The first thing their creators have said is that it's not a cryptocurrency, nor does it represent a share of the company's overall value, but the new Reddit Notes are drawing a lot of attention. In simple terms, Reddit will distribute $5 million among 950,000 users via a raffle, which will give these “notes” a value of more than $5 each. However, you can't exchange them for money, nor can you buy Reddit Gold with them. So, what's the point?
How Reddit Raised $50 Million
Initiatives like Reddit need to seek funding from time to time, and with over 175 million registered users, it wasn't very difficult for the social portal to raise $50 million. Many celebrities participated in that round (Snoop Dogg and Jared Leto are two of the most notable names), and with the new income, Reddit's value would be floating around $500 million. Now, the most striking thing is that Reddit announced in September that it would distribute ten percent of the amount it received among its users. The final sum established the “promise” at $5 million, and after three months without signals on the radar, the Reddit Notes appear.
... or something like that. There are many details to resolve.
What Can You Do with a Reddit Note?
Five million dollars, 950,000 users. Only those with a good reputation on the site will be considered for the raffle, and the lucky winners will need to create a virtual wallet to receive this note. What can you do with it afterwards? That's when Reddit becomes imprecise. The main options are to keep it, buy something (we don't know what yet), or give it as a donation. It is supposed to use a system similar to Bitcoin, although it has not been presented as a cryptocurrency. If someone wants to convert that note into cash, they won't be able to; it also doesn't represent a Reddit share (despite being backed by part of its equity), and the possibility of buying Reddit Gold hasn't even been confirmed.
According to Alexis Ohanian, one of Reddit's founders and current executive chairman, it is essentially “something of value, like sugar”, although he also admitted that they must resolve many aspects from a financial point of view. And they have plenty of time to do it. The raffle in question will be held (probably) during the third quarter of 2015.
