Vkontakte (VK), the so-called “Russian Facebook”, launched an internal digital currency this April, ahead of its US competitor. According to the social media giant, the VK Coin registered over 4 million users just one week after launch.
Vkontakte members can “mine” for coins through an app integrated into the VK social media platform. They can use their earnings to buy services on the platform and send coins to other users. They can even transform VK Coins into fiat currency.
Another engaging feature of the app is a competition for the top winners’ list. This includes the users with the highest VK Coin holdings.
However, the current VK Coin is far from being a real cryptocurrency. For now, it’s little more than an experiment the Russian social media giant is performing to understand how fans might engage with a digital coin.
Vkontakte, one step ahead of Facebook? Not really
The news about the launch of the VK Coin comes just weeks after Facebook made its blockchain efforts public. In February, Facebook first announced the possible introduction of FaceCoin, a digital currency based on the blockchain that would enable WhatsApp users to send money online instantly.
Vkontakte adopted the same strategy but managed to put the digital coin on the market faster. The first rumours about a possible VK Coin were seen as speculations on how the Russian social media platform would launch a digital currency to integrate with its existing VK Pay payment system.
However, VK Coin is really not a cryptocurrency at all since it’s not developed on a blockchain yet. Also, generating Vkontakte’s coin is called “mining”, but it has nothing to do with Bitcoin mining at all.
On the other hand, Facebook is looking into developing a stablecoin to disrupt the global payments market and get its hands on an estimated additional $19 billion in revenue by 2021.
The Russians have launched a new game and called it a cryptocurrency. But Facebook seems to be taking things more seriously this time (after two failed attempts, Facebook Credits and Facebook Gifts).
How VK Coin works
The VK Coin app enables members to earn coins by simply clicking – similar to an in-app game. Every time you tap the button, you generate 0.001 VK Coin. Then, you can use the coins to buy “accelerators” that allow you to speed up the process of creating new coins, thus earning more.
Even if VK Coin developers and users call this process “mining”, clicking/ tapping is far from how other cryptocurrencies are earned on blockchains.
According to VK Pay, the process can bring users millions of coins in a relatively short time. One user gathered over 890 million VK Coin in less than a week from the launch.
For now, the VK coin can be used for buying services and paying for adverts on the network, as well as for turning it into fiat currency using the VK Pay service. However, it’s hard to estimate how useful these earnings are in real life in the long run.
The impact of Vkontakte and its coin
Far from being a cryptocurrency in the actual sense of the word, the VK Coin could still change the way social media users relate to cryptocurrencies. By implementing a method of paying for engagement, Vkontakte opens up the way for a revolution in this niche.
The Russian social network is looking into implementing rewards for users who create and consume content using its apps. This opens up the possibility of people actually making money by being active on social media.
A reward system would allow people to monetise the data they share with social media channels. At the same time, digital coins could give users more control over the way they interact with tech giants while gaining more benefits from being online.
And that’s not the only way digital coins on social networks could impact the crypto ecosystem. The VK Coin could accelerate cryptocurrency adoption in Russia, just like FaceCoin for the US market.
Currently, the Russian Facebook has 97 million active users who generate around one billion “likes” and send over 6.5 billion messages every day. That’s a large pool of potential cryptocurrency adopters!
Vkontakte can change the way people interact with social media and, at the same time, show users how cryptocurrencies work. However, the Russian tech giant is still far from having an actual cryptocurrency running on a blockchain.
While VK users may have fun clicking and tapping for coins, it’s unlikely that cryptocurrency stakeholders will be impressed by the supposed benefits of this type of mining.