Back in September, Reddit announced a new $50 million round of funding, but what raised the eyebrows of many redditors and crypto-geeks alike was its plans to distribute 10 percent, or $5 million, of that funding round back to the community.
Reddit finally gave some, albeit vague, details Friday on how it plans to actually do that. According to the announcement, new Reddit Notes will be awarded in a random lottery to 950,000 users in the fall of 2015 — a much smaller number than the Reddit user base.
Eligibility for the Reddit Notes will also be determined by “activity” on the site before September 30, 2014 (the date they announced the funding), so late-comers can’t get in on the action now. And even if you are eligible, the Notes won’t be distributed until fall 2015.
There’s still many questions about how Reddit actually plans to execute this and how it will be financially and legally compliant. And it won’t exactly be a new cryptocurrency that many had hoped for (or feared) from the original announcement. In an interview with Inc., product manager Daniel Lim said to think of it more “Like McDonald’s Monopoly game” rather than a currency that has value or equity.
In a comment on the bitcoin subreddit, Reddit’s cryptocurrency engineer Ryan Charles also confirmed the view:
[blockquote person=”” attribution=””]”The post is deliberately vague about technology and legal. For one, we’re holding back on committing to a particular technology just because the bitcoin world changes very fast, and we want to make sure we pick the right choice. However, almost certainly it will be either colored coins or sidechains.
Legally, we originally announced we’re issuing a “cryptocurrency” that will be “backed” by reddit shares. Issuing such a thing would be illegal since we are not a public company. We have mostly figured out a legal strategy that allows us to give something of actual value to the community, but we are not ready at this moment to announce it.[/blockquote]
Lim, the product manager, also elaborated a little more on the definition of a Reddit Note said via email: “A reddit note is a digital asset because we will be using blockchain technology to validate the ownership of reddit notes in a fun way. There will not be any mining of reddit notes, but it will use existing cryptocurrency capabilities to insure that reddit notes are transferred and owned in an innovative manner.”
So it may not be a grand, equity-bearing, first-of-its-kind legal currency after all (at least in its current description), but Reddit Notes are still going to be an interesting experiment in user loyalty — if you’re one of the lucky 950,000 to receive it in the first place.
This post was updated to add in an emailed comment from Reddit product manager Daniel Lim.