Reddit Launches Cryptocurrency

Reddit’s new community initiative is creating a reward system called “Community Points.” This will come in the form of Ethereum-based token rewards in two of its subreddits, Cryptocurrency and Fortnite: Battle Royal.

A subreddit is a forum focused on a specific subject, and each of these subreddits has slightly over 1 million subscribers.

Redditors will receive these tokens for providing quality content and will be able to tip, gift, and transfers these points to one another.

The points themselves can be used to access exclusive community features such as badges, custom emojis, and GIFs in comments.

These limited features will likely help them remain insulated from regulators, at least at first. Since they are ERC-20, it’s not unreasonable to assume they will make their way to decentralized exchanges like Uniswap, where they’ll take on a certain financial value. At that point, the regulatory risks might return.

The tokens are currently on the Rinkeby testnet as they’re still in beta. They will eventually migrate over to mainnet with accrued balances carrying over. Each subreddit will have its own corresponding token, as seen below. DappRadar’s tracker currently has the amount of FortNite’s Brick token holders sizably outpacing that of CrytpoCurrency’s Moon token.

Reddit lets you create your own Vault, which operates just like a wallet. Reddit will also be covering the cost of “gas” on the Ethereum network, since most users don’t have Ether already.

These fees won’t accrue to the regular network since this is currently living on the Rinkeby testnet, at least through the summer.

There will be an initial 50 million point distribution based on karma already earned in the subreddit. The first year will include another distribution of 50 million, with subsequent distributions slowing down until an eventual cap of 250 million tokens is reached. Each month that tokens are distributed, a portion will go based on karma, but half of it will also be divided between, moderators, reddit, and the broader reddit community.

It’ll be interesting to watch how well these tokens catch on. This should, at the very least, familiarize other individuals with how such self-custodial wallets function.

This likely won’t be of material importance at first, but the transition to mainnet combined with growing exposure to a potentially new audience could have an impact in the long run.