
Reddit Plans Cryptocurrency to Give Back to Its Users After $50M Raise - banderon
http://techcrunch.com/2014/09/30/reddit-scoops-up-50m-series-b-from-sam-altman-a16z-sequoia-at-500m-valuation/?ncid=rss
======
slg
This seems like an interesting but risky experiment if Reddit really does tie
something like this to user contributions.

First it seems like a massive regulatory headache. From Reddit's perspective,
are they going to send out 1099s to their users? Will they require them to
have real names and addresses on file? From a user perspective, will I need to
worry about my Reddit activity when filling out my tax returns.

It is also a gamble for Reddit as there is a psychological principle know as
the overjustification effect [1] that is at play here. Once a person is paid
for a habit they previously only did for enjoyment, the habit will generally
become less enjoyable. Reddit turns from a hobby to a job.

Finally there is the issue of "circle jerking". Reddit is already notorious
for its annoying and dangerous group think. Can you imagine if people could
actually turn their karma into straight cash? The incentive will be even
higher to simply echo back to the group what you think it wants to hear.

[1] -
[http://en.wikipedia.org/wiki/Overjustification_effect](http://en.wikipedia.org/wiki/Overjustification_effect)

~~~
Karunamon
I have to ask, how notorious? Is this a documented effect (on Reddit, not in
general) or just the noise that people on the site are repeating much like any
other meme?

Most accusations of "circle jerking" I hear there consist of shock and horror
that certain communities seem to have certain beliefs/thoughts/ideas in common
and that they were dared to be disagreed with. (I.e, you really should not be
all that surprised when you try to float progressive ideas in /r/republican,
or vice versa, and find your comments downvoted)

It's to the point where I almost reflexively downvote anyone on Reddit who
brings it up, since 99 out of 100 times, it's a complaint that they were
disagreed with, rather than anything that adds to the discussion at hand.
(Which, IMO, is the explicit purpose of downvotes)

~~~
nl
_I have to ask, how notorious? Is this a documented effect (on Reddit, not in
general) or just the noise that people on the site are repeating much like any
other meme?_

I think there have been some incidents which were dangerous and notorious. In
particular, the misidentification of the Boston Bomber was one case that
attracted mainstream attention[1].

[1] [http://www.cnet.com/news/reddit-regrets-role-in-online-
witch...](http://www.cnet.com/news/reddit-regrets-role-in-online-witch-hunt-
for-misidentified-suspect/)

~~~
patcon
Funny, since i find that to be the best example of communal remorse and
reflection that i can dredge up for reddit. Compare reddit's turnaround to how
quickly and thorough redactions take place in establishment in-groups of
journalists or business leaders or politicians. The fact that an amorphous
group of humans can come to have reddit's institutional memory and remorse is
astounding imho. The boston bombing error is known and passed down like
folklore from old members to new, keeping similar actions on check.

~~~
snowwrestler
Feeling remorse about being so wrong is not laudable, it's just normal. The
problem is that they got it wrong in the first place.

> The boston bombing error is known and passed down like folklore from old
> members to new, keeping similar actions on check.

No it's not. The Boston bombing thing was just the most high-profile example
in a long line of similar problems. Here's one from before the Boston Bombing:

[http://gawker.com/5751581/misguided-internet-vigilantes-
atta...](http://gawker.com/5751581/misguided-internet-vigilantes-attack-
college-students-cancer-fundraiser)

And here's one from after:

[http://www.theawl.com/2013/09/i-was-a-hated-hipster-meme-
and...](http://www.theawl.com/2013/09/i-was-a-hated-hipster-meme-and-then-it-
got-worse)

~~~
scrollaway
There's a hilariously sad _current_ bandwagon effect going on about the user
Unidan, a "reddit-famous" biologist who, after a petty argument with another
user, turned out to have less credentials than he claimed and to have
manipulated votes using sockpuppets.

 _This_ is possibly the most hated guy on Reddit right now. Not whoever
started the whole boston bombing witchhunt. Not someone who actually did
anything harmful. Just a guy who got "unfair karma". And unlike with the
boston bombing, there is zero self-awareness about how idiotic this whole
thing is (and how common it is for anyone remotely popular on that site to
manipulate votes in some way). It's a sad display, and I cannot imagine what
this would turn into with more concrete monetary incentives.

~~~
Karunamon
If you think it's about the karma, you are _seriously_ misinformed.

Voting accomplishes two things - giving/taking meaningless points, and
determining where (and if) your posts are ranked on the board.

The problem with Unidan is that he used a botnet to cheat the system. When
you're on the new queue or have just commented in a large thread, a single
vote or two can be the difference between ending up at the top of the thread
(or board) or never being seen _at all_.

It's not about the points, it's about the fact that the voting system is
pretty damned sacred to Reddit. By breaking pretty much one of the only global
rules, he cheated people out of a chance to have their own posts/comments
seen. We can only speculate as to how long it was going on.

Creating "useful content" is not a valid excuse for usurping community for
your own self-aggrandizement. Even HN has a voting ring detector. Why do you
think that is?

~~~
scrollaway
I'm not saying he doesn't deserve to be banned and what not. I'm saying it is
stupid and pathetic that he is _despised to the core_ more than a pedophile
strangling kittens would be on that site.

~~~
Karunamon
Know any pedo-kitten-stranglers that made the front page via one of the
default subreddits? You seem to be very quick to disparage a lot of people who
are mad for very understandable reasons.

------
Throwaway12830
This seems incredibly strange. Personally, I don't see how it's going to add
value to Reddit and help build the community. Mixing money into the site is
going to complicate things, bring forward a lot of challenges, and it's going
to be a large time sink.

I think Reddit has more important things to focus on, and I don't find this to
be a good use of resources. Reddit is also slow to roll out changes, so if
this has a negative impact, it'll take them a long time to pivot back on
track.

Perhaps it's going to be a minor feature that the majority of users never know
exists, and things will continue as they do now. If it's a major feature, I
think it'll be a flop, and open up room for competition.

Edit: To expand a little more, what's the best case scenario they're hoping
for here? They think the community is going to grow and more people will flock
to the site because of this change? Reddit is anti-corporate, the community
likes to feel small, even though it's one of the largest communities on the
internet. When they associate money with the site, people will look at it as
more of a business, and I think that'll drive more people away than it brings
in.

Why doesn't Reddit just launch an image hosting platform? Why do they send all
this traffic to imgur and gfycat, when they could roll out their own solution
for the community? They can spin it off into a separate service to attract
non-Redditors, and with all the incoming visitors from other sources, they can
refer more people back to Reddit. To me, this seems like a no-brainer, since a
large portion of their site revolves around images, and they're giving that
traffic and monetization away to third parties at the moment.

~~~
vijayboyapati
Not to mention it sort of defeats one of the main value propositions of
cryptocurrencies - their decentralized nature. If reddit created such a
currency you would need to trust reddit to trust its value. And if it's backed
by reddit shares, then it seems like a proxy for allowing public trading of
the shares of a private company. I wonder what the SEC would think of that.

------
swanson
"as well as individual investors like ... Calvin Broadus Jr. AKA Snoop Dog
[sic] (also randomly)"

Snoop Dogg is actually a pretty active reddit user:
[http://reddit.com/u/Here_Comes_The_King](http://reddit.com/u/Here_Comes_The_King)
\- especially in a certain..err.."plant-based" subreddit.

He's done several AMAs that are actually amazingly fun to read. In some ways,
AMAs can provide a better "celeb-to-fan" interaction than Twitter so I can see
why they got a few celebs in this round.

~~~
diydsp
I dislike being cynical, but I don't see many posts by Snoop that aren't in an
article without his name in the title... or that aren't promoting one of his
products. I'm smelling good PR work here, not an authentic interest in reddit.

~~~
hnha
It is depressingly rare nowadays to see AMAs of celebrities that are not
purely for advertising $upcomingthing and low on content.

~~~
embolalia
I haven't looked too deep in that sub, but maybe there are some going on that
just don't make the front page? There are some weird ones occasionally, mostly
people who've had some sort of surgery or health problem, from what I've seen.
But really, can we just focus on Rampart?

------
mandlar
Well, that explains why they were looking for a Cryptocurrency Engineer.

[http://www.reddit.com/r/redditjobs/comments/2c9d61/cryptocur...](http://www.reddit.com/r/redditjobs/comments/2c9d61/cryptocurrency_engineer_redditcom_san_francisco/)

~~~
wehadfun
That is a neat profession

------
eordano
They shouldn't use a new cryptocurrency, instead,
[https://medium.com/@barisser/an-open-letter-to-reddit-why-
yo...](https://medium.com/@barisser/an-open-letter-to-reddit-why-you-should-
build-on-bitcoin-e52705bc87c5)

------
mappum
They will probably be using colored coins (assets issued and exchanged on the
Bitcoin blockchain), not their own blockchain/altcoin. Otherwise, they would
have to worry about keeping enough miners to make their blockchain secure.

Colored coins also offer some cool features, such as trustless trading. It's
possible to construct a transaction that sends Alice's Reddit shares to Bob,
and also send's Bob's Bitcoins to Alice. Since they are in the same
transaction, either both sides of the trade happens, or neither do.

~~~
wmf
Or you could just not use a blockchain. I think some guy named Chaum is
rolling in his grave.

~~~
drewbug
Chaum's alive.

~~~
wmf
You wouldn't know it based on the blockchain frenzy these days.

------
dipso
Seeing as the Dogecoin community is so active on Reddit, this could be an
interesting use case for Dogeparty.

Dogeparty is an crypto-token (e.g. securities) application layer built on top
of the Dogecoin blockchain. Now that Dogecoin is merged with Litecoin's asic
hashrate, the network is pretty secure against attack.

There are other options built on top of Bitcoin (such as Mastercoin, Colored
Coins & Counterparty), but certain Bitcoiners have been worried about
blockchain bloat, so Dogeparty could be a decent shout on top of another
secure blockchain. Other options exist on new blockchains, but I think these
are too unproven this point.

Dogeparty: [http://www.dogeparty.io](http://www.dogeparty.io)

Web wallet: [https://wallet.dogeparty.io](https://wallet.dogeparty.io) (note:
I do not endorse this, it's beta and as with anything in cryptocurrency be
careful!)

~~~
oafitupa
So you just copy/pasted Counterparty's code too? Do you have any plans on
providing something of value, or only copycats?

------
dimitrideag
I´ts interesting, however the idea of Reddit to allocate 10% of their shares
back to the Reddit community for me it´s more than something "cool" as Sam
Altman said, and beyond the "a new way to think about community ownership".

From another perspective, It´s just a good strategy to do your own IPO (go
public) without the legal/bureaucratic way. It´s creating your own NY Stock
Exchange with the idea to increase your value based on what your users are
doing now (because it will be possible to buy, sell and trade between users).

So, beyond the message that it´s for “giving back to the community”, Is it
more a clever strategy to increase the company value, and even more the
stockholders value? or I´m incorrect?

~~~
exelius
Everything you said is totally true, which is why the SEC will block it. The
most they could do is set aside 10% of the shares and let users proxy vote
them, but I don't think that using them to back a cryptocurrency is going to
fly with the SEC. I know a lot of people like Bitcoin because it's magical
internet money with no rules, but financial markets are regulated for a
reason.

I don't think the SEC would have a problem with the method (using a
cryptocurrency) but rather the reason (using a cryptocurrency to avoid SEC
IPO/ownership rules). If Reddit were public, I don't see a problem with using
their stock to back a cryptocurrency. But it's a loophole big enough to drive
a truck through, so the SEC needs to close it before the con men descend.

------
Igglyboo
As long as they don't tie this to imaginary internet points I can't see a
problem. If karma is involved they better have a pretty advanced anti-gaming
algorithm.

------
jared314
That is an interesting move to empower users with a feeling of ownership.
Although, it would be more interesting, to me, if they tried to push towards a
distributed autonomous corporation instead. The type and amount of operations
that could be fully automated is up for debate, but the attempt would be very
interesting.

------
BrainInAJar
Dogecoin is already the cryptocurrency of Reddit... why not just buy a bunch
of Doge?

~~~
vertex-four
The point is that this cryptocurrency will be exchangeable for (backed by)
shares of reddit, which is rather unlike current cryptocurrencies.

~~~
arenaninja
The fun thing is that as soon as I saw the plans to distribute ownership
earlier today, I figured why not use their own cryptocurrency? I guess I'm
starting to predict the future, albeit only a few hours in advance

~~~
oafitupa
Because it's stupid? Why peg millions of dollars to a currency with no
security?

------
SushiMon
Just what we need! Another Cryptocurrency!

------
drcode
I find it very unlikely this will happen, for legal reasons- They want to link
their currency to shares in reddit corp and the SEC isn't going to be happy
about that. (Though if they can pull it off that would be positive development
in my book.)

------
toasted
The last person who tried a bitcoin based IPO outside of established legal
frameworks and existing stock exchanges ended up having to renounce his
citizenship, move to panama and was fined by the SEC

[http://www.satoshidice.com](http://www.satoshidice.com)
[http://en.wikipedia.org/wiki/Erik_Voorhees](http://en.wikipedia.org/wiki/Erik_Voorhees)
[https://www.sec.gov/litigation/admin/2014/33-9592.pdf](https://www.sec.gov/litigation/admin/2014/33-9592.pdf)

------
mkr-hn
ITT: Rich people finding ways to avoid giving money to people directly.

I'd love some extra money. I would use it to fix up the emissions system on my
car so I don't spend twice as much as I have to on gas. Then I'd use that to
drive to where the jobs are and _get one._

I might write fewer comments on Reddit once gainfully employed, but is that
such a bad thing? It seems like half the problems on Reddit are from people
having too much free time to troll and make low-effort comments.

------
adrianwaj
I think it's a great idea. I think redditcoin failed because of copyright
issues. Myself I had the idea for "hoinz" but never really pursued it,
although I'd like to.

"Embracing the new spirit of cryptocurrency. Obtain hoinz from your
reputations and contributions on various websites. Because you owe it to
yourself."

[http://www.reddit.com/r/hoinz](http://www.reddit.com/r/hoinz) (nothing there)

Things like moderation tasks can be paid in hoinz.

------
CephalopodMD
So, what kind of crypto currency would this be? Does anyone know if there are
plans for a mining operation like bit/lite/doge coin that one could
participate in, or is it just a block chain that is allocated to reddit
"shareholders" by some other means? (all of this is assuming that "considering
a cryptocurrency" == "planning to implement a cryptocurrency")

~~~
wmf
It sounds more like a "cryptosecurity" than a currency.

------
6thSigma
If reddit figures out how to get past the legal and technical hurdles this
brings, I'm very excited to see what comes of it and if other online
communities will do something similar. Communities which produce a lot of
content/value for free such as open source developers can begin getting equity
in the companies they are helping.

------
jmount
I'll be "that guy." My guess: Reddit releases a small fraction of a new crypto
currency (likely a simple BitCoin clone) to its users. Reddit recipient
interest in the currency then supports a large price for what Reddit retains
and Reddit ends up net-profiting from the transaction.

------
subdane
I wonder if they've been planning this for a while?
[https://twitter.com/redditcoin/status/428947176002056192](https://twitter.com/redditcoin/status/428947176002056192)

------
tomelders
I was hoping Reddit would create some sort of Reddit Trust that would re-
invest it's earnings based on what the Reddit community thought best.

That is of course not without it's own problems, but still, I prefer my idea.

------
spolu
Hope they use existing systems to issue their currency and don't try to create
a new currency. Stellar could do the job perfectly IMHO!

~~~
oafitupa
Stellar? What kind of joke is this? Why go with some small, centralized
currency created by a private company (and owned by it to some degree),
instead of going with the most adopted, most secure, most serious of all, and
decentralized: Bitcoin.

~~~
spolu
Cause bitcoin does not let you issue your own currency + Stellar is a not for
profit.

~~~
bitsweet
Not true. [https://coins.assembly.com](https://coins.assembly.com)

------
AndrewKemendo
What will happen to reddit gold?

------
squids
If they don't call them creddits they've missed a trick.

------
darkstar999
so "Thinking about" == "plans to"? Nice journalism.

~~~
Igglyboo
"The investors have explicitly agreed to this in their investment terms."

So the investors have it in their contract and the actually talked to an ex-
SEC lawyer, pretty sure that constitutes intent.

~~~
darkstar999
They have agreed to give up 10%, not to do the crypto thing.

"We are thinking about creating a cryptocurrency"

------
bond
Maybe they can use an existing coin like Karma...

[http://karmacoin.me/](http://karmacoin.me/)

