Reddit has revealed how it plans to distribute $5 million to its users. Kinda. In a blog post yesterday, the company unveiled "Reddit Notes," a sort of digital currency that represents a piece of equity in the privately held firm. Sometime late next year, a random selection of 950,000 Redditors will be gifted Reddit Notes. (The site is said to have roughly 6 million active registered users, so not everyone will get a piece of Reddit's appreciation.) As long as you're an active user in good standing, you'll be eligible to receive a Note.
No one really knows what Reddit Notes are
But it's what you'll do with a Reddit Note once you get one that remains unclear. Reddit is incredibly vague about the program, though it notes that users will be able to "save it or use it to tip, donate, or trade." But depending on how you define the word, Notes won't actually have any value. Company executives have made clear that Notes are most definitely not a currency, even though it'll be based on a Bitcoin-like blockchain for transactions. It won't be redeemable for cash, and it won't count as shares of Reddit, even though Notes will be "backed" by equity. Under the current plans, you won't even be able to buy Reddit Gold with Notes, according to the company's cryptocurrency engineer, Ryan Charles.
Newly-minted executive chairman Alexis Ohanian tells Inc. that "it's something of value, like sugar or gold or bacon." However, he does concede that "there are still things we have to figure out from a finance perspective." If all this ambiguity is getting you down, at least Charles promises that "we are working on a legal strategy and I'm sure the cryptocurrency will be exchangeable for something of value."
What we do know is where the $5 million comes from: when Reddit announced its latest $50 million funding round, it made the highly unusual decision to distribute 10 percent of the funds back to its community. If Notes don't have any real monetary value, however, who knows how that money is going to use.
Disclosure: Reddit's Alexis Ohanian stars in a Verge-produced online video series, Small Empires.