Reddit just revealed their plans to create a cryptocurrency as part of a widely-supported move to share 10% of the equity raised with Reddit users. Hours ago, Sam Altman, a well-known venture capitalist, announced that he was investing in Reddit personally, not through Y Combinator. Also joining Sam in the $50 million USD fundraise for Reddit are Marc Andreesen of Andreesen Horowitz and Alfred Lin of Sequoia Capital. Sam Altman worked alongside Reddit’s cofounders, Steve Huffman and Alexis Ohanian, nearly a decade ago when they were in the same Y Combinator’s start-up batch.
Editor’s Note: Check out this well-articulated proposal to Reddit, by Andrew Barrister, that details the benefits of issuing these Reddit shares on top of the Bitcoin blockchain as colored coins, as opposed to as a new cryptocurrency.
Reddit’s Yishan detailed the situation in a Reddit comment:
CAVEAT: KEEP IN MIND THAT THIS PLAN COULD TOTALLY FAIL
We are thinking about creating a cryptocurrency 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.
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.
(Also, I know this totally contradicts what I said over here but that was before Sam proposed this plan to me, and the idea of being able to distribute ownership of reddit back to the community – a long-held dream of many of us, frankly – is important enough to try and do this)
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), but we are going to try it because… well because we are reddit and we do these kinds of things.
Reddit Hired a Cryptocurrency Engineer
Last month, Reddit posted a job listing that specifically asked for a “cryptocurrency engineer,” a new and fast-growing niche group of engineers. Yesterday, BitPay’s Ryan Charles posted to twitter to let everyone know that he got the job. As Yishan previously explained in the original job posting, Reddit was looking for someone that understood cryptocurrency and blockchain technology at a fundamental level. Reddit has been considering the formation of their own cryptocurrency for at least a month now. At this point, it is unclear whether Reddit’s cryptocurrency will be on top of an existing Bitcoin 2.0 platforms or stand alone as its own blockchain or sidechain. The specifics of the new cryptocurrency will undoubtedly need to be meshed out; however, Reddit seems committed to having a decentralized system to properly distribute the cryptocurrency to Reddit’s truly worldwide audience.
Images from Shutterstock.