Reddit plans cryptocurrency for its community after $50m investment

This is exciting. Reddit is planning on sharing 10% of its equity with its army of 3-million strong users. It’s like taking an IPO to a whole other level!

The move comes after the news and social networking sitejust raised a Series B round of US$50-million from a group of investors, valuing it at a massive US$500-million. Reddit CEO Yishan Wong explains:

“We are thinking about creating a cryptocurrency [like Bitcoin] 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.”

The Series B investment was led by Sam Altman, CEO of Y Combintaor, with participation from Andreesen Horowitz and Sequoia Capital, as well as individual investors like Peter Thiel, Ron Conway, Josh Kushner, Jessica Livingston, Kevin and Julia Hartz, Mariam Naficy, and Reddit CEO Yishan Wong.

Celebrities Jared Letto and Calvin Broadus Jr. AKA Snoop Dog were also among those who invested.

If we’re going by the numbers, each Redditor will theoretically get about US$16 worth of Reddit currency. Chances are the company won’t roll out this digital money straight to each user though — it’s as complex as it is unclear about what the process will be like.

Last month, Reddit attracted more than 135-million page views with users in more than 200 countries. It’s also listed as the world’s 49th most popular site on Alexa, and growing incredibly fast. Wong further states:

“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.”

Given that Reddit relies on shares, voting and collaboration, assigned traceable values of these Reddit Shares could help the company gain from its community’s innovations and contributions.

Referring to Colored Coins, which is a method that attaches true value to specific information, Medium user @barisser suggests how this might help innovate Reddit’s online system. “Colored Coins enable a host of new capabilities for owners, such as cryptographic voting, to multisignature addresses for mass organizations. Representing ownership as a token is only the first step,” he writes.

“Again, we want to emphasize that this plan is in its earliest stages right now and could totally fail (if it does, we will find another way to get the shares to the community somehow),” Wong concludes. “But we are going to try it because… well, because we are Reddit and we do these kinds of things.”