Reddit Community Points: the perfect technology for the current regulatory and political environment

Reddit Community Points (RCPs) are not only a groundbreaking social media technology but potentially the ideal digital asset to spur Ethereum/crypto adoption with the present regulatory landscape. Here's what makes RCPs so well-suited to current regulatory approaches:

First and foremost, it's important to remember that RCPs are nothing like the token sales and cryptocurrencies that the SEC has historically taken issue with. RCPs are issued within already-existing communities, not pitched as investments promising future returns. They primarily serve as tokens of appreciation and governance, rather than an investment vehicle. This distinction is critical for the kind of regulatory response we can anticipate.

When you consider the pure transparency of RCPs, it's hard to see them being seen as a threat from the standpoint of financial crimes enforcement agencies. All tips, transactions, and earnings related to RCPs are publicly available on the blockchain, and linked to a public-facing social media account, making it a highly transparent and auditable system. This should assuage all concerns surrounding money laundering.

Another advantage RCPs have is their individuality. Each RCP is its own distinct token. It's important to note that no single RCP has any hope of attaining a market cap in the billions of dollars. Their adoption potential is capped to the size of their Reddit community, which sets an inherent limit to the valuation that speculators might bid them up to.

So from a regulatory standpoint they can only be seen as a collection of isolated microcap tokens, which makes them far less risky and likely to provoke regulatory enforcement actions. In contrast, from a technological standpoint, RCPs benefit from economies of scale, as their standardization around the Reddit implementation means they can all leverage the same software tools. In other words, all tools developed for individual Reddit communities and their RCPs would be contributing to the common pool of tools and markets that all RCPs can take advantage of.

And how large could this RCP market get? We can get some idea by looking at the three existing RCPs:

https://www.coingecko.com/en/categories/reddit-points

Their market caps range from $4.1 million to $29.3 million, while the two official RCPs that are integrated into the Reddit app vault are valued at $11.1 million and $29.3 million respectively.

Reddit has 140,000 active subreddits, so if the RCP program became available to all of them, and even 1/10th of them decided to opt it, and the average RCP attained a market cap of $1 million, the total RCP market cap would be $14 billion.

With respect to KYC laws and the potential of Reddit itself being designated a money transmitter that has to perform KYC on all users, I would just say this:

The essence of RCPs isn't in monetization. They are tokens of reputation, appreciation, and governance, not primarily a means of financial exchange. The relatively modest monetary value attached to each RCP token makes it hard to classify them as money, thereby possibly negating any risk that Reddit will be deemed a money transmitter.

Furthermore Reddit will always have the option to relinquish control over RCP contracts and let users custody the tokens entirely by themselves, to further reduce the risk that they will be viewed as a money transmitter.

So in conclusion, RCPs offer a combination of being very low risk from a regulatory standpoint, and potentially very useful for the billions of people who participate in online communities every day, and this combination means they could be the best application yet for spurring Ethereum/crypto mass adoption.