What’s Reddit Cryptocurrency and How Does It Work?

Reddit, a popular social media and discussion platform, has integrated cryptocurrency into its ecosystem in the form of Community Points and other cryptocurrency-related initiatives. Reddit’s approach to cryptocurrency is aimed at rewarding and incentivizing user engagement within specific subreddits (communities) and empowering users by giving them ownership of their contributions.

Key Aspects of Reddit Cryptocurrency:

1. Community Points:
   • What They Are: Community Points are ERC-20 tokens based on the Ethereum blockchain. They are specific to individual subreddits and serve as a measure of reputation and contribution within those communities. Each subreddit that participates has its own unique Community Points.
   • Subreddits Involved: As of now, only select subreddits have Community Points. Two prominent examples are:
     • r/CryptoCurrency: Uses the token called MOON.
     • r/FortNiteBR: Uses the token called BRICK.
2. How Community Points Work:
   • Earning Points: Users earn Community Points by contributing to the subreddit, such as through posting, commenting, and receiving upvotes. The more value the community perceives in a user’s contributions, the more points they earn.
   • Storing Points: Community Points are stored in a Reddit Vault, which is a wallet feature integrated within the Reddit app. Since these points are on the Ethereum blockchain, users technically have control over their points outside of Reddit as well.
   • Using Points: Points can be used in various ways within the subreddit:
     • Tipping: Users can tip others in recognition of quality content.
     • Premium Memberships: Some subreddits allow users to use points for premium features, such as special memberships that give exclusive access to certain subreddit features.
     • Governance: Community Points can be used to vote on certain decisions within the subreddit, effectively giving users a say in how the community is managed.
3. Blockchain Integration:
   • Ethereum: Reddit initially chose the Ethereum blockchain due to its robust smart contract functionality and widespread use in the crypto space. Reddit’s Community Points are ERC-20 tokens, a standard for tokens on Ethereum.
   • Arbitrum: To address Ethereum’s scalability issues, Reddit has also integrated with Arbitrum, a Layer 2 scaling solution. This helps reduce transaction costs and speeds up transactions for Community Points.
4. Reddit’s Broader Cryptocurrency Initiatives:
   • Reddit and NFTs: Reddit has also explored the NFT (non-fungible token) space, allowing users to create and sell unique digital items as NFTs.
   • Crypto Integrations: Reddit has integrated cryptocurrency tipping bots and services in the past, enabling users to tip each other with popular cryptocurrencies like Bitcoin and Ethereum.

How Reddit Cryptocurrency Works:

1. Distribution:
   • Community Points are distributed periodically based on a formula that takes into account a user’s contributions and their impact on the community.
   • The distribution process is typically governed by a set of rules established by the subreddit’s moderators and community guidelines.
2. Ownership:
   • Unlike traditional rewards systems on social media, where points or credits are stored on the platform’s servers, Reddit’s Community Points are stored on the blockchain. This means that users truly own their points and can transfer them outside of Reddit if they wish.
3. Transparency:
   • Since Community Points are on the blockchain, all transactions and point allocations are transparent and verifiable by anyone. This transparency helps build trust within the community.
4. Decentralization:
   • The use of blockchain technology means that the control over these points is not centralized within Reddit but is distributed across the network, aligning with the broader ethos of decentralization in the cryptocurrency space.

Challenges and Considerations:

• Gas Fees: Because Community Points are on the Ethereum blockchain, users might need to pay gas fees when transferring their points, though Layer 2 solutions like Arbitrum help mitigate this.
• Adoption: While the idea of Community Points is innovative, widespread adoption across all subreddits remains to be seen.
• Regulatory Concerns: Like all cryptocurrencies, Community Points might face regulatory scrutiny in the future, especially if they start to represent significant monetary value.

Reddit’s cryptocurrency initiatives represent an interesting fusion of social media and blockchain technology, creating new ways for users to interact, engage, and take ownership of their contributions within online communities.