reddit closed $50MM funding last September (175 million monthly active users. Massively multiplayer topic-based pub banter.) They promised to give 10% of the shares to the community, and they've just said how:
Announcing reddit notes.
To celebrate all of you and your contributions, we plan to give away reddit notes in a random lottery. As of this point, it looks like we're going to have approximately 950,000 reddit notes to divide among active user accounts.
reddit notes will be a digital currency, used for tipping good comments and other in-community transactions, backed by approx. $5MM in shares. You'll be able to buy and sell them for dollars. As reddit-the-company gets more valuable and approaches IPO, reddit notes will grow in value because - hopefully, one day - the shares will be worth actual money on the primary market.
See also Storj which is cloud storage - like Dropbox - except that in addition to paying for online storage, you can rent out spare space on your hard drives for other people to use, and get paid for that. Behind the scenes it's based on Bitcoin, the cryptocurrency and distributed secure ledger.
What's significant about reddit notes is that they're tied to the success of the company. If you have notes, you share in the upside as the value grows. If you contribute to the success of the company by being popular in the community, you'll accumulate more notes via tips from others.
Bitcoin will be the underlying technology for reddit notes too.
Remember when Instagram sold? The value of the company is the value of the community. I finished that post by writing
More interesting to me is the question of what happens when the workers organise, and demand a wage that is transferrable between the island economies of the internet. I've absolutely no idea what that would even look like, a transferrable store of labour but one in which the act and value of labour is contextually variable according to its position in a social network. But I can't imagine money itself looked entirely obvious before it was invented either.
So what if every company had its own currency used for shares in the company, for resource allocation by the company and community (e.g. balance of online storage used and provided, or - say, with Uber - to replace surge pricing and balance the number of drivers and customers), and to reward the community? And if that currency could be exchanged for dollars?
I'm interested in Bitcoin because it can be used as the underlying technology for applications like reddit notes and crypto-equity.
Bitcoin is technical and has lots of new concepts all at once, but it's not that complicated. How the Bitcoin protocol actually works.
The article that really nails it: Bitcoin isn't Money -- it's the Internet of Money.
Core Internet protocols, such as TCP, part of the 'transport layer,' shuffle packets of data around, but they don’t define how the exchange of packets is then used to create meaningful communication. Internet applications, such as email and the World Wide Web, are defined in protocols implemented on devices at the edges of the network, like servers and home computers, not in the guts of the network: routers, switches, hubs, and exchange points.
The Internet model improves upon the traditional telephone model by making possible what Vint Cerf calls 'permissionless innovation.' Tim Berners-Lee was able to launch the World Wide Web without waiting for Internet service providers to support it.
Permissionless innovation is the key. Plus the distributed nature of the internet... lots of applications can work together without the people who make them needing to be in the same team. And also the layers! The bits and bytes of the internet keep moving around, even while a particular webpage might render badly.
As the internet is for data, Bitcoin is for money.
Look at the banks... they're horribly inefficient when it comes to technology. Vertically integrated stacks of slow moving, expensive code. There's no incentive to upgrade this technology because it's a protective moat against smaller, more agile competitors who can't afford to enter. So the banks end up being these giant bundles of all the services they provide... foreign exchange, letters of credit for international trade, investment, mortgages and overdrafts, merchant accounts, online balance checking. Why should the same organisation provide all of these things?
Well, if you did try to make interoperating technology for all these services, it probably wouldn't work. It would be insecure and error-prone. Translating between data and currency the whole time would make things inefficient. Hackable. But base it all on Bitcoin? Treat Bitcoin and the blockchain as the architecture for interop between all the different bits of a bank's technology?
Maybe, in the future, these monolithic banks will provide infrastructural and corporate applications only, all the other services fulfilled by an ecosystem of small and medium businesses.
Maybe there will be a business that just does overdrafts. A business that just does real-time credit risk. A business that just sweeps your spare change into investments.
Unbundle the banks!
There are these industry sectors that are dominated by huge, monolithic, vertically integrated companies.
For example, the toy industry has history been able to prevent competitors entering using a combination of: difficulty accessing distributors and retailers; the economics of mass production demanding mass consumption and therefore mass media. This is being undermined by direct sales (e-commerce) and marketing via social media.
Or newspapers and magazines. Being unbundled under the pressure of the internet.
These get broken up in a death of a thousand cuts.
And then there are new technologies which are coming in that demand a whole ecosystem of new businesses to really take advantage of them, and force existing businesses to restructure to avoid being left behind.
For example, as I said the other day, to take advantage of the Internet of Things, existing manufacturers will need new teams and new departments to figure out how to speak directly with consumers.
The Internet of Things (IoT) is a proper deep value chain sector. I can't think of a single business that could do everything from the product manufacturing, the wireless chip design and fabrication, the back-end web services, the community management, and the design, marketing and customer service. There are a dozen decent size businesses at every step of that.
When I think of IoT, I think of that bit in The Graduate,
I wanna say one word to you. Just one word. Are you listening? Plastics.
Plastics? Like, pacemakers or wind turbines? Putting it out the ground or selling it in shops?
And one of the things that preoccupies me (working with startups, and having been immersed in the Internet of Things for a decade) is: what do you do, as a business early into these deep value chain sectors? You have to throw a line across the canyon to ship any product at all, but you'll get out-competed by people who wait for the ecosystem to appear.
Two other areas I'm keeping my eye on:
I'm rambling I know. And I haven't edited these notes so they're a blimmin mess stream of consciousness.
But the meta I'm trying to figure out is: when you spot that one of these deep value chains is at the beginning of a big reconfiguration, what do you do? How do you enter it as a small business? How, as a national economy, do you help it along and make sure the transition happens healthily?
Update: Good grief, I wrote a lot more.