Sweatcoin, a free smartphone app that pays people to be physically active, said on Wednesday it has secured its first round of institutional funding after topping download charts in Britain and the United States.
The fitness app pays digital “sweatcoins” for how many steps users take daily as measured on their smartphones.
They can be exchanged for fitness-related products and services and, say its developers, could one day be traded like money or even cryptocurrencies such as bitcoin.
But most users just prize the virtual coins for the psychological boost they get from tracking their daily exercise.
“It is the emotional element that makes people engage with Sweatcoin on a daily basis and open us three times a day,” Oleg Fomenko, the company’s co-founder and a London-based Russian entrepreneur, told Reuters.
The company said it had completed a $5.7-million initial “seed stage” round of financing from Silicon Valley and European investors including Goodwater Capital, Greylock Partners’ Discovery Fund and Seedcamp. It first funded itself by collecting $600,000 from individual angel investors.
While inspired by bitcoin, the system is not yet on blockchain, a record-keeping system that is designed to make transactions irreversible, Fomenko said. It is also not formally convertible into established currencies, as widely traded, often volatile cryptocurrencies can be, he said.
Fomenko plans eventually to develop the technical and security features to enable it to be listed on cryptocurrency exchanges, creating a marketplace for movement, he said.
These and other money-making plans have been put on hold while the 10-member Sweatcoin team struggles to satisfy growing volumes of consumers using its basic fitness tracking features. Co-founder Anton Derlyatka said Sweatcoin had 2.28 million active users who have counted their steps on Tuesday this week.
It’s a successful second act for Fomenko, whose last start-up, Bloom.fm, a music app launched in 2013, drew 1.3 million downloads before imploding when its sole investor, a unit of Gazprom Media, pulled out after Russia’s invasion of Crimea.