Reddit has recently unveiled “Reddit Notes,” a sort of digital currency that represents a piece of equity in the privately held firm. Later next year, a random selection of 950,000 Reddit users will be gifted Reddit Notes. The website is said to have approximately 6 million active registered users, so not everyone will get a piece of Reddit’s appreciation.
Unfortunately, it still remains unclear what a user will do with a Reddit Note once he/she gets one. The company says that users will be able to “save it or use it to tip, donate, or trade.” But no matter how one defines the word, Notes won’t actually have any value. Reddit executives have explained that Notes are most definitely not a currency, even though it will be based on a Bitcoin-like blockchain for transactions. It will not be fixable for cash, and it will not count as shares of Reddit, even though Notes will be backed by equity.
Daniel Lim, the project leader of Reddit Notes, who has been working for Reddit for two months, stated that the current iteration of Reddit Notes are not going to have immediate cash value – or equity value.
However, according to Ryan Charles, Reddit digital currency engineer, there is a legal plan in action and “the cryptocurrency will be exchangeable for something of value.”
“In a lot of ways, it’s not like a currency. It’s something of value, like sugar or gold or bacon. It can be transferred,” Alexis Ohanian, a co-founder and the executive chairman of Reddit, said in an interview with Inc. “I would not call it a cryptocurrency. I would call it a digital asset and we are building something that will distribute it,” he added.
As said by Ohanian, Reddit has been working with existing government regulations to structure the Notes, and not every detail is decided. “There are still things we have to figure out from a finance perspective,” he said.
When Reddit announced its latest $50 million funding round, it made the unusual decision to distribute 10% of the funds back to its community. If Reddit Notes don’t have any real monetary value, who knows how that money is going to use. The idea that Reddit could become a home for these small unusual transactions might seem rather eccentric, but it has already started. Like it or not, Reddit is turning into a unusual tiny system.