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What is MOON cryptocurrency? In May 2020, the online message forum Reddit announced something called Community Points, which has now become a real cryptocurrency called MOON, which has huge implications for the future of the media.
Today I’ll give you the quick backstory, show you why MOON is money, and discuss whether buying MOON in 2021 is like buying bitcoin in 2011.
If you’re not familiar with Reddit, it’s the self-described “homepage of the Internet,” a massive collection of online communities around every conceivable topic, from funny photos to ridiculous pet behavior to people who really love drinking water.
What sets Reddit apart from other message boards is that it actually works.
Each community (or subreddit) relies on human moderators, combined with technology that lets users upvote useful or funny posts. This combination of humans + algorithms, which is different from pure algorithm platforms like Facebook, is really key to Reddit’s success. It means the overall quality stays high, and you get a lot of interesting and surprising posts.
As an incentive for users to reward helpful posts and funny comments, Reddit created “karma,” which are points that you earn when people like your content. It’s similar to people “liking” your YouTube video, with one important difference: on Reddit, the “likes” (i.e., the karma) accumulates in your Reddit account, like frequent flyer miles.
Then Reddit beta-launched Community Points, which essentially tokenizes karma on the blockchain as an ERC-20 token.
This is a really big deal.
Traditional social networks like Facebook own all the content that you post on the platform. True, they are providing a free service by connecting us to each other. But they also earn ad revenue on the content we post, and it seems we should at least earn a royalty on that.
Community Points are a different model: you earn blockchain-based tokens for content that the community finds helpful or entertaining. Each community has its own allocation of Community Tokens, and in the r/Cryptocurrency subreddit, those tokens are called MOON. (Of course.)
This whole experiment, while nearly a year old, is still very early stages. The tokens are kept on an Ethereum testnet, because ETH fees are so high that Reddit would go bankrupt tomorrow if it allowed users to easily cash out their Community Points for cash.
Think of Community Points like Monopoly money that can be converted into real money (i.e., switched to the Ethereum mainnet) once they work out the technical issues. Then your “imaginary Internet points” would become “real American dollars” overnight.
Now the news: Someone found a way to do it.
How MOON Became Money
It’s not easy, even by cryptocurrency standards. It’s a multi-step hack that requires loads of technical expertise and still requires significant ETH fees, which will probably far exceed the value of your MOON. (Here’s a sample how-to guide.)
Already we are hearing stories about the user who cashed in MOON for $24,000 in bitcoin. Before you get too excited, know that the current price of MOON is about 9 cents. It’s probably too early to quit your job for full-time Reddit posting just yet.
I did the math, and that gives MOON a current market capitalization of about $10 million, which is still peanuts by crypto standards.
Also, you have to do a lot of posting for your MOON: turns out creating online content is not wildly lucrative. (We could have told you that.) The $24K user above has been posting since 2017, making Reddit more like a part-time job at less than minimum wage.
With these caveats, I will restate that this is a very big deal. By breaking the firewall – allowing Internet money to be worth real money – we are crossing the chasm, making the same leap that bitcoin made in 2011. (Indeed, even the price is similar.)
A single post is still practically worthless, but that will change. It requires a Ph.D. in cryptography to convert MOON into dollars, but that will change. It’s still prohibitively expensive, but that will change. Over the next few years, this will all get easier, better, and more valuable.
Of course, you don’t need to necessarily post to Reddit to participate in MOON: you could just buy it directly. (Technically you need to buy DAI, then convert it into MOON using Honeyswap.)
Let’s say you believe – as I do – that we will inevitably have a cryptocurrency that rewards users for posting valuable content. You see that r/Cryptocurrency is the biggest crypto community on the Web, and it’s got a thriving platform and a real company (Reddit) behind it.
Here’s the question you’re thinking.
Is MOON a Good Investment?
MOON is not the only version of Community Points: other subreddits have their own version, like r/Fortnite, which has an ETH-20 token called BRICK. (BRICK value is currently about one-tenth of MOON.) You can compare the two tokens here, and picture a day where there are thousands of competing tokens, each powered by their own Reddit communities.
So what makes MOON so special? Simply because it’s the “base cryptocurrency” of the r/Cryptocurrency crowd, which is the largest cryptocurrency community on the Web.
Let’s paint a picture of how this may play out:
- Users will post to Reddit, earning Community Points. These are currently stored in a “Vault,” which is like a wallet connected to your Reddit account. (Great demo here.)
- While each subreddit will have its own flavor of Community Points (i.e., its own ERC-20 token), some communities — just like some cryptos — will be worth more than others.
- Users will be able to swap or cash out tokens in their Reddit Vault (eventually), or via third-party wallets like Metamask (sooner).
The economics are interesting: if MOON tokens are currently worth 10x BRICK tokens, that makes the r/Cryptocurrency community theoretically 10x more valuable than r/Fortnite. That brings more users to r/Cryptocurrency, but the increased supply (i.e., more posts) does not mean more quality.
In fact, it is popular to complain on r/Cryptocurrency that MOON has actually made the community worse, because people are simply “moon farming,” or posting for points. (Which, by the way, is even less lucrative.) It does seem to increase the amount of low-quality spam, but does not seem to decrease the overall quality of the top posts, thanks to Reddit’s algorithms which filter out a lot of the junk.
I am reminded of the Reddit crypto clone Steemit, which was enormously popular in 2017 and 2018. It copied many of Reddit’s mechanics, rewarding its users with STEEM cryptocurrency instead of karma. Comments on STEEM were incredibly helpful, and the community grew incredibly fast. But Steemit lacked the human moderation, and its tokenomics were confusing, so it eventually collapsed under its own weight. (Today, it’s a mess.)
Steemit is an important cautionary tale: running online communities is really hard. It’s way harder than running a straight technology platform, because of the human element. People are emotional and unpredictable, and nearly all of Reddit’s challenges – and there have been many in its 15-year history – have been due to humans using the platform in harmful ways.
In some ways, it’s a miracle that Reddit is still around. Nearly all the online community forums that were created in the 2000s have withered or died, but Reddit has survived and thrived. It’s kind of an amazing success story.
It’s hard to say whether Reddit will still be around in another 15 years, making MOON a good long-term investment. But so far, this company has stood the test of time, overcoming some of the most difficult human/technology challenges ever. Reddit co-founder Alexis Ohanian is famously pro-crypto, so it’s a good bet this is not a passing fancy.
There’s one last thing to consider: if MOON does go mainstream, it will almost certainly be considered a utility token. The SEC regulation, when it finally comes, will likely apply to companies trying to use blockchain tokens for fundraising—which is not at all what Reddit is doing. Community Points—and MOON specifically—are rewards points, plain and simple. That passes the SEC’s guidelines.
Will MOON Go to the Moon?
For most investors, MOON is still the most speculative of the most speculative investments. It’s the bleeding edge of the leading edge. Feel free to “farm moons” by posting on Reddit, as long as you understand that your time has value. Currently you’d be better off working in fast food.
If you want to invest in MOON by reverse-engineering the instructions below and buying directly, hoping that you’re buying bitcoin in 2011, just understand that it may be years—if ever—before your MOON goes to the Moon. Don’t invest anything more than your mad money.
Whether MOON becomes the default social cryptocurrency of the future, it represents an important idea, which is social cryptocurrency. If MOON really does break free of Reddit, then you can imagine everyone starting to integrate MOON into their own community platforms. You can see MOON WordPress plugins, MOON browser extensions, maybe even MOON integration with other popular social media platforms. MOON trading. MOON arbitrage. Jim Cramer talking about MAD MOONEY.
If and when this happens, my hope is that we can use MOONs as a motivator for a kinder, gentler Internet. If MOONs can be used to reward helpful and generous content—and demotivate harmful and obnoxious behavior—that is a powerful good for humanity.
Like Reddit, that will require a combination of humans and algorithms. It will require both thoughtful “game mechanics” to reward positive contributions, as well as human moderators to make the difficult judgment calls that software can’t.
MOON, or something like it, can be the new currency for a new kind of capitalism – call it social capitalism – where we can elevate the public discourse by rewarding people for creating content that appeals to our highest human values. That can change the entire media landscape. It’s possible.
If we can send a man to the moon, surely we can use MOON to bring back our humanity.
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