Can Reddit Still Give Users Money Now that Redditcoin Is Dead?

​Redditcoin, a planned cryptocurrency backed by shares in the company that would be distributed to its users, has for all intents and purposes been killed. In lieu of redditcoin, it looks like the site is going forward with an alternative way to give value back to users, called reddit notes. But what, exactly, reddit notes will accomplish is vague at best.

Last Thursday, redditcoin developer Ryan Charles tweeted that Reddit had laid him off and that development of the cryptocurrency was being put on hold. "Cryptocurrency is not a part of reddit's near-term plans," Charles wrote. "This is unfortunate, but understandable."

According to Charles, disinterest among the company's new leadership following the departure of CEO Yishan Wong—one of redditcoin's largest internal supporters—led to support for the project being dropped. However, Reddit users have accused Charles of slacking on the job and dedicating his time to a side project that involved enabling Bitcoin in Javascript instead of building redditcoin.

Redditcoin and reddit notes are both part of Reddit's initiative to give 10 percent of its shares back to the community after it received $50 million in investor funding in September. The reasoning behind this, according to the site's administrators, is to give something of value back to the users that made the site popular by posting content. How, exactly, the site will do that has been a topic of debate for months, and administrators posted a topic asking for community input in November.

Reddit notes was first announced in a blog post on December 19th, and it appears to be a kind of pseudo-currency that Reddit users will be able to use to trade with other people on the site, or "tip" each other for posting good content. According to the post, reddit notes will be rolled out to random users using a lottery system.

"Similar to how there is monetary value to goods (i.e. gold or pork bellies), there is a monetary value to reddit notes," wrote site administrator akahotcheetos in a post on the topic.

What and how, exactly, reddit notes will amount to in terms of value on the site or the real world is unknown, and the Reddit community has taken notice. As user VodkaBarf put it, "My tinfoil explanation for it is someone thought of an interesting name for something, had no idea what it could actually be, posted a vague announcement, then trawled the comments for ideas on what to actually make this thing in to [sic]."

Regardless, now that redditcoin is dead, things are looking good for reddit notes. Reddit representative Ashley Dawkins told Motherboard that "Reddit is going forward with reddit notes" in response to our request for comment. However, Dawkins noted that "our research leads us to want to wait until the law and technology around cryptocurrency are further along before deciding exactly how [reddit notes will issued]."

The regulatory framework regarding the intersection of cryptocurrencies and real-world equity is murky. In December of 2014, the US Securities Exchange Commission (SEC) barred computer programmer Ethan Burnside from the security trading industry and required him to pay $68,000 after he operated sites that allowed people to trade Bitcoins and other cryptocurrencies for stocks. According to the SEC, the sites were not properly registered.

"The registration rules are vitally important investor protection provisions, and no exemption applies simply because an entity is operating on the internet or using a virtual currency in securities transactions," Andrew M. Calamari, director of the SEC's New York Regional Office, said at the time.

Reddit representatives would not comment on whether regulatory concerns regarding creating a cryptocurrency based on a company's shares were to blame for dropping support for redditcoin.

With redditcoin effectively dead and reddit notes on the horizon, Reddit's path forward to giving users 10 percent of the company's value in the form of online currency is no more clear than it was months ago. Though reddit notes has apparently been chosen as the way forward, it's unclear what their real value will be.