Yesterday, Reddit announced something curious. And how’s this for an exciting title:
Reddit is raising some financing. It released some new details on Tuesday – including the fact that some of the $50 million is coming from Snoop Dogg and Jared Leto. My favourite part of the announcement was this little mention:
As long as it’s genuine…
Anyway, the post goes on to say that the backers are going to give 10% of their contribution back to the Reddit users. Although the details were still being figured out.
Obviously, because this is Reddit, someone immediately asked for a teaser.
Reddit CEO Yishan Wong responded with:
- Forget the Gold Standard – we’re creating the Reddit Standard!
- Because why the hell not?
So the idea is to create a bitcoin-like reddit-share-backed hybrid… People are already calling them “creddits”.
To quote a quote from Fusion (they got it from Jeff Garzik, a Bitcoin core developer):
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. 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.
A reminder of how Bitcoin solves the problem of double spend…
Here’s an extract from the post “I wrote about bitcoins“:
To illustrate that problem, let’s start with Harry Potter and the Goblet of Fire. If I possess it in hardcopy, I can either read the book myself, or lend it to a friend. But I can’t do both at the same time. Ebooks, however, are a different story. Ebooks are easily replicated – so both my friend and I could read my e-copy of Harry Potter and the Goblet of Fire simultaneously. Or many friends. And even people that aren’t my friends.
In the same way with an electronic currency, there is an issue of replication – because I could spend the same bitcoin that my friend is spending (ie. double-spend).
To address that, Mr Satoshi Nakamoto resorted to math:
If you cast your mind back into school, you might recall dimly that there are irrational numbers in mathematics: numbers like π, e or √2. Meaning that their decimal string is infinite. So you could, if you wanted, expend lots of processing power looking for blocks of decimals in the deep dark space of their galactic stretch.
In the world of bitcoin, the mining computers look for the next block in the chain of a mathematical proof (one that has a similar infinite decimal string, as I understand it). And when one node (being one of the mining computers) thinks it has a solution, it broadcasts the solution to the network. If 51% of the network agree that the solution is correct, the block of proof gets embedded in any open bitcoin transactions, those transactions are marked as processed, and the network moves on in search of the next block of decimals.
The idea is that no bitcoin can be replicated: in order to replicate it, someone would have to have greater processing power than the whole combined processing power of the network (because it would have to go find the most recent block, and all the preceding blocks which the network has produced since inception).
So the problem of double-spend is solved.
So (I guess) in a similar way, Reddit wants to issue cryptoshares, backed by Reddit shares, that cannot be replicated.
And this would conveniently remove the need for ever listing on a stock exchange.
Some Immediate Issues
The problem of double-spend is solved by:
- infinite mathematical solutions; and
- ever-increasing amounts of processing power for the processing of transactions, such that no one entity could ever reasonably replicate them.
And this processing power will come from…Reddit users?
Uh – no. That sounds like way much admin.
Here’s another idea: if you want Reddit community users to have shares, just email them share certificates.