passed after LINE launched its general-purpose cryptocurrency with a motto of ‘THE BEGINNING: LINE TOKEN ECONOMY.’ We’ve been racing as if there is no speed limit: we’ve been preparing, developing, and grew out of the devastating crypto slump and only became stronger.
We’ve been sticking to the plans we stated on our whitepaper 1.0 as well — we’ve completed the launch of dApp services upon the mainnet open, and development of LINEAR Network that is capable of interchain.
We also proved that our experiment was not reckless with the issued 436 million LINK and the price it has formed thus far. And we decided to forget about the ‘experiment’ for a while and instead immerse ourselves into ‘exploration,’ so we can go further with our faiths and pave our own way to a bigger world.
To kick off more serious business journey of LINK, we will be creating the genesis block for our 2nd chain ‘Bamboo Chain.’ I’d like to finish my article by quoting the phrase that’ll permanently stay in the block.