Reddit’s CEO explains why he’s still big on the blockchain

Crypto critics have had a very good year. Much of what they predicted has come true: that high-profile projects would be exposed as Ponzi schemes; that security breaches would lead to massive thefts; and that average people would be left holding the bag. Bitcoin, which traded around $67,000 in November, is at $21,570 today; many other cryptocurrencies fare much worse.

As I mentioned here last month, however, on social networks it can feel like the crypto crash never really happened. In recent months, Facebook and Instagram have added ways for users to display non-fungible tokens, and Spotify allowed artists to use NFTs as profile pictures.

The genesis of that piece was the news that Reddit, the venerable social news aggregator and discussion site, had released its first “blockchain-backed collectible avatars”—what other companies call NFTs. Created by a handful of artists, the avatar riffs on Reddit’s “Snoo” alien mascot and can be used as profile pictures on the site.

In the video game industry, the sale of NFTs has often sparked outrage among players who are angry at what they perceive to be pure greed. But while Reddit takes 5 percent of sales from the NFTs, the announcement came and went without much fanfare.

This month, the company went a step further: Starting August 17, it began giving away collectible avatars for free to 10 million users. About 50,000 have been given away so far to longtime Redditors who have made popular contributions to their communities; the rest will be released in the coming weeks. The only catch is that users must set up a crypto wallet to receive it — the first step, Reddit hopes, in encouraging millions of users to start exploring the concept of “wearable identity.”

Some people hear such phrases and their eyes roll so far back in their heads that they may never recover. But a significant number of executives at tech platforms large and small continue to believe that somewhere in all this lies a solution to many of the criticisms we have of our current online lives: that a small number of companies have too much power; that our data is locked and inaccessible to us; that platforms ask us to share more of ourselves than we are comfortable with.

Steve Huffman is one of those leaders. A co-founder of Reddit and its CEO since 2015, Huffman says he has been fascinated by blockchain technologies since the early days of Bitcoin, when he would marvel at the fact that some people were willing to pay as much as seven cents for one.

Avatars were a natural starting point for Reddit’s blockchain explorations, he said, since people use the feature differently on Reddit than on iMessage or Snapchat. There, avatars usually represent users somewhat accurately, like cartoon versions of themselves. Reddit avatars, on the other hand, are aliens, meant to highlight aspects of a user’s personality without giving away their true identity.

Launched about a year and a half ago, about a third of logged-in Reddit users have created avatars so far, he said.

“You can reveal your hobby without revealing your race. You can reveal something about your style without revealing your age or your gender,” Huffman told me at the company’s offices in the Mid-Market area of ​​San Francisco. “This idea of capturing something of your own identity there, on your own terms, is a very Reddit thing to do. I wish we’d done this 10 years ago – because it really suits Reddit.”

Image: Reddit

Allowing artists to sell avatars on the platform was tied to a separate goal of helping Redditors earn money from other users, Huffman said. But he also wants to get away from a world where digital goods are controlled by the platform that creates them.

“What crypto adds is the ability to own digital things,” he said. “Before that, you could create digital goods, like in a game. But these items ultimately exist for the pleasure of the company that makes them, or runs the database. And so it’s not actual ownership—I’d like to get closer to actual ownership.”

Already, he notes, a user can choose to display their digital Reddit avatar as part of a collection on Instagram, or use it as a profile picture on Twitter. The companies didn’t sign a partnership agreement to make it happen – it only works because the blockchains run on an open standard.

“We don’t work with any of these companies,” Huffman said. “I can’t say we are the best of friends. But now we have this third-party database—an interoperability layer. I think it’s really cool.”

Of course, that’s not to say that many people will be racing to bring Snoos to Twitter. But it hints at what might be possible in the future, Huffman said. People can start by taking a profile picture around the internet; later, other parts of the identity can also become portable. Reddit users reward each other with “karma” points for sharing high-quality links or making good comments; what if you could log into other sites with your reddit karma?

The company took a step in that direction in 2020, when it announced an ongoing experiment called “community points”. Based on Reddit’s existing karma model, community points allow subreddits to award users with tokens found on the Ethereum blockchain. The company has proposed a number of uses for these tokens, including polls that give more weight to active community participants, prizes for contests, and giving users in good standing access to additional features in other apps and websites.

The company’s avatar effort is, in a way, even bigger: an attempt to get 10 million people to start actively using crypto wallets — without calling them crypto wallets or (hopefully) using any crypto-related words at all.

“We try very hard not to use any crypto words — it just confuses people,” Huffman said. “The ecosystem is so confusing. I can’t figure out the half of this.”

Huffman offered a metaphor to make his point.

“One of my frustrations with the crypto community is like, you know how everything in open source is just a little bit worse? But they’re like, ‘That’s it.’ fantastic! Check out this Microsoft Word replacement, it’s just as good! No, it is not. Crypto is like that again.”

Like any crypto builder, Huffman’s challenge is to abstract away all these confusing terms and arcane user experiences, and replace them with something accessible and valuable. Few if any companies have hit that line to date, despite years of trying and billions of dollars invested.

Reddit also needs to conduct its explorations without triggering the kind of backlash that video game companies have experienced when they announce blockchain projects. Huffman told me he’s confident the company can — and said the recent crash makes it easier to focus on building utility.

“I was anti-profiteering, anti-bubble,” he said. “All this crypto stuff I found extremely distasteful and counterproductive for years, and that’s why we don’t talk about it. Because I didn’t want to get sucked into the hype, which I think is parasitic and delusional. Our business model is never, let’s sell NFT -is to crypto people to make a bunch of money. Our goal is to put identity and reputation into a third-party database.”

The next steps then are to get people to use wallets, and from there see what other parts of Reddit can be transferred from the platform to users and their community.

I enjoyed talking with Huffman, who brings the right kind of skepticism to a technology that has been poisoned by wide-eyed optimists and outright frauds. At the moment, it can feel like the tech world is investing most of its energy into a set of Legos that no one has figured out how to put together – using building blocks like identity, ownership and decentralization to make… something, and hoping that the end product is worth all the effort.

“The pushback usually comes from profit-seeking—we do that clearly and intentionally,” Huffman told me. “The product may not work. But its success will not come at the expense of our users.”