# Voluntary Basic Incomes in a Reputation Economy

I want to write an essay on how reputation economies could make voluntary basic incomes possible. If things go right, it should become part of the second Transpolitica book. Here’s the abstract:

Advanced reputation systems provide the basis for an emerging reputation
economy. In turn, a reputation economy provides unprecedented
possibilities and incentives for voluntary basic income systems. There
are multiple ways in which a mature reputation economy could make
voluntary basic incomes feasible. These voluntary basic incomes have the
clear advantage of not requiring large political interventions in order
to operate successfully, and thus could be implemented faster and
easier. Voluntary basic incomes could play an alternative or
complementary role to a more conventional universal basic income.

What I want to write about is:

1. What voluntary basic income systems already exist or are planned: http://www.basicincome.co/ for example (what else is there?)
2. What a reputation economy is and how it could work (for example with Quantified Prestige)
3. How reputation economies can be used to make voluntary basic income systems work. There are different routes for that. For example, QP can have a predefined basic income. Another alternative is that people start expecting companies or DACs to pay voluntary basic incomes. If they pay more than expected, the reputation of those companies rises. If they pay less, their reputation falls, so that they will have problems staying viable in a really mature reputation economy.

If you have any suggestions what I should write about exactly, I would be grateful

This might be of special interest for @Darklight

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Voluntary basic income/voluntary basic capital does benefit from a Reputation Economy but we have to be very careful about that. On reputation economies you can also write about the reputation lotteries concept I mentioned in my blog.

Reputation is possible because in a transparent blockchain a person can verify by cryptographic proof what they contributed money to. If a person for example consistently paid or over-paid into the basic income then it could effect their reputation for the better. Consistent givers could be entered into reputation lotteries where we can give bonus rewards to these people who win.

If you write the essay and use the reputation lottery concept please attribute the source to my blog and to darklight.

http://darkai.org/?p=190

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In the context of QP the reward could be bonus reputation credits to whomever wins the lottery. This adds the gambling element so that the only way to play the game to get high reputation scores is by being altruistic. Not every altruistic person will win big but everyone would win enough of the time to compulsively give.

It’s an example of attraction by incentive. It’s something which can help QP.

You have a way of expressing yourself that is sometimes hard to comprehend. More contextual information would be tremendously helpful. As far as I understand you, your idea is to have a fund on a transparent blockchain where you can verify whether someone has or has not paid into that fund. Those who have, get reputation for doing that. Reputation then gives you tickets for a lottery. The lottery reward itself is paid out of the fund on the transparent blockchain.

That fund could be for anything, but it could also be a voluntary basic income fund for some kind of network. In this case you are having many psychological incentives for paying into that fund:

• Being genuinely altruistic (this may be a weak and unlikely one, but you shouldn’t totally discount it)
• Being seen as altruistic and getting a reputation for that.
• The dopamine that is released for chasing possible rewards. Excitement about the chance to win something in the lottery.
• Hope to win the lottery. Discounting the probably outcome of losing money in favour of the unlikely outcome of winning money. This may seem irrational, but in the case that you prefer a small chance of a very good outcome to a big chance of a mediocre outcome, it doesn’t need to be necessarily irrational.
• Paying into the fund regularly should be habit forming.

I think it’s a good idea. It’s psychologically clever. It’s an idea that could be combined with the idea of an ECDF (Electronic Currency Distribution Fund) in the QP system (see QP documentary V0.02).

In a mature reputation economy, however, paying the donors in Fluido in proportion to their reputation that they’ve gained for having paid into the fund, would be a more natural solution. Fludio is generated by Prestige, so in this system there is no deduction from the basic income fund to finance a lottery. Most rational participants would prefer to have their contribution to get to the basic income fund fully in favour of participating in a lottery in which they are expected to lose money (as always).

The idea is to use transparency to have “Proof of Altruism”. A person gives and can prove they gave it using a transaction id or hash. The algorithm would verify that they sent exactly what the transaction says they sent and give them a ticket.

It’s not a fund. They can give to any address on any blockchain which is on the list of addresses. It could be used for a fund, for charity, for giving harddrive space, computation, anything as long as it can be proven they gave it.

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You’ve got it correct. The idea applies knowledge of human psychology and is an applied incentive centered design to produce altruistic effects. It uses a combination of psychology and mathematics.

Good, thanks for verifying my interpretation. How do you want to be referred to in the essay (if at all)? Just as “Darklight” or with some other name?

Darklight is fine. If you want you can also include my blog post in your reference section if your essay has such a section.

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Btw: How do you define a “transparent” blockchain? Is it just a blockchain on which people reveal their identities voluntarily or is there some special technology involved? After all, all blockchain transactions are transparent in the sense that they appear in the transaction blocks.

A transparent blockchain includes the pseudo-identities necessary to determine what is behind a certain address. So for example if you donate to the Life Extension foundation you want to be able to verify a nearly 100% degree of certainty that it belongs to them, that the funds really go to them. Since identities can be attached not only to addresses but to deterministically generated addresses you can have an identity on the blockchain for the Life Extension foundation and for every new transaction a new address from them is generated deterministically.

The idea is the sender requires the privacy. The receiver doesn’t. The receiver should be identified on a transparent blockchain. The sender would get tickets and would be able to win the lottery with complete privacy in that no one has to know they donated. As long as a new address is used for every transaction it makes analysis difficult yet it’s easy for the blockchain itself and smart contract to know the transaction took place and award tickets based on that.

There are probably a lot of technical details I’m not mentioning or haven’t thought through but I can only say it’s technically possible to do it with a smart contract and transparent blockchain (which means identities attached to the addresses receiving funds).

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Would it be possible for a sender to reveal his identity for a specific interaction without compromising his security or identity (in relation to other transactions) otherwise?

Yes in theory using a digital signature or public key I would say it is possible. But I haven’t worked out the technical details to say how private it is.

You could have a pseudo-identity easily though and anyone who sends anything to that screen name would send to one of your generated addresses.

I have two questions:

1. Is there already and real implementation of a transparent blockchain?
2. What about a totally transparent blockchain in which all senders, recipients and transactions are completely transparent? Is there something like that planned or in construction or already in existence? This could be used to inform a reputation network about how generous certain people are.
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The Bitcoin blockchain is very transparent. How transparent it is depends on how you interact with it. Everyone can see every transaction on the blockchain going back to the beginning.

The level of transparency on the blockchain is determined by whether or not identities are attached to addresses. If identities are attached to addresses then it’s totally transparent for all the public accounts.

My own opinion would be to do it pseudo-anonymously and attach something like an alias to an account. This way people can have privacy in other accounts but give from a specific account which has the good reputation.

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Thanks for explaining. That was quite helpful.

My incentive layer works exactly like that. An algorithm verifies if a node has given to the fund, and the fund is automatically distributed amongst all nodes who have contributed (I use dividend pathways to know who has contributed).

How it works:

Each node chooses how much they want to give. Consuming from someone ‘replicates’ their ‘giving-behavior’ (temporarily). Consuming from someone who gives nothing (someone outside the system) replicates that behaviour, consuming from someone who gives 1% replicates that behaviour, and so on and so forth.

Dividend pathways created to someone who gives a lot provide higher flow.

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Thanks for joining the Fractal Future Forum, Johan Nygren! It’s good to see you here among this small group of innovative thinkers. Your Resilience idea has fascinated me, and I’m still struggling to understand it completely.

What does the “giving” consist of? Donations or voluntary transaction taxes or even something else?

You are trying to explain a seemingly very complicated system with few words. Let me try to understand that. It seems that there is some type of formalized “giving-behavior” of paying into some kind of basic income distribution fund. How is that behavior formalized? This is connected to the question above. I see different options:

1. Donating a specific sum into the fund. Replicating that would be problematic
2. Donation a specific fraction of your account into the fund. That might still be somewhat problematic
3. Donating a specific fraction of the transaction value into the fund. Now here it starts making sense.

So, am I right in the assumption that your system basically uses voluntary transaction taxes that are first set on a voluntary individual level and next replicated by people who do transactions with you?

The question here is “1% of what”? Are we really talking about transaction value or something else?

Or am I mistaken that there is some kind of “central” basic income distribution fund, and instead there is some local distribution mechanism of local transaction taxes? Or can even both mechanisms coexist simultaneously?

Voluntary transaction taxes.

3

Yes. If you consume from someone, then you’ll ‘copy’ their transaction tax-rate. (0% if you consume from someone who isn’t part of the ‘resilience network’).

Transaction value. Like traditional taxation. My system is just evolution of the current systems.

It’s not central. The tax you pay is automatically distributed amongst all nodes who have contributed. I use dividend pathways to know who has contributed. This is where it gets a bit complicated. If you send 100BTC to another node, then you create a dividend pathway of 100BTC.

These pathways create a ‘web of consumption’. These pathways are a direct reflection of how and what nodes have consumed.

The tax you pay is shared on everyone who’s connected to you through such a ‘web of consumption’. Every node who’s consumed from you, and every node who’s consumed from a node who’s consumed from you.

When a node receives money, their pathway shrinks. If a node has a 200BTC pathway to another node, and receives 3BTC, their pathway shrinks to 197BTC. If a node consumes more from that same node, say it buys something for 20BTC, then that adds to the pathway and it grows to 217BTC.

“In my Basic Income #DApp, your safety net emerges from the sum of your financial interactions, allowing you to live and evolve as a global and mobile citizen. Basicincome.co transforms the stage upon which we unfold."

• Johan Nygren
How to Create Resilience [2013], SpaceCollective

Visualization:

small scale,

medium scale,

large scale,

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Ok, thanks for explaining all of that @resilience_me.

Let me try to get this straight. This system looks to me like this:

Every user of the system can be seen as merchant who can sell products. And there are effectively voluntary taxes on these products. The taxes are taken as transaction taxes, but that’s just a detail that comes from the practicality of the system. They could equally be voluntary value added taxes on the products themselves, but using transaction taxes is easier in the setting of cryptocurrencies.

Every merchant has his own web of consumption in which his voluntary tax rate is effective (unless the merchant himself copies the tax rate from some other merchant by buying from her). This web of consumption consists of direct customers and of the customers of those customers and so on. It’s a tree with the original merchant as root. Every purchase in that web of consumption is taxed is the tax rate of the root merchant. At least a part of the tax money goes back to the original merchant. It’s only a part, because multiple webs of consumption can overlap, in which case things become complicated.

Dividend pathways seem to be unidirectional. Let’s see how they might work:

This looks a bit confusing. Let’s say we have two nodes A and B and we denote the transfer for money with arrows, then what happens when $A [110BTC] \rightarrow B$? There is a dividend pathway of 110 BTC, but what is the direction of the pathway? Let’s say in the second step $B [30BTC]\rightarrow A$. This seems to mean that the pathway shrinks to 80 BTC. So, if we denote dividend pathways with “=>”, then $A [80BTC]\Rightarrow B$.

To connect it with what I’ve written above, B acts as merchant in the first step and A consumes from B. If be has a transaction tax of 10%, then the value of the purchase is 100BTC, and there are 10BTC tax revenue in the web of consumption of B. Let’s say that everyone agrees on a transaction tax of 10%, when and how is the tax money finally distributed?

For, example what happens if

$$B [55 BTC]\rightarrow C$$
and
$$D [220 BTC]\rightarrow A$$
? What are the dividend pathways in that situation exactly and what happens with the tax money?

A will get dividends via B.

If those 30BTC are tax being payed out, then it shrinks to 80BTC. But if it’s a consumption transaction, then A[110BTC]⇒B (unaffected) and a B[30BTC]⇒A is created.

Each node pays out their tax in real time. It’s distributed throughout the web of consumption, and divided based on the liquidity of the dividend pathways in it. If, in a hypothetical scenario, everyone chooses to use the exact same transaction tax rate, then everyone will have an equal flow, and everyone in the web of consumption gets an equal share. If you have 3 million nodes in a web of consumption downstreams from you and you pay 10% tax on an incoming 100BTC transaction, then those 3 million nodes get 10BTC/3million each.

This plays out all the time, over and over again, and everyone gets a tiny amount from each payed tax dollar, but it adds up to become alot.

www.bitnation-blog.com/voluntary-basic-income-on-a-co-op-dividend-scheme/

How the tax money is distributed is a science in itself. I use what I call ‘the optimization algorithm’,

read up on it if you want to.

Still using those agreed 10%:
C will pay 5.5BTC, and those 5.5BTC are divided on everyone who has a pathway to him (except the pathway B just created), and everyone who has a pathway to everyone who has a pathway. If the web of consumption downstreams of C is 1000 nodes big, and each node has a pathway made with a 10% taxRate, then every node gets 5.5BTC/1000.

A will pay 22BTC. If the trophic web below him is 2000 nodes big, then each of those nodes get 0.011BTC.

The optimization layer is the next step. Each of the 2000 nodes in the web A supports keeps a log of how much they have recieved, and they all add 0.011BTC to that log. Some of these 2000 nodes might have recieved part of the tax payed by C when B sent 55BTC, and they would then have added their share, 0.0055BTC to their log, prior to adding their share of As 22BTC. After updating the logs with As 22BTC, the system checks which of the 2000 nodes has the most ‘unrecieved dividends’, it might find a node who’s node has logged 0.011BTC+0.0055BTC+earlier logs of say up to 40BTC - a node with 40.0165BTC that it has not yet recieved, and who has the most unrecieved dividends. A then sends the 22BTC directly to that node. If no node has accumulated above 22BTC, then A will send multiple transactions, but still as few as possible.

This last step, the optimization algorithm, is a practical solution, but you could understand the system without it. It’s just a way to make it easily implemented. I can already implement it on Bitcoin, and Ripple, and Stellar, and pretty much every financial platform online.

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