Finding the Answer to Crypto's Biggest Problem | Ted Livingston, CEO of Code

Ted Livingston's Journey into Crypto

Ted Livingston's journey into the world of cryptocurrency and blockchain technology began long before his current role as CEO of Code. In 2009, Livingston founded Kik, a messaging app that would go on to become one of the fastest-growing applications in history. Kik's explosive growth, reaching one million users in just 15 days and doubling that number in the following week, laid the foundation for Livingston's deep understanding of consumer technology and user behavior.

However, Kik's journey wasn't without its challenges. Shortly after its initial success, the app was kicked off the Blackberry platform, causing it to lose 99% of its users in just three weeks. This setback forced Livingston and his team to pivot, focusing on building a messenger based on usernames rather than phone numbers, allowing connections across communities without requiring a phone number.

The Birth of Kin and the Transition to Crypto

As Kik continued to grow, Livingston faced a common challenge in the messaging app industry: monetization. Unlike traditional social media platforms that rely on advertising, messaging apps struggled to find sustainable business models. This dilemma led Livingston to explore the potential of cryptocurrency as a new monetization strategy.

In 2017, Livingston launched Kin, a cryptocurrency designed to create a new economy within digital apps. The vision was to allow users to earn Kin for being great moderators in chat rooms or spend it on features like stickers. However, regulatory challenges and technological limitations led to several iterations of the Kin blockchain.

The Journey to Solana

Livingston's search for the right blockchain infrastructure led him through various platforms. Initially, Kin was launched on Ethereum, but scalability issues quickly became apparent. As Livingston explains, "Just giving our active users five Kin points to get started would consume the entire capacity of the entire blockchain for six months. And that's still true today."

The team then moved to Stellar, which offered improved transaction speeds and lower costs. However, even Stellar's capabilities fell short of what Livingston envisioned for a mainstream consumer application. This led to the creation of a Stellar fork with a new fee model, but it still wasn't sufficient.

It was at this point that Livingston discovered Solana, even before its testnet launch. He saw in Solana the potential to support mainstream consumer experiences with the necessary speed, cost-effectiveness, and scalability. Livingston's conviction in Solana's superiority as a blockchain infrastructure remains unwavering: "Our conviction in Solana being the best layer one to build on, never mind layer one, layer two, the best infrastructure to build on... is as strong as ever. It is amazing technology."

Code: Reimagining Digital Payments

With the infrastructure challenges addressed, Livingston and his team set out to create Code, a Solana-based payments app designed to make it easy for anyone to pay anyone, anywhere in the world. Code represents a culmination of Livingston's experiences in both the messaging and cryptocurrency spaces.

Code's user experience is designed to mimic the simplicity of handling physical cash. Users can send money to each other by simply pointing their phone cameras at each other's screens, with transactions occurring instantly, privately, and without fees. This seamless experience is made possible by a sophisticated system that Livingston describes as a "layer two on Solana."

The Layer Two Solution

While Solana provides the necessary speed and low transaction costs, Livingston realized that additional infrastructure was needed to deliver the user experience he envisioned. The team spent nearly two years building a layer two solution on top of Solana to ensure transactions are atomic, private, and guaranteed - much like handing over physical cash.

This layer two solution addresses several key challenges. It allows for instant transaction confirmations, unlike the typical blockchain experience where users might have to wait for multiple confirmations. It also provides a level of privacy, preventing situations where someone could quickly look up a user's entire balance on the blockchain after receiving a small payment.

Challenging Conventional Wisdom in Crypto

Throughout the interview, Livingston challenges several widely held beliefs in the cryptocurrency industry. One of his most controversial statements is about Ethereum: "If you want to fast forward to the future, you could just build on Solana today." He argues that many projects building on Ethereum or its layer two solutions are more focused on narratives than on delivering great product experiences.

Livingston also questions the necessity of stablecoins for mainstream adoption. He argues that the biggest problem in crypto adoption isn't volatility, but rather answering the question, "What can I do with it?" He believes that focusing on use cases that uniquely leverage crypto's capabilities is more important than trying to replicate existing payment systems.

The Future of Crypto Adoption

Livingston's vision for the future of crypto adoption is centered around creating products that people love, which happen to be powered by blockchain technology. He believes that the path to mainstream adoption lies in building experiences that are 10 times better for the end-user, rather than focusing on marginal improvements like saving merchants 2% on transaction fees.

Code's next iteration aims to tackle this challenge by creating a permissionless micropayments platform for the web. This platform would allow developers to easily implement small charges (between 5 to 100 cents) on their websites for various actions, such as unlocking content or participating in a game. Livingston sees this as a unique use case that existing payment solutions cannot effectively address due to their cost structures.

Lessons for Founders and Developers

Drawing from his experiences with Kik and now Code, Livingston offers valuable advice for founders and developers in the crypto space. He emphasizes the importance of questioning established narratives and always asking, "What are all the options?" This approach has led him to make contrarian bets that have often paid off.

For app developers, Livingston stresses the importance of identifying problems that can be uniquely solved with crypto. For those working on infrastructure, he advises focusing on expanding the funnel of developers who can successfully build on the technology.

The Road Ahead for Code and Crypto

As Code continues to evolve, Livingston remains focused on creating a product that can demonstrate the unique value of cryptocurrency to mainstream users. He believes that the key to crypto's success lies not in replicating existing financial systems, but in enabling new types of interactions and economies that were previously impossible.

While challenges remain, particularly in messaging and adoption, Livingston's experiences with Kik and Kin have prepared him for the long journey ahead. His contrarian views and focus on user experience position Code as a potential breakthrough application in the crypto space, one that could finally bridge the gap between blockchain technology and mainstream users.

As the cryptocurrency industry continues to mature, voices like Livingston's serve as important reminders to focus on real-world utility and user experience. Whether Code becomes the killer app that brings crypto to the masses remains to be seen, but Livingston's insights offer valuable guidance for anyone looking to build in this rapidly evolving space.

Facts + Figures

• Kik, founded by Ted Livingston in 2009, grew from zero to one million users in 15 days, and from one million to two million users in just 7 days.

• Kik lost 99% of its users in 3 weeks after being kicked off the Blackberry platform.

• Tencent invested $50 million in Kik at a $1 billion valuation, 4-5 years after its initial growth.

• Kik was the inspiration for WeChat, born when Tencent saw Kik go viral in 2010.

• Kin, a cryptocurrency launched by Kik in 2017, started on Ethereum before moving to Stellar and then Solana.

• Code, Livingston's current project, is a Solana-based payments app that allows instant, private, and fee-less transactions.

• Code's layer two solution on Solana took almost two years to build.

• Livingston argues that Ethereum L2s are about 1000 times more expensive than Solana for transactions.

• The Bitcoin Lightning Network, according to Livingston, would require weeks of the entire Bitcoin blockchain capacity to open up payment channels for 10 million users.

• Kin is the only cryptocurrency on Solana with zero inflation, zero foundation, and no website.

• Code aims to enable micropayments between 5 to 100 cents on websites in a permissionless way.

• Livingston suggests that existing chat apps like Facebook Messenger, WhatsApp, Telegram, and Signal are not profitable endeavors.

Questions Answered

What is the biggest problem in crypto adoption according to Ted Livingston?

Ted Livingston believes that the biggest problem in crypto adoption is not volatility, but answering the question "What can I do with it?" He argues that people don't use crypto for payments because they lack compelling use cases, not because of price fluctuations. Livingston emphasizes that the industry needs to focus on solving real problems that users care about, rather than simply creating alternatives to existing payment systems.

Why did Ted Livingston choose to build on Solana?

Ted Livingston chose to build on Solana because it offered the speed, cost-effectiveness, and scalability necessary for mainstream consumer applications. After exploring other options like Ethereum and Stellar, Livingston found that Solana was the only blockchain that could support the user experience he envisioned for Code. He believes Solana is the best infrastructure to build on, stating that anyone not building on it is more focused on narratives and speculators than on building great product experiences.

What is Code and how does it work?

Code is a Solana-based payments app that aims to make it easy for anyone to pay anyone, anywhere in the world. It works by mimicking the simplicity of handling physical cash in a digital format. Users can send money to each other by simply pointing their phone cameras at each other's screens, with transactions occurring instantly, privately, and without fees. Code achieves this seamless experience through a sophisticated layer two solution built on top of Solana, ensuring transactions are atomic, private, and guaranteed.

What is Ted Livingston's view on stablecoins?

Ted Livingston is skeptical about the necessity of stablecoins for mainstream crypto adoption. He argues that stablecoins don't solve the fundamental problem of giving users compelling reasons to use cryptocurrency. Livingston believes that focusing on use cases that uniquely leverage crypto's capabilities is more important than trying to replicate existing payment systems with stablecoins. He suggests that the industry's emphasis on stablecoins may be misplaced and driven more by narrative than actual user needs.

What advice does Ted Livingston offer to crypto founders and developers?

Ted Livingston advises crypto founders and developers to question established narratives and always ask, "What are all the options?" For app developers, he stresses the importance of identifying problems that can be uniquely solved with crypto. For those working on infrastructure, he recommends focusing on expanding the funnel of developers who can successfully build on the technology. Livingston also cautions against blindly trusting experienced hires and emphasizes the importance of persevering through difficult times rather than assuming inexperience is the problem.

What is the next focus for Code according to Ted Livingston?

The next focus for Code, according to Ted Livingston, is creating a permissionless micropayments platform for the web. This platform would allow developers to easily implement small charges (between 5 to 100 cents) on their websites for various actions, such as unlocking content or participating in a game. Livingston sees this as a unique use case that existing payment solutions cannot effectively address due to their cost structures, potentially providing a compelling reason for mainstream users to adopt cryptocurrency.

How does Ted Livingston view the future of crypto adoption?

Ted Livingston envisions the future of crypto adoption centered around creating products that people love, which happen to be powered by blockchain technology. He believes that the path to mainstream adoption lies in building experiences that are significantly better for the end-user, rather than focusing on marginal improvements to existing systems. Livingston emphasizes the need to solve problems that cannot be addressed by traditional financial systems and to create compelling use cases that demonstrate the unique value of cryptocurrency to mainstream users.

What lessons did Ted Livingston learn from his experience with Kik and Kin?

From his experiences with Kik and Kin, Ted Livingston learned the importance of perseverance in the face of challenges and the value of questioning established narratives. He realized that difficulties in a startup's journey don't necessarily mean the founders don't know what they're doing - sometimes, it's just a hard problem to solve. Livingston also learned the importance of focusing on real user needs rather than chasing industry trends or narratives. These experiences have shaped his approach to building Code and his overall perspective on the cryptocurrency industry.