Civic is a pioneering blockchain-powered identity start-up, but it has a problem: it needs more people to sign up for its services. So, it has come up with the idea of paying for all identity checks for users and business partners from now until the end of the year, or at least for checks to the value of $43 million.
It is allocating 333 million of its CVC tokens (out of a total supply of 1 billion) to pay for the cost of the identity checks, which it hopes will bootstrap its growth and stress-test the Civic protocol.
Civic founder, Vinny Lingham told Coindesk, “We basically said we’re going to reserve a third of the tokens to drive network effects.” How this should work is that for “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.” Basically, it is incentivising new users to come on board.
Incentivising is something that Lingham has been thinking about for a while and he pointed to what he sees as successful campaigns by the likes of Paypal: “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.” Coinbase also uses a similar incentive.
Of course, crypto-based businesses have an advantage over Paypal in that they can create their own money supply as long as the market sees future potential. Therefore, Civic, being the only entity that currently provides the know-your-customer (KYC) verification within the system, will be paying itself in CVC tokens for the service.
The demand for KYC services is growing and Civic has built up a lot of partners, companies and entrepreneurs that need to verify a user’s identity, the most well known of them being Annheuser-Busch.
Identity verifications on Civic cost anything from $2 to $60, the latter being from accredited investor verification. It’s hard to tell how far the allocated $43 million will go, but Civic thinks it could be gone by Christmas.