Civic to Spend $43 Million In Tokens to Boost User Numbers
Like all crypto projects, Civic, the pioneering blockchain-powered identity startup, needs people, lots of people, using its platform.
And, according to Civic founder Vinny Lingham, while the technology is all in place for the system to work, it's this network of users that the company is still struggling to achieve. In an effort to spur this adoption, Civic announced Wednesday that it will be paying for all identity checks for users and business partners from now until the end of the year.
Well, at least, $43 million worth.
All told, Civic is allocating 333 million of its total 1 billion supply of CVC
tokens, a third of which it sold for $33 million in an initial coin offering ( ICO) in June 2017. The tokens will be transferred to Civic to pay for the cost of the identity checks, serving to bootstrap growth and stress-test the protocol.
"We basically said we're going to reserve a third of the tokens to drive network effects," Lingham told CoinDesk.
For Civic, every new user that's had his or her identity verified on the platform makes it a little more attractive for the next company looking for an identity solution. In this way, Civic is creating incentives for more people to join.
Lingham has been thinking about the challenge of reaching critical mass since before his company conducted an ICO in 2017.
He told CoinDesk:
"Paypal got it right with the whole $10 free if you invite a friend and it nearly bankrupted the company. They managed to crack the chicken and egg problem doing it that way."
Fortunately for Lingham, in the new world of
crypto, it's possible for a company to create their own money supply as long as the market sees future potential. So, Civic – being the only entity, currently, that provides the know-your-customer (KYC) verification within the system – will be paying itself in CVC tokens for the service.