Wealth Inequality Is Even Worse in Reputation Economies
locusmag.com
locusmag.com
That was the business plan of at least half the Bitcoin exchanges.
Charging back a PayPal transaction also basically ensures you'll get banned from the service (and by extension: eBay)
It's not credit card -> merchant, but rather credit card -> your PayPal account -> merchant's PayPal account
Edit: What I mean to say is that AFAIK, paying by CC through PayPal is separate from your PayPal balance.
The point being made is that your CC transaction is still with PayPal, so if you chargeback they might ban you from the service.
1) In the Ebay case, reputation can be conditioned on the type of items and the flow of money being processed by the merchant. Someone who is highly reputable for $50 transactions, isn't necessarily so for $5,000 ones. You could also always have "anomaly detection" built into the system, which kicks off whenever the seller moves too quickly from $50 items to $5,000 and either warns users or pro-rates their reputation (if nothing else, radical behavior change could mean the seller's account got compromised...).
2) In the Bitcoin exchange case, there is currently no real reputation score for Bitcoin exchanges as far as I know. But you could have a proof of stake system that requires exchanges to hold X% of their funds available, similar to the requirements for banks. You could also operate the exchange in a reduced risk way if say, to convert $1000 USD to BTC you sequentially post 1000 $1 USD transactions and don't send them the next dollar until the corresponding BTC amount clears on the network and is safely stored in your hardware or multi-server wallet.
Not saying that there aren't fundamental issues with reputation economies, but lets give the dystopia a fair trial and assume that the non-essential problems will be solved.
(No, that $100 ounce never came, and I lost my money just like fifty other fools on Agora.)
EDIT: oh yeah, this is also how I got scammed out of $200 trying to purchase a fake ID. Kids, friends make friends use an escrow service.
The actual proportion an exchange needs to keep to be able to pay everyone (who asks for it) at all times is about as predictable as the bitcoin market itself.
Would we trust "100% funds available" exchanges more? Possibly, but the "cost" would be very high so I would actually be a little wary of an exchange which does this, as to me it would be "trying too hard" to look nice (in reality there's always some trust involved, and so some risk that the owners run off with your coins/money).
Bitcoin is by design deflationary currency. Fractional reserve banking is by design inflationary. No matter where you sit on how much inflation and what monetary policy is best - it is obvious that it is against the intentions of the original adopters and creators of the BTC network.
With fractional reserve banking, the institution has assets greater than liabilities. With insolvency, the institution has a plan to someday have assets greater than liabilities.
You lost me there. Why would that cost be high? All you need is a wallet (or two, hot/cold) which holds your customer deposits and which you are not allowed to spend from.
This is not a comment on what should be done in an ideal and/or moral world but the bitcoin (and financial) world is neither.
This was never true, but in the aftermath of 2008, makes a really poor argument. Two points worth mentioning without going into details:
1. Bitcoin doesn't have a central bank to easy the bank-run.
2. When financial businesses go burst, it's extremely difficult to quantify the loss a priori for the accountants
Any sane financial business with half-brain at this time and age would keep at least some percentage of the funds intact.
In Bitcoin's case you can even do that provably and without trusted third parties: https://github.com/olalonde/proof-of-liabilities. I haven't worked on this in a while so there might be more recent proposals.
So, now the exchange has account X with Y money in it. Once Y get's to 100,000,000$ (or whatever) they defect.
PS: The bitcoin network only handles ~7 transactions a second, 1,000 1$ transactions would take over 16 minutes if your willing to pay more money than anyone else to do those transactions. However, if you wait for a transaction to clear that's ~10 minutes per transaction. So, 1000 1$ transactions would take 1 week.
Also, I'd be afraid of triggering some kind of banking system warnings if I sent a hundred transactions within one day.
With crypto to crypto exchanges a better solution would be to do it as a DAO/smart contract.
I'm of the opinion that, since Dunbar's number is a purely biological limitation, there's no reason to think that computer-assisted reputation can't scale to much larger groups of people. I think Cory Doctorow is right to be worried that an authoritarian government could use reputation as a tool of coercion (and this is why we should worry about things like government collection of phone metadata). However, I think it's also worth considering that reputation could be used as a tool by the people to obtain some accountability from the rich and powerful, and to help distinguish grass-roots support from astroturf. (I went so far as to create a site, http://polink.org, as a sort of collaborative graph database of how powerful people and organizations are connected to each other. It's one of those side projects I feel like I should get back to and work on one of these days.)
One of the reasons I think computer-assisted reputation hasn't taken off is that it's actually kind of hard to implement a good reputation engine, or even agree on what sort of properties a good reputation system ought to have. A lot of awful reputation systems have taught the technology industry to have very low expectations, which is a shame because I think they can be very powerful if implemented well and used correctly.
..tangentially, why even bother with reputations? The big issue with money based economy is that money is all cleansing. All the shitty things you did to get your money can be forgotten and your money used to buy yourself into a position of power, prestige, or even good standing.
If we could tag money's history of exchange we could maybe avoid the both the issues of reputations (big if obviously). Individual transactions could be judged by the prior history of exchanges. Though this could be used as a proxy for reputation or to construct a reputation, the reputation is not required to complete the transaction as a seller. The seller only needs judge the transaction on the history of the money offered itself.
Ideally this would create a situation where 'clean' currency would progressively become more valuable than 'dirty' currency, encouraging clean wealth creation.
Fortunately, for digital currency there are easier ways to implement such tracking ideas. One approach is for a team to use its planned budgets directly as digital currency. When two teams transact, corresponding amounts of expense and revenue budgets get cancelled, so there is no transfer of currency between teams. Thus, each payment offer is always traceable to the reputation of the team who issued the currency (as budgets).
Illustrated explanations, more details, and a working prototype is available at: https://tatag.cc/ui/. (Disclaimer: I'm the developer of the linked site.)
As an aside, traditional systems do not prevent similar situations from happening. You have ultra-wealthy people that are each effectively holding an endless supply of money. Should we not be asking that same question whenever and wherever we see it happen today?
Otherwise, if the reputation engines are too strict, no one would trusts the currency. Too loose, and there is no effective deterence to unsustainable activity. There's an ideal balance to the targeted overall rejection rate among all teams, most likely erring on the side of being too loose (0.5% rejection?), filtering out only the worst of the worst. This targeting to a metric value reminds me of fed actions to indirectly influence the economy, such as with setting interest rates.
We could track US Cash: All FRN have unique serial numbers, including codes for which bank issued them.
I have prototyped a reputation currency platform [1] where third-party 'advisor' applications offer real-time advisory on whether a payment recipient should approve or reject a payment offer. Data science/big data techniques would help improve and adapt such reputation engines over time, much like web search engines improving incrementally over time.
The bigger picture is that a team in the proposed system would not have to constantly worry about funding, since it could use its budgets directly as currency as long as the team maintains its reputation. I think that for most participants that is more than good enough trade-off to take on small privacy risk. In other words, would a team rather worry about funding or privacy, and with good platform design those concerns might not even be mutually exclusive in most cases.
With regards to not having access to reputation data from online applications, there are work-arounds. For example, tweets, blog posts, or product reviews about a team could be crawled for sentiment detection and used in reputation metric calculations. These work-arounds might seem difficult to do, but so was search engine technology in the early days of the web.
github.com/neyer/respect
In small, local communities, you have one thing you can never get rid off, your face.
But online there is no face, nothing to tie your claimed identity back to your biological self.
While pondering this i reminded myself of a mmorpg that may illustrate this.
It originated in South Korea, and there the player account is tied to the players national identity number. So once banned, one is banned for life.
But when it was exported to the states, anyone could sign up multiple times. End result was that various mechanics that originally was meant for the community to police itself, was used to harass other players.
Not just "could", China is already doing it. It sounds awful
But Peeple is a modest effort compared to ‘‘Citizen
Scores,’’ the for-now-voluntary service run by the Chinese
government in partnership with Tencent (a huge social media
and games company) and Alibaba (China’s answer to Amazon).
Your citizen score is visible to everyone the government
wants – buying socially approved items, undertaking
approved leisure activities, adhering to rules and
regulations, and socializing with other high-score
individuals. Of course, not doing these things makes your
score go down. Just being friends with low-scoring
individuals drags your own score down, creating a powerful
incentive to conform.
Mandatory Citizen Scores are being phased in over the next decade [...]I find myself in agreement with much of what you say, but the above argument always makes me pause in these discussions. Essentially, the argument is: "on the one hand, the rich can use this tech to control the poor. That's bad. On the other, the poor can control the rich. That's good."
Yeah, well, which one are you? Where do you draw that line between who is "rich" and "poor"? Why is one side coercive, while the other is obtaining accountability?
We're all, here, the poor and oppressed, of course, only willing to use our new-found power for good.
Reputation is a powerful (and rather dangerous) tool and software-assisted reputation calculation is something that's going to exist and can't be un-invented. Therefore, I think it would be best if that tool were accessible to all sides of society so it isn't exclusively applied by the powerful against the weak. I don't mean to imply that any use of reputation systems by the powerful is bad and any use by the less-powerful is inherently good, I just think that abuse is less likely if those wielding the tool are fully aware that the same tool can and will be used against them if they get enough people mad.
(This came out the year before Peeple launched, I just noticed).
https://www.youtube.com/watch?v=CI4kiPaKfAE
Spoilers: The result is a Communist revolution against meow meow beenz.
Whuffies sound a whole lot more like politics than money. As a medium of exchange, usually to get something of value you must give up or at least risk some money. Yes, there will be a power kaw distribution (as with any network phenomenon) but it will be tempered by self-redistributive, non-zero-sum property of exchange.
Whuffies don't have that, so obviously the inequalities will be greater.
I'm not sure if it'll help you to think about it this way, but you can always model the system as zero-sum if you normalize the total amount of wealth in the system to 1 after every transaction. Or track participants' share of total wealth instead of absolute wealth.
Yes, if you "normalize" the world to fit your conclusion, you'll generally find that your conclusion is true. If we just normalize everybody's wealth to 1, then all wealth inequality disappears. Problem solved.
The fact that you need to normalize the total amount of wealth suggests that you recognize that the total amount of wealth changes, which means the system isn't zero sum.
> The power law is created by the preferential attachment of capital to existing capital. Even a weak preference creates an extreme inequality.
The evidence doesn't really bear this one out. https://www.gsb.stanford.edu/faculty-research/publications/f...
You misunderstood the use of the word "normalize". The point of normalization is to change the absolute magnitude but keep the relative magnitudes the same. Perhaps I should be more specific: if you have two values, 6 and 4, which sum to 10, and you'd like to normalize the total to 1, then you multiply each by 1/10 so that you end up with 0.6 and 0.4.
> The evidence doesn't really bear this one out.
Write some code to simulate this. I think you'll find that preferential attachment does in fact create a rich-get-richer phenomenon. For example, take a look at this simulation coded in NetLogo (http://ccl.northwestern.edu/netlogo/models/PreferentialAttac...).
This is exactly what i'e designed with github.com/neyer/respect
It's basically the same as pagerank, but it has an important feature that the author doesn't seem to have considered.
Look at the notion of 'soundness of respect' in my code, and see how different it is from anything out there. It provides multiple parties who aren't directly part of a conflict with an incentive to find a resolution.
> Gamergate could use to destroy your’s employment and personal life, possibly permanently, just by mass-one-starring you.
This is specially what the respect matrix works against; people who one starred someone else for spurious reasons end up dinging _themselves_ if they are at all connected, which the social graph says we all are. You'll lower your soundness score if you give someone else a shitty rating, and yet you have an implied positive rating through other links.
http://www.ribbonfarm.com/2016/02/11/minimum-viable-superorg...
I don't think the "inequalities" really generally apply to constrained reputation economies.
I doubt that internally Lyft stores your score on a scale of 1 to 5. It's almost certainly derived from a bunch of other data, or at the very least stored as a floating point number. You can approximate whatever curve you like with either, and then just round.
I'd believe that Lyft doesn't currently have a power law curve, but the 1-5 system isn't what's stopping them.
Also you can't mathematically have a power law over (1..5)
100-90% you get a 5
90-75% you get a 4
75-40% you get a 3
40-5% you get a 2
5% and under a 1
To the extent that corporations and brands are virtual individuals, I think this explains why so many Internet markets are winner take all. There is only one Facebook because Facebook occupies a "Dunbar slot" in the minds of its users and those slots are scarce.
Also means that more B2B or behind the scenes Internet companies may not be as winner-take-all as B2C Internet fronts and gateways. To an extent the 'portal' hype from the original dot.com boom was correct-- portals are super-valuable and tend to be winner-take-all or at least a few winners take most.
Science fiction writing is amazing in how it gets us to imagine, be bewildered, or be alarmed by things that have not happened yet, or could never happen.
It is a starting point, giving us the confidence to keep building -- but also the foresight to be ready for the ills that our creations will no doubt introduce.
>"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
I think you bring up an interesting parallel between Hayek's conception of the purpose of economics and the common view of science fiction. Being an avid reader of both, this seems to be a great synergy!
Peace out bros.
(without giving too much of the plotline away, the main distinguishing factor of the reputation-based currency is that people lose it very quickly when they upset people, and in the book people are usually upset for perfectly understandable reasons. Otherwise, people achieve high reputations with the same blend of shrewdness, endeavour and inheritance as required to get rich in today's economy).
That's because he didn't. Cory published DaOitMK in 2003, meaning it was in the publisher's pipeline in 2002 and written probably 2000-2001. This essay was published in 2016. He's had 15 years of cumulative experiences upon the basis of which to change his opinion on reputation economies -- is it surprising that he's done so?
(Similarly: I disagree violently with the Charlie Stross who wrote Accelerando, circa 1998-2004, on the subject of the singularity. But hey, it's been close to 20 years; younger Charlie had less data and experience to go on, is all.)
((Disclaimer: I have no insight into Cory's mind on this topic other than that which comes from having known him for about 15 years and written a book with him.))
(When you look at the pattern of beliefs around the singularity they structurally resemble the complex of beliefs held by pre-millenarian Christian fundamentalists. They're equally difficult to falsify, too. If you conditionally accept the theory that atheism as understood in the West is a product of the Enlightenment and thus a Protestan heresy, then it looks like a bunch of the avowedly rationalist atheists have come full-circle and accidentally built themselves a tree house that looks uncannily like a church.)
Just like "Post a comment; people shower it with karma" is positive-sum activity, many efforts in the wider economy are positive-sum. That's why we don't eat grubs and use leeches for treatment.
For that matter, he doesn't actually show that even his imaginary reputation system is worse than our current monetary system, just that some of the same types of issues can happen.
It seems to me, and I could have misread, that the biggest problem with the examples of currency systems in the article is that the 'pooled' currencies are unquestionably accepted by participants. Take that guarantee away, and someone could design a reputation currency where participants could reject payments from disreputable participants. In which case accumulation of units does not imply the long-term ability to use them; instead, there will be a long-term incentive for participants to maintain a good reputation.
See this overview of a counter-example to the article's point, a reputation currency system without a central issuer: https://tatag.cc/ui/home-about. (Disclaimer: I'm the developer of the linked site.)
There's an important distinction here: the score of your peers versus the score of your government/authority.
It's possible your peers love you while your government hates you. Maybe you do great work, but are a pain to the power structure. In that case, you end up with high peer ratings, low "political office" ratings.
If the goal is "orderly citizens," then the political ratings become more viral (as in, the people you associate with get boosted or discounted based on your Official Political Office Rating) and try to reinforce people conform to how The Political Office wishes people would behave.
We can even make this local to HN. HN has secret "political rankings" on accounts to restrict the reach of people the "HN establishment" doesn't like (HI DANG), but the public vote counts are more peer-oriented rankings (which still aren't perfect because HN has 3 to 5 distinct sub-cultures fighting against each other, so a +100 from the "VCs are evil bastards" subculture in the morning gets canceled out in the afternoon once SF wakes up and you get -200 from the "VCs are genius darlings and we should all kiss their feet" subculture).
So, in the digital currency system that I have prototyped [1], each team decides on which recommender system they want to provide advise, in real-time, on whether to accept or reject a payment offer from another team. Borrowing from your examples, one team could use an "advisor" developed by the HN staff, another team could use an "advisor" endorsed by the subculture you identify with, etc.
There are many issues that I have worked out in the prototype, such as making sure payments are always traceable to the issuer and inflation is decentrally regulated, and most of the solution comes from the budgets-as-currency approach. I'm still in the process of improving the advisor options with better data-science techniques (hopefully with contributions from others). [2]
[1] https://tatag.cc/ui/home-about [2] https://github.com/siosonel/tatag-api
This is the successor to the Dang'an, a permanent record kept for each citizen of China since it went Communist. The record was typically maintained in a book by the employer, in conjunction with the Public Security Organization. The Dang'an system became less relevant as more non-state employers appeared. Now it's getting an upgrade.
[1] https://www.youtube.com/watch?v=lHcTKWiZ8sI [2] http://www.bbc.com/news/world-asia-china-34592186
It's good that you pointed out the possibility for scores to go down in that system, and I assume that would affect the ability of low scoring participants to transact in the system. If that's the case, it makes me doubt the article's strong assertion regarding that example of a reputation currency.
+1, considering that the empowerment of individuals to issue the currency themselves creates a trust graph that should be enough to mitigate many of the downsides he brings up. Here's my attempt at social, reputation cryptocurrency (but it's currently being rewritten from scratch): https://github.com/sunny-g/whuffie/blob/master/ABOUT.md
I'm just a curious onlooker and not directly involved with the idea, but there is a blockchain related implementation at https://ripple.com/, and other implementations of the original idea at https://classic.ripplepay.com/ and https://villages.cc/.
This project however is being built on Stellar https://www.stellar.org, which is actually a fork of Ripple started by the Ripple founder!
Just amazing how alt-currency/alt-payment ideas have grown so much from being on the fringe to more or less widely accepted. It was hard to imagine back in 2006 how these ideas would finally take off.
[1] https://groups.google.com/d/msg/rippleusers/IVin3Qwrp7k/urza...
EDIT: A cursory first pass at googling it doesn't yield anything. Can you provide any details on where/when or whatever, to help narrow the search?
If this sounds familiar, it’s because that’s how money works."
No, that's how democracy "works".
I don't know about the campaigns but the point about doubt is as it should be because if you put forward a hypothesis it's vital (a la Popper) to subject it to tests to see how well it matches reality.
The CO2 versus global temperature relationship is anything but simple. Between 1998 and 2013, the Earth’s surface temperature rose at a rate of 0.04°C a decade, far slower than the 0.18°C increase in the 1990s. At the same time, CO2 levels rose uninterruptedly as they did earlier. Someone should compute the enforced degree of depression of industrial activity across the world which would according to the theory, have reduced global temperatures to be consistent with those figures. What a pointless and tragic exercise that would have been.
http://www.nature.com/nclimate/journal/v6/n3/pdf/nclimate293...
Of course CO2 is implicated in the energy balance on Earth but to claim a direct strong causal relationship is simply in denial of the facts.
Especially since Doctorow flogs Arduino endlessly on BoingBoing.
Its a limit on the utility of term limits where the term limited officer is unlikely to seek another elective office when termed out, but that concern does not apply to most holders of term-limited positions (it does apply to the US President, which tends to be someone's last elected position, but state legislators, for instance, often seek other, usually higher, offices with constituencies overlapping those of their prior office when termed-out, and so the concern doesn't really apply to them.)
Can't they always control when they stop running for office?
The State held information on every citizen, and all official transactions resulted in stamps and signatures in little booklets. The stamps and signatures were a proxy to reputation. Don't have the 40 years worth of stamps in your employment booklet? That's a problem for your retirement. Know the right people with the right connections? You get a better apartment than everyone else.
Plus ça change...
That's a perfect problem description for a new business. Existing reputation systems don't do it well, but then again, search engines before Google didn't do search well.
Does he really believe that you can't quantify ability in any way? I don't buy that.
This happens even in notionally quantifiable domains like finance. What asset gives the best return? Should be easy, right? Well, what about volatility? Oops, turns out the naive rank ordering of assets by expected return contains an implicit value judgment about volatility.
See upthread for a mention of eBay seller scores being unadjusted for transaction size for another example.
I just wanted to reply and say that you and saintgimp have changed my opinion.
There’s no objective measure of ‘‘merit’’ so there’s no
way to know whether your society is meritocratic or not.
>[money] ends up pooling up around sociopathic jerks who
>know how to flatter, cajole, or terrorize their way to the top
If you don't try to reason out your political opinions objectively, they're no better than the opinion of a screaming mob.