Social news site Reddit announced Thursday that it will allow users to earn cryptocurrency by contributing content and participating in discussions about the service. Many in the crypto world hailed the news as a major milestone, pointing to the hundreds of millions of Reddit users who could adopt the digital currency.
However, the real impact of Reddit’s move is likely to be muted due to the way the site awards cryptocurrency and the ongoing regulatory scrutiny of crypto.
It turns out that Reddit will offer digital currency in just two of its many “sub-Reddits,” the site’s discussion forums dedicated to specific topics. The first of these, unsurprisingly, is a sub-Reddit for cryptocurrencies, while the other is dedicated to chatting about the Fortnite online game.
Contributors to the sites will receive one of two coins that Reddit has coined (known as Moon and Brick) and which it will track on a popular blockchain called Ethereum, a digital ledger technology similar to Bitcoin. However, unlike Bitcoin, the new coins can only be spent on Reddit to acquire badges and other trinkets and cannot be used as a form of money more broadly.
This can ensure that Reddit remains in the good will of financial regulators, who have vaguely looked at the more ambitious digital currency projects from other social media sites like Facebook and the messaging app Telegram. In the case of Telegram, the company’s CEO announced this week that he was canceling plans to sell millions of dollars in tokens called Grams. Telegram’s announcement came after a judge backed the Securities and Exchange Commission’s position that the sale of Grams appeared to be an unregulated investment scheme.
In contrast, Reddit’s decision to restrict Moon and Brick coins to its own website means that they are more akin to loyalty points, or digital “gold” that site users have been able to give away for a long time.
“We continually conduct experiments to explore features that appeal to our users and communities. With Community Points, we are working exclusively with two communities to test this feature and collect feedback from our users, “the spokesperson said.
The result, according to Byrne, is that the Reddit initiative is not a game changer for crypto adoption. He notes that it does not provide a compelling new use case, nor a reason for crypto fans to adopt it. However, Byrne praised the Reddit experiment as a “cool development.”
Reddit’s tactic can prove useful in the long run, providing the site with a beachhead from which to launch a broader and more versatile cryptocurrency in the future, when and if regulator attitudes change.
