GetGems - is this the Future of Messaging?
GetGems has developed a digital currency layer on the telegram messaging app allowing users to SMS each other digital cash. Will it catch on?
Would you like to transfer money as quickly and easily as sending a text message? Well then, meet GetGems, the smart little messaging product built by Israel-based developer and entrepreneur Daniel Peleg. With GetGems, users can send bitcoin - or the native currency of the network called gemz - within their regular chat windows. Interactions look like this:
- Bob: Alice, I love you.
- Alice: You owe me $20.
- [Bob types "$20" and confirms the amount on a pop up by entering his four digit pin]
- Alice Receives $20
Simple concept, but the culmination of a lot of different technologies. Let's take a non-technical look under the hood and see how it works.
Telegram for Secure Messaging
GetGems is built on top of the open-source messaging app Telegram, which provides GetGems a number of different advantages. First, Telegram works on handheld and desktop operating systems, with native apps on iOS, Android, and Windows. It has a much higher level of encryption and security than mainstream messaging systems like Whatsapp, which is useful when engaging in commercial transfers. It is open source, which not only allows GetGems the ability to utilize the system itself, but opens up a world of possibilities in terms of additional developments within the Telegram ecosystem - a network of apps within an app. (More on that later). And lastly, Telegram has a nicely-sized user base of 50 million+, which provides a potentially powerful network effect. The most important aspect in establishing a messaging ecosystem is reaching critical mass, something more easily achieved when joining an existing infrastructure.
Counterparty Wallet Integration
Get Gems comes integrated with a wallet powered by Counterparty. The address generated is associated to the username, which is all that is required to send money to someone on the network (to send bitcoin or gemz to someone off network, the standard QR / copy-pasting of addresses is possible). The wallet is HD, meaning that private and public keys are generated from a client-side seed, and users can upload the wallet at any BIP32 product by inputting a mnemonic password. In terms of security, client-side breaches would require stealing the phone and correctly inputting the four digit pin code within five attempts, after which the account would be locked. No password or private key information is held server side.
Gems, and the Creation of a new Currency
So excellent, we've got a messaging app that allows the transferring of value between secure wallets as easily as sending a text message. Next step is to establish a currency to go along with it, while building an economy that gives the currency value.
Assigning value to GetGems and the Currency Gemz
GetGems was the first project to utilize crypto-funding platform Koinify in a January 2015 presale of Gemz. Crypto-funding is a method of publicly listing companies that operate within the cryptocurrency niche. GetGems announced that it would release 100 million gemz into circulation. Of these gemz, 50 million would be sold to buyers in the public sale; 30 million would be used in so-called user "airdrops" to foster engagement and power a tell-a-friend program; 12 million towards marketing, promotions and bounties, and 8 million allocated to fund R&D and operations, along with the funds raised from the crowdsale.
The crowdsale was a success with 38.13 million Gemz sold to 1,500 buyers at a total price of 2,633 bitcoin ($780,000 in January 2015). The additional 11.87 million gemz not sold were "burned", or taken out of circulation, so as not to dilute shareholder value. An additional $400,000 in seed capital was invested by Magma Ventures, bringing total capitalization to ~$1.2 million.
The Distribution of Gemz, and How they are Traded
The Genesis block, or the initial digital creation of the gemz currency, took place on November 7th 2014, with 100 million gemz created on Counterparty and distributed into wallets of the investors according to their Koinify investment. Counterparty, which itself is a layer sitting on top of the bitcoin protocol, passes transactions of gemz directly to the bitcoin blockchain, where they are cryptographically recorded along with standard bitcoin transactions. Gemz are available on a number of large exchanges for trade against bitcoin - most notably on Poloniex which accounts for the lion's share of trading volume.
So to recap - GetGems is built on top of Telegram's messaging app, with an integrated wallet and the ability to send via text message the native currency gemz, which were generated at Counterparty and allocated to investors who took part in an initial coin offering on Koinify. Gemz transactions are recorded through the Counterparty protocol directly on the bitcoin blockchain, providing an exceptional level of security. I have seen the future, and it is now. Truly an innovation from start to finish. But can it work? Is there a demand, and how can a network effect be established to give GetGems staying power?
Theoretically, the expansion of the GetGems network will result in wider usage of gemz, which will increase demand and value. The most obvious beneficiaries, and thus the most motivated ambassadors, are the initial coin purchasers who have demonstrated their belief in GetGems potential by investing, and now have a vested interest in spreading the word to encourage greater market saturation.
And these users are, more than likely, active members within the wider bitcoin market. This is the community that has the greatest ability to see the implicit value in setting up a successful messaging app integrated with bitcoin; they would like to see GetGems succeed because success will contribute to wider adoption of bitcoin.
Amongst recruits, the tell-a-friend program provides pretty solid incentive - in the form of gemz - to sing the gospel. Indeed, when I open the "invite friends via facebook" icon in the lobby, I'm told that I could earn $200 worth of Gemz recruiting my friends to the network. Not a bad amount for telling my friends about something I think is cool anyways.
And for those who say - what would I do with $200 worth of gemz? - a store in the lobby allows the purchase of Amazon, iTunes, Starbucks, eBay and other vouchers, giving real world value to this digital currency. It is a very interesting mechanism for the recruitment of new users to the network, which as of September has 15,000 active members.
But is there Capital V value?
There could be. GetGems provides an extremely simple on ramp to the world of cryptocurrency. Users who download the app develop a familiarity with the concept of digital currency, and might begin to appreciate its advantages. Sending money instantly to a friend's online wallet by writing $1 in an SMS and clicking "send" could be disruptive. Offering real value in exchange for the coins directly in the lobby also makes the concept of digital value less abstract. Slowly, users begin to look into how the wallet works and get more familiar with the concepts.
From there, it is a short theoretically walk to bitcoin use. "Hey, why can't I do this with my online shopping?" Bitcoin can also be sent and received by SMS through the app. The Coinbase trading API has been integrated, allowing the buying and selling of bitcoin in the exact same manner - type "buy 1 bitcoin" and hit "send" - though this requires users opening and funding their account at Coinbase. Those that have seen the light due to their use of gemz will be more inclined to do so.
And then there is the shoot-the-moon scenario. Telegram has provided a messaging platform upon which additional programs - like GetGems - can be developed. These programs, called Telegram Bots, are essentially apps within the Telegram app. The Wired's David Pierce recently wrote an interesting piece on the rise of messenger applications, which he states "have the potential to be to the web browser what the browser was to the internet". The article is worth a read and his follow up podcast a listen, but the long and short of it is that for a large portion of the world's connected, the mobile phone is replacing the computer and the messenger app is becoming the new operating system.
Most of the main Western messaging applications have for whatever reason not taken the step to become a true platform in the spirit of China's now ubiquitous WeChat. The Chinese, it seems, have turned their poor internet coverage and connection into a virtue, leapfrogging the desktop to manage everything through mobile messenger. Email is seen as obsolete, shopping is done through integrated payment solutions, taxis are flagged and paid for, users manage their bank and credit card accounts, friends talk, share pictures and follow celebrities - all from within the WeChat platform. It is essentially like having 10 million downloaded apps, with seamless navigation from one to the other, without having to download, create accounts, or sign in. All in your pocket. And it is now used by 500 million people.
Will GetGems provide a cryptographic method of transfer on a Telegram that morphs into the Western world's WeChat? Probably not, but why not?
Bitcoin Price (USD): 853.48