Will Twitch Bits ever be a cryptocurrency? Before answering this question, it is necessary to have some background knowledge of the company Twitch and its product Bits.
Twitch is a popular American platform for live streaming that enables users to view a variety of video games. Since its launch in 2011, it has grown to be the leading video game streaming site, attracting about 31 million visitors each day, on average.
The platform does not allow access to people under 13. Those between 13 and the legal age in their area can use the platform only with permission from a parent or guardian who agrees to Twitch’s terms of service.
Additionally, Twitch Services are not available to individuals who have previously been banned from the platform or to anyone prohibited from using them by US laws or laws applicable in other places.
Twitch is owned by Amazon, which acquired it for $970 million in August 2014. San Francisco serves as its main headquarters.
What are Twitch Bits?
In June 2016, Twitch introduced a new feature called “Cheering,” a kind of emoticon that can be purchased via a platform-specific currency known as Bits.
Twitch describes Bits as a virtual good you can buy on Twitch to enable you to, among others, encourage and support its streamers.
Twitch’s streamers are rewarded with Cheers, typically at the cost of one cent per Bit. Bits can be purchased with dollars at the Twitch website in denominations ranging from 100 Bits ($1.40) to 25,000 Bits ($308).
Are Bits Cryptocurrencies?
Although Bits are a kind of virtual asset, they are neither a cryptocurrency nor a money instrument. Hence, you cannot use Bits as a payment method to purchase items in a supermarket or grocery store, unlike fiat and cryptocurrencies.
This means that Bits are not interoperable and that the only place you can transact with them is on the Twitch website or ecosystem. In other words, Twitch Bits are centralized and under the control of Twitch.
In contrast, many crypto platforms are decentralized, interoperable and widely accepted payment methods.
Will Twitch Bits Ever Be A Cryptocurrency?
As noted earlier, Bits are a kind of virtual currency but can only be used within the Twitch system. They are centralized, belong to, and are controlled by Twitch. For Bits to become a cryptocurrency, however, they must follow the steps needed to create one.
Notably, there have been other company-specific digital assets that transformed into externally available cryptos. An example is Kin, originally the token for Kik, a social media app.
Under the ownership of a giant like Amazon, which has a similar experience with its “Amazon Coins,” one would imagine that Twitch has both the technical depth and other resources to transform into a globally accepted cryptocurrency.
So, it can be argued that a future Bits cryptocurrency depends on Amazon’s plans for it going forward.
Creating a Cryptocurrency
To create a cryptocurrency, you must have an in-depth understanding of how blockchain technology works. Before creating, there are certain questions you need to brainstorm: What is the intended purpose of the new crypto? What is the problem it will be designed to solve? What does it offer to users in terms of value? Questions like this will help determine the new crypto’s design and functionalities.
When all necessary questions have been answered, then here are other things Twitch or any other party wishing to create a new cryptocurrency will have to consider:
Blockchain Network Selection
Having a blockchain network on which to base your new crypto is the first step. There are three ways to proceed with this, depending on the new crypto’s particular needs – build an entirely new blockchain, modify an existing blockchain, or create the new crypto on an existing unmodified blockchain.
Building a new blockchain is ideal for those looking to create a new crypto that has unique characteristics or features. However, constructing a blockchain from scratch requires a high level of technical expertise and is resource-intensive.
The second option, modifying an already existing blockchain has to do with altering a blockchain’s source code to align with the specific needs of the new crypto. Source code modification does not require as many resources as building a new blockchain, but it requires significant technical expertise.
Lastly, creating a token on a pre-existing blockchain network is not as technical as the other two options. So, it is a good choice for those seeking to introduce a new crypto without having to worry about the complex technicalities involved in blockchain creation or blockchain source code modification.
Cryptocurrency Design
After selecting a blockchain network, designing the cryptocurrency comes next. Things to consider here include determining the consensus mechanism, total coin supply, and distribution methods, among others.
Consensus mechanisms are particularly crucial because they specify how to verify blockchain transactions. Proof of Work (PoW) and Proof of Stake (PoS) are the two most implemented consensus mechanisms. Each mechanism has its own distinguishing features.
Regulatory Compliance
Even at the earliest stages, it is essential to ensure compliance with all applicable laws to avoid unpleasant consequences such as fines and lawsuits. This should require in-depth research that must include consultations with legal and crypto experts.
Maintenance and Growth
Once the cryptocurrency is created, ongoing maintenance and growth are often equally as challenging if not more so. Maintenance and growth efforts may include building a user community, raising awareness about the new crypto, and continuously enhancing its features and functions.
Conclusion
Twitch Bits is a virtual good that is exclusive to Twitch for now. Will Twitch Bits ever be a cryptocurrency? Well, this depends on the plans of Amazon, the owners of Twitch.
Amazon is a big, technologically advanced company that has already created Amazon coins, meaning that it has the necessary resources to create a Bits cryptocurrency if it desires.
FAQs
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Are Bits a kind of cryptocurrency?
No. Bits are virtual goods or platform-specific currency used in the Twitch ecosystem.
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Can Bits become cryptocurrency in the future?
Yes. There are instances of platform currencies that have metamorphosed into cryptocurrencies.
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Does Twitch accept cryptos?
Yes. Digital cryptocurrencies are one of the several payment methods available for intending Twitch subscribers. You can also subscribe through Amazon Payments, PayPal, credit/debit cards, and Apple Pay, among other methods.
