Messaging app developer Kik Interactive, which raised about $100 million last year to launch services on the Ethereum blockchain, discovered that the ledger technology isn’t ready for prime time.
The company is shifting some of its business onto a different digital ledger, one called Stellar, and also building a custom blockchain using Orbs technology, explaining that no existing system is a perfect fit.
Kik wanted to run its messaging app used by millions of teens entirely on Ethereum, but found it was often congested, with slow transaction confirmation times and high costs. A big part of the problem: CryptoKitties, a blockchain-linked app that lets users breed digital cats but whose skyrocketing popularity has clogged up Ethereum.
“There’s a lot of great innovation happening around cryptocurrency, but there are some inherent limitations to consumer adoption,” Tanner Philp, Kik’s director of corporate development, said in a phone interview. “We launched on Ethereum in September and quickly started to run into these limitations.”
Kik is just the latest blockchain migrant. For instance, Sirin Labs, which issued a token on Ethereum and was initially focused on creating a phone that would use the IOTA digital ledger, in February said it would integrate with Cardano.
As startups try to build applications on blockchains, they’re discovering the technologies all have pros and cons. None solve every problem. Ethereum, for instance, is good for issuing tokens. Stellar might be good for cross-border payments. Hundreds of different digital ledgers already exist, and new ones appear almost daily. Many of these ledgers are copies of older technologies, like Bitcoin and Ethereum, with some new features added in.
“Different blockchains have different properties, and have different teams working on them and they have different road maps,” Jerry Brito, executive director of the Coin Center advocacy group, said in a phone interview. “It makes sense sometimes to move to another.”