Reddit is considering creating a cryptocurrency backed by shares of the company. These shares would then be redistributed back to the community in recognition of the role it has played in the site's success.
Or that at least is the plan for some of the $50 million the company raised in funding from a group of investors that include Sam Altman, president of Y Combinator, Alfred Lin of Sequoia Capital and Marc Andreessen of Andreessen Horowitz.
Other investors participating in the round, according to CEO Yishan Wong's blog post on the subject, include Peter Thiel, Ron Conway, Paul Buchheit, Jared Leto, Jessica Livingston, Kevin and Julia Hartz, Mariam Naficy, Josh Kushner, Snoop Dogg, and Yishan Wong.
The capital will be applied to a number of projects, Wong wrote—the company plans to hire more staff for product development, expand the community management team, build better moderation and community tools, work more closely with third party developers to expand its mobile offerings, improve the self-serve ad product, build out Redditgifts marketplace and invest in the infrastructure.
The investors also pledged to give back 10 percent of their shares to the community. In the comments section, Wong went into more detail about how that could occur.
We are thinking about creating a cryptocurrency and making it exchangeable (backed) by those shares of reddit, and then distributing the currency to the community. The investors have explicitly agreed to this in their investment terms.
Nothing like this has ever been done before. Basically we have to nail down how to do each step correctly (it is technically, legally, and financially complex), though in our brief consultation with an ex-SEC lawyer, he stated he could find nothing illegal about this plan. Nevertheless, there are something like 30 different things we have to pull off to make this work, so we're going to try.
Wong freely acknowledges the plan could fail – and if it does, it's back to the drawing board for a plan to reward the community.
But it is unlikely Reddit would junk the entire project without salvaging something from it.
Last month Daily Dot noted that Reddit was seeking a cryptocurrency engineer—someone with a background in math or computer science “to explore new technology applications and infrastructure involving the blockchain and cryptocurrency.”
One theory suggested by a (who else) redditor was that Reddit wanted this person to create an official tipping system to allow community users to gift coins to one another using a comment or personal message.
“A coin created and backed by reddit itself will be very profitable and I'm certain a mining operation is being built into the business model of the site itself,” according to the commenter.
The cryptocurrency would also fit well with the plans for expanding the Redditgifts marketplace--and as it happened, Reddit was seeking several marketing positions to promote this new offering in addition to the cryptocurrency engineer.
Ditto the third-party app development initiative, where in-app purchases and payments are, pardon the pun, the coin of the realm.
