Reddit to turn Snoop Dogg's cash money into cryptocurency

By Fusion Staff | October 1, 2014 | 3:08pm

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Reddit CEO Yishan Wong on Tuesday revealed more details about the company’s recent round of funding. In addition to revealing that rapper and marijuana enthusiast Snoop Dogg and socially conscious actor Jared Leto were among the investors who gave the popular social site $50 million during the latest round of outside funding, Wong announced that the company is planning on giving its users a stake in the action.

“The investors in this round have proposed to give 10 percent of their shares back to the community, in recognition of the central role the community plays in Reddit’s ongoing success,” Wong wrote.

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That 10 percent share will likely equal a 1 percent stake in the company. (Remember, Reddit raised $50 million on a $500 million valuation, so 10 percent of 10 percent is 1 percent.) It’s a thoughtful gesture—one that has already been met with praise by the Reddit community—, but it’s probably also meaningless. While the community will certainly own a fraction of the company, it’s unclear whether they’ll have an actual voice or vote at the decision-making table. Think of the Green Bay Packers: the team’s shareholders are its fans, but they aren’t actually involved in the decision-making process.

But there’s more. Not only is Reddit giving part of itself to its users, but it will likely do so in its own cryptocurrency similar to Bitcoin, according to a Reddit comment posted by Wong. The idea of cryptoshares has been floating around for about a year, but this would be the most high-profile digital stock issue to date.

“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,” Wong wrote. He said investors had already endorsed the plan, and acknowledged it could fail.

Snoop Dogg does the Cryp(to) dance

The Reddit CEO didn’t divulge much beyond this announcement, largely because there are still a lot of technical, legal, and financial hoops to jump through before implementing any system. But the concept is fairly straightforward: Reddit would simply be taking the core concept of the Bitcoin network — a shared registry of information — and applying it to equities. Reddit shares could be bought and sold just like individual Bitcoins.

“Bitcoin is the world’s first truly working DRM (digital rights management) scheme, as it guarantees you may copy a digital resource once and only once,” Jeff Garzik, a Bitcoin core developer, told Fusion via email. “If you can do that, you can do the same thing with shares, bonds, store credits, or any other digital resource you can imagine. Cryptography guarantees that the share registry will behave according to the rules set forth by the issuer.”

So far there are more questions than answers, as it remains unclear what steps Reddit will take to implement their new system. Will it be a modern version of company scrip, where people are issued tender that can be spent only at the company store? Or will these shares of cryptocurrency be transferable into other currencies? Also, how will these shares be distributed, and will people be rewarded for their link and comment submissions?

Whatever the case may be, this move will do much to bridge the gap between a user base disaffected by how The Fappening scandal was handled by administrators and a company that truly isn’t much without its large user base.

Fidel Martinez is an editor at Fusion.net. He’s also a Texas native and a lifelong El Tri fan.