Saturday, September 17, 2011

"A Good Name"


"A good name is to be chosen rather than great riches,and favor is better than silver or gold." -Proverbs 22:1

  Those who know me are aware that the vast majority of the Christian bible (really, all "holy" books) holds no sway with me, so this may come as a shock that I quote a verse from such in a blog post.  Whatever.  This is a fitting proverb to the subject at hand:  Reputation.  In particular, the role of reputation in the developing digital economies.

  In discussions of online economies that are not regulated by nor dependent upon centralized states, a major point of discussion surrounds the need for trust (though truthfully, nation-states do not do away with this need, and the downgrading of the U.S. government's S&P rating demonstrates that many trust/rating systems are flawed) .  That is, if you are offering a product or service, and accepting payment in a form of currency/exchange that cannot be charged back (such as bitcoin.  Chargeback fraud has been the bane of seller's utilizing PayPal since its inception-through-merger in 2000.  Just scroogle.org search "paypal sucks" for more information on this), the buyer needs to then trust you to make good on the delivery of the product/service.  Many reputation systems exist, but for the most part they are mind-numbingly simple, and equally mind-numbingly elementary to game. 

  Take Ebay for example.  A person can setup several accounts, conduct "business" between the accounts, give themselves a high positive rating, then when someone else buys that $800 guitar they're advertising, they just take the money and run. 

  Wavyhill and Andre Goldman wrote "Toward a Private Digital Economy" in 2004 and within described a concept/protocol for  trust systems that would make it harder to game.  Ideally, it would make it impossible, but economics is notorious for listening less to what is "ideal" and more to the cost/benefit analysis.  So in actuality a trust system does not have to be "perfect", it just has to make it so that the costs of gaming the system outweigh the potential benefit/payout of gaming the system.

  For a real-life example/explanation of systems that currently implement reputational protocols (and could only benefit from a more robust protocol implementing secure features of crypto-identities), check out this Tedx presentation on the rise of collaborative consumption.

  Curiously enough, the differential calculus that describes the velocity and acceleration of physical objects, the motion of stocks/bonds/futures and (*snicker*, derivatives) can also be applied to more comprehensive representations of reputation.  When engaging in business with individuals, one can compare the reputation of the individual to the level and types of risk you are willing to undertake, and thus facilitate safe/rewarding commerce.

As is discussed in "Towards a Private Digital Economy", bonds-persons can alleviate the boot-strapping issue of trust systems, through the commoditization of reputation.


*deep breath*

Now to go and code out a distributed reputation server and hope someone finds it useful enough to put together a gui front-end, since most people won't want to have to manually perform differential calculus before conducting business every time.


Truly, a good name is more valuable than silver or gold, and curiously, all of the above can now be digitized.

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In "Towards a Private Digital Economy"  (under the sidebar "Reputation as Capital") the authors draw a rather Marxist conclusion from the idea of commodifying reputation that I feel is rather unwarranted. More to come on this (perhaps)
Another recommended read is "Future of Reputation" by Daniel J. Solove

2 comments:

  1. Just stopping by to say I love you! And good post. And I'm going to work on your design - but with the boys coming Wednesday it might take me a little while. I hope that's okay!

    ReplyDelete
  2. Hey thanks for dropping in :) Good luck with the new kids, and don't worry, I'm in no rush. Love you too!

    ReplyDelete

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