So far social media platforms built on a blockchain or the ones including a cryptocurrency token to reward their users has always been a new startup.
But recently an existing and established social media platform with about 400 million users integrated cryptocurrency on blockchain into its platform. Yes, I am talking about Reddit.
Reddit has recently launched two ERC-20 based tokens and integrated them on its platform. These tokens viz. MOONs & BRICKs are being integrated in two of its subreddits with over 2 million existing subscribers.
For now these tokens can represent user reputation and can be used to unlock some badges. This is a pilot project intended to incentivise user contribution. So these tokens will be rewarded to users in return of the upvotes they earn through their posts and comments.
But will Reddit succeed?
Yes, at least it will bring a massive crypto adoption by exposing all its 400 million users to the world of cryptocurrency.
But I don't think this experiment is gonna succeed for Reddit itself. Here is why I think so.
Firstly, Reddit is not a blockchain and will always stay a centralised platform. So major part of the income generated through this platform will not be shared by users. Users may get some pennies which won't be enough to lure serious content creators to the platform and incentivize the existing ones for long.
Transferring ERC-20 tokens consumed gas. So these are not suitable for transferring micro-payments. A SMT integration would have been a better choice for that, if SMTs were already here!
Secondly, ERC-20 tokens are based out of ethereum network and not on its own blockchain. Neither are these tokens any SMT or a tribe token as issued on Steem Engine. So Reddit has hardly any control over these tokens except their issuance over Ethereum smart contract. There won't be much flexibility to adapt and change the token reward structure & tokenizing model as per the needs of the community.
Just converting community points to transferable tokens won't make a huge difference. At best they can become akin to some loyalty tokens. Use case is what provides value to a token. If it's only a loyalty token then its value will be severely limited for what they can be exchanged for.
Since they have started this pilot project with cryptocurrency community, once they will start trading these tokens on some exchange, they will also start comparing it with other similar social media tokens. This will eventually help them discover the strength of other social media platforms on blockchain and they may switch over to them.
It seems, they just wanted to be the first to integrate cryptocurrency token into their platform before others could do it and capitalise on the first move advantage. Of course, they win over that. But if they lack flexibility to add features quickly to compete with their potential competitors then they will lag behind.
I don't see any innovative model to attract more users or sustain their existing userbase. The only advantage ...and by far the biggest advantage they have got is of a huge existing user base.
But that alone is not enough to succeed in future. I can only hope that they can find a better way to maintain and increase their user base.
What other reasons you can think of for the failure of of adoption of cryptocurrency by credit platform.