Why I'm not buying any more Reddcoin


Opinion: by guest writer James McAlister

James McAlister is a UK based, seasoned stock investor and freelance market journalist with an interest in cryptocurrency markets.  Opinions are his own and not necessarily those of The Cryptocurrency Portal.

I am writing this with the expectation that I will get flamed.  I shouldn't be surprised it happens, this is the case when having an opinion online about almost anything especially when it comes to cryptocurrency.  I have found with most coins you get the supporters, the detractors and those trying to objectively analyse for investing.  The latter are folk who are neither for or against a coin but are investigating if there is real potential for investing in it (I am one of these).  For the record I DO hold Reddcoin, I have a diverse portfolio which attempts to cover the breadth of sometime illogical reasoning behind crypto market gains, which does include value that is purely hype and speculation.  However the reasoning below explains why I won't personally be buying any more.

Ideas
The idea of Reddcoin in a nutshell, is to provide a digital currency for the social networks.  The basic plan for the currency was to provide incentive to users of various social platforms in the form of tips or rewards that have a real world monetary value.  The currency could also be utilised on websites or within apps to buy services, eg in-game purchases, social re-posts and even physical goods or gifting.

On the surface these are valid ideas.  Social media is huge, after all there aren't many people with access to the internet who don't have at least one account on a social platform.  People might show their appreciation by liking or sharing material on these platforms so how cool would it be if that sort of thing actually earned some sort of real world worth.  On this premise there would be more incentive for content creators to ... well ... create.

Great ideas?  Well yes they are.  However in practice, actually achieving these would be quite difficult once you dig a little deeper into the 'how would you actually do it'. This is where it becomes hard for me to see the value in Reddcoin.

Execution
To achieve successful adoption in any numbers on a social platform, the proposed system would need to be made extremely easy for the average person to use.  The ability to reward someone would need to be right at the user's fingertips, as easy for them to use as the native 'rewards' already in place on a platform eg likes, re-tweets, re-pins etc.

Here lies the first problem, how would you get a social platform to agree to integrate functionality such as this alongside their native controls?  You don't , unless there is a demonstrated value to the owners of the social platform.  Native platform functionality is the sole domain of the owner.  It is not in their best interest to hand control over part of that functionality to a 3rd party; possibly even to the detriment of their current setup.  A 3rd party looking for functionality would need to develop their own app.

Engagement
The biggest hurdle facing a 3rd party app, presuming it is designed well, becomes user uptake ie. how do you get people to use your 3rd party app?  To allow for the transfer of reward between two parties both would need to install the app, they would both need to be aware of the purpose, the perceived value in having it and of course how to use the app.

Uptake of the app would necessarily rely on the community behind it.  A community can be vocal, they can spread the word about the benefits and value of the app.  Reddcoin does appear to have quite a vocal community who have faith in the ideas behind their coin.  The flaw however is that although they are as enthusiastic, vocal and engaging as they can be it will all be for nought unless they have the backing of developers to create, develop and maintain the applications supporting Reddcoin.

Support
The importance of support in this equation is perhaps the main consideration of my reasoning and one that raises a very red flag for me right now.  Looking at the development of any project is one of my first 'Screeners' when investing in cryptocurrency.   When looking at the development metrics happening at the Reddcoin project right now I see a distinct lack of development support happening.

Github Insights : Reddcoin Commits have been dwindling the last few years (link)

If a project like Reddcoin is registered on GitHub it is quite easy to confirm activity over time.  A sure sign that development and maintenance is taking place is COMMITS, and I'm talking commits to CODE, not just commits to update the page or readme files of a project.  Explaining the process in detail is enough material for its own separate article (or two), but in terms of commits it isn't looking too rosy for Reddcoin right now looking at the graphic above. Commits have dwindled to a feverishly sporadic low over the past 3 years.

Github Insights: ReddID has even less commit activity (link)

Redd-ID, Reddcoin's blockchain level service to allow a user to associate a username and social network identities - a must if Reddcoin has any chance of multi platform uptake - has even more dismal commit activity on its GitHub (as seen above).

This lack of development means that no matter how much vocal faith and support the non-coding community has for its chosen coin there is simply no progression of the project to warrant any uptake at all.  These are huge red flags for me.

Other Value Considerations
Ideas, execution, engagement and support are not the only factors to consider.

From a pure investing point of view you would have to ask yourself "how would Reddcoin gain in value?"  Whilst the idea of a social network geared reward system sounds grand, the execution theory leaves too many questions unanswered, so how does Reddcoin set itself apart from other blockchain projects to be of value?

Bitcoin's value for example is in its liquidity and scarcity.  Reddcoin is neither scarce nor is the market movement liquid.  A snapshot of the past 24 hours of volume shows the saturation of Reddcoin with comparative volume traded.  Bitcoin statistics have been included for comparison.
  • Reddcoin: 28,581,963,835 units - 24 hour volume $477,030
  • Bitcoin: 16,478,167 units - 24 hour volume $1,778,000,000
Other currencies such as NEO, Ethereum, Monero, Ripple just to name a few examples all have technical differences that set them apart from other blockchain projects in notable ways.  This is another potential way for a currency to be perceived as valuable.  Reddcoin technically is no different to many other altcoins on the market apart from its goal to be adopted somehow as the accepted social media tipping currency.  In reality many other altcoins with sufficient support could do exactly the same thing by developing their own apps for use on social platforms.

From a pure beneficiary point of view how does one party tipping in Reddcoin derive value from their tokens?  This concept would rely on people who have Reddcoin spending their tokens to tip content creators simply in return for viewing posts and content that are already free to begin with - a major driver behind the adoption of social platforms in the first place.  To then pay for free views with something of value would assume an uncommonly high level of Altruism.

There are already systems in place that reward creators for content.  Google for example, rewards content creators who use their AdSense platform to allow targeted ads to be shown to readers.  YouTube likewise.  Affiliate programs allow content creators a commission on incoming business and some brands and businesses will often sponsor posts by "influencers" on platforms that do not even have inbuilt monetary reward systems.

All these rewards are a two way street; the content creator is rewarded because the owner (or a sponsor) of the reward system earns money from advertising or increased business.  The third party in the equation - the people viewing the content - do not have to pay.  If a person can already view free content on social platforms, then I find it near impossible to calculate the value of a system that gives no real incentive to tip.

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