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For years, we’ve heard about the demise of mainstream media and the difficulty that online publications have had in attracting new advertisers and subscribers. In response, we’ve seen countless new advertising approaches and plenty of new subscription-based pay walls. Nothing seems to be working, which is why a new approach from Reddit is potentially so interesting. What Reddit is doing is rewarding loyal users with a new cryptocurrency that will run on the popular Ethereum blockchain as a way of building a more engaged and invested Reddit community. If this strategy works, it could have huge implications for both mainstream media and social media.
A quick look at the new Reddit crypto plan
While Reddit is not rolling out the new crypto strategy to its entire base of 430 million monthly active users (MAUs), it is testing it with two of its most popular subreddits: r/cryptocurrency and r/FortNiteBR. In one case, Reddit is targeting some of the biggest crypto enthusiasts on the planet. And in the other case, it is targeting highly engaged video gamers who play FortNite Battle Royale. Reddit users will earn tokens (called “moons”) by posting comments, engaging with the community, and finding new stories for Reddit users to upvote. The logic here is clear: Reddit users will have a new incentive to become more active within the community. The more active they are, the more cryptocurrency they will earn, it’s as simple as that.
In a base case scenario, Reddit users will then re-invest Reddit tokens they have earned back into the community, such as by buying up badges, emojis and GIFs. Instead of paying with U.S. dollars, they will be paying with Reddit coins. This is different from earning in-game cash or rewards from video games and then reinvesting the money back into the video game. Here, users will be able to earn points by posting about FortNite Battle Royale, not simply by playing the video game, and then invest the money wherever they would like on the Reddit platform where these tokens are accepted.
But where things get really interesting is the potential to trade these Reddit tokens with other Reddit users, or even with people who are not on Reddit. In order for this to happen, people will need to first create a “digital wallet” to house these coins (the same way you would with any other crypto), and then there will need to be a third-party crypto exchange where you can buy and sell these tokens. Launching with r/cryptocurrency is so brilliant, because presumably, most of the people who check out this subreddit already have digital wallets for all of the other coins they have collected. The problem right now, though, is that you aren’t going to find a crypto exchange like Coinbase willing to list the Reddit tokens, because there is not yet a true market for them. But if millions of Reddit users start to collect tokens, then it’s easy to see how you might be able to sell Reddit “moons” for fractional shares of Bitcoin or Ethereum, or to cash out entirely and sell your Reddit tokens for cold, hard cash.
Will other social platforms take notice?
For now, the big question is if other social media platforms and mainstream publishers will sit up and pay attention. If the Reddit experiment goes well, then it’s easy to see other platforms copying Reddit on a limited scale. And, in the case of Facebook, which already has plans for a new cryptocurrency called Libra, it could completely reinvent the way we interact with media platforms.
Imagine, for a moment, reading a story on the New York Times, posting a comment, liking a few of the other comments already on the article, and getting rewarded with crypto. That might go a long way in removing all of those offensive Internet trolls who leave nasty comments. If you’re trolling, you aren’t going to be making money. Or, imagine for a moment posting a new status update on Facebook, getting a lot of likes for your creativity and originality, and also getting rewarded with crypto. That might really help independent content creators who are struggling to make any money with social media platforms. Unless you’re a big-time YouTube creator or A-list social influencer, you’re probably not making enough money from social media to pay the bills. But if you are also getting rewarded with a valuable crypto, that could change the dynamic completely.
And what’s in it for Reddit?
Ok, Ok, you’re probably thinking, but what’s in it for Reddit (and other social platforms)? It’s all well and good to build a loyal and engaged community, but doesn’t Reddit already have “karma,” which is a way to reward thoughtful and insightful content? And “loyalty” and “engagement,” the last time we looked, doesn’t pay the bills. Which is why even the most esteemed media publications practically beg you to subscribe or donate some money to them so that they can survive.
So here’s the big reveal: according to what we know now, Reddit will give itself 20 percent of all tokens created. This means that Reddit users will own 80 percent of the tokens, and Reddit itself will own the other 20 percent. That might not sound like a big deal, but owning 20 percent of any market is huge. Remember when Bitcoin was trading for less than $1 and people thought the coin was worthless? Back on the original Bitcoin Pizza Day in May 2010, you needed 10,000 Bitcoins to buy two pizzas. Now, those 10,000 Bitcoins would be worth close to $100 million. So apply the same logic to the Reddit coins. If the coins take off as planned, and if Reddit owns 20 percent of the market, that could be worth a fortune in a few years from now.
The future of social media
So definitely keep your eye on the crypto-social media space. Small test launches – like the one that Reddit is doing now – could presage even bigger announcements later. And if Facebook’s Libra cryptocurrency ever takes off and wins approval by banking regulators, then we could see an entirely new “alternative” financial system take shape, all driven by social media platforms. Who needs big banks and sovereign central banking authorities when billions of social media users around the globe are free to trade cryptocurrencies across national borders without third parties taking a cut of every transaction?
