Reddit Shuts Down Its Crypto Experiment: Users Lose Tokens and Trust

Reddit is shuttering its blockchain-based Community Points program

Reddit, the popular online forum, has announced that it will end its blockchain-based community points service, which has been running as a test version since 2020. Some subreddits rewarded users with Community Points for their positive contributions to the online discussions and content. These points were actually Ethereum tokens that could be exchanged for other things. Users could store and manage their points in Reddit’s Vault, which was a kind of cryptocurrency wallet. However, Reddit said that the service was too costly to maintain and faced regulatory hurdles.

The news came as a shock to many Reddit users, who saw the value of their tokens plummet overnight. According to CoinCarp, the Moons (MOON) token of the r/CryptoCurrency subreddit dropped by 85%, the Bricks (BRICK) token of the r/Fortnite subreddit dropped by 67%, and the Donut (DONUT) token of the r/ethtrader subreddit dropped by 66%. Some users also accused Reddit of insider trading, claiming that some addresses sold large amounts of tokens before the announcement was made public.

Reddit said that it will replace the community points service with a new contributor program, where users can earn cash rewards based on their karma and gold earned from qualified posts and comments. However, this did not appease the users, who expressed their dissatisfaction and disappointment in the r/CryptoCurrency subreddit. The post announcing the cancellation of the service was marked as [SERIOUS] and received over 3,000 comments.

One of the commenters was Jesse Powell, the co-founder of the crypto exchange Kraken, which listed some of the Reddit tokens on its platform. Powell said that he did not see any regulatory problems with the service, but he understood that it was a complicated and evolving area that Reddit might not want to deal with.

The decision by Reddit to terminate its community points service reflects the challenges and uncertainties that still exist in the crypto space, especially in terms of regulation and adoption. It also shows that Reddit users are passionate and engaged with crypto-related topics, and that they value their tokens as more than just digital assets.