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What is the REPDEV Network?

economics

(Michael Hrenka) #1

Note: This was originally published on 2015-05-21


This is the first post in the following series:

Presenting the REPDEV Network

The abbreviation REPDEV means Reputation Economy Promotion, Development, Exploration, and Vitalization. So, the purpose of the REPDEV Network is so create a reputation economy and then help it to really flourish. But what is a reputation economy in the first place?

What is a reputation economy?

While there are many ways to define a reputation economy, there is one issue that lies at the hear of the reputation economy: How do reputation and wealth relate to each other? I call this connection reputation-wealth coupling (RWC):

Reputation-wealth coupling

Reputation can have an influence on your wealth and vice versa. It is certainly possible to "buy" reputation with lots of money, though that effort may sometimes be problematic and even backfire. What is much more interesting is the other direction of influence: How does reputation influence wealth?
  • Indirect reputation-wealth coupling means that your reputation influences your wealth somehow, but in a rather indirect way. You might get more customers, because your reputation (or the reputation of your products) is good. Or you might not get a job, because your online reputation has been tarnished.
  • Direct reputation-wealth coupling is a state in which your reputation has a rather direct influence on your wealth. Currently, this is a rather rare phenomenon. One example might be views and likes of YouTube videos of YouTubers who allow advertisements on their videos. If one interprets view and likes as reputation of a video, then this high reputation translates rather directly into income for that YouTuber via advertisement revenues. Direct RWC is something which will be much more prevalent in the future, and enabled by new targeted mechanisms (for example the reputation system Quantified Prestige, as explained below).
  • Weak RWC means that the relation between reputation and wealth is statistically weak, formally expressed as low correlation between both variables. Corporations and persons might be excessively wealthy, while at the same time having a horrible reputation in the general population. On the other hand, highly esteemed individuals may be financially poor. That is a fate that is often experienced by teachers, artists, and philosophers.
  • With strong RWC your reputation is your capital. If you have a high reputation, you are almost certainly wealthy. And if your reputation is terrible, your wealth will go down the drain.

So, let’s use a rather general, albeit somewhat fuzzy, definition of a reputation economy:

An economy is a reputation economy if reputation-wealth coupling is predominantly direct and strong.

Effectively, this means that people can make a living out of having a good reputation alone!

Recent books like The Reputation Economy by Michael Fertik and David C. Thompson and Reputation Economics by Joshua Klein point out that this prospect may be closer than most people realize. The importance of reputation is ever increasing in our more and more online-centric world. But the real revolution is still to come, and the REPDEV Network is there to bring it forth!

What is a reputation economy good for?

So, if we have a reputation economy, what is it actually good for? Can it solve all of the problems in the world? Nope, but it can solve some of them!

Making artificial scarcity obsolete

Interestingly, reputation economies are a natural solution to the problem of artificial scarcity. But what is artificial scarcity?

Artificial scarcity and digital goods

Well, it's an phenomenon that arises for goods that are easily reproduced and transmitted, like information, or digital goods. With our ever advancing technology more and more goods are digital or can be digitized:
  • Computer games
  • Videos
  • Online courses
  • Music
  • Books
  • Magazines
  • Papers
  • Patents
  • Software
  • Genetic codes
  • Blueprints for physical goods that can be manufactured by 3d-printers
  • Objects in virtual worlds
  • … and a lot of other stuff …

All of these goods can nowadays be copied and shared for virtually no cost. That is absolutely awesome! However, creating those goods in the first place does cost a lot of time, effort, and usually also money. So, the creators of these goods need a way to cover their costs. And this is where artificial scarcity comes into play: Instead of giving away their products for free, creators make their products artificially scarce in order to sell them on a market for a relatively high price that is in no relation to the actual cost of copying and transmitting the product in question! This is an issue that has been examined, among others, in the book The Zero Marginal Cost Society by Jeremy Rifkin.

Now, how do they make their products artificially scarce? By making it hard or illegal to copy their products without their permission! The tools for that are copyrights, intellectual property legislation, and digital rights management. Sure, that is an approach that works to some degree, but it is an unnatural solution that reduces potential technologically enabled abundance to politically enforced artificial scarcity. But is there any better solution?

Well, with a true reputation economy there is! In a reputation economy creators can give away their products for free and thus maximize their reputation. Their reputation in turn will create wealth – and hopefully at least cover the costs of content creation. No artificial scarcity required! In this situation we have abundance for all: For the consumers, because digital products are effectively free; and for the creators, because their reputation makes them wealthy!

But how would reputation actually create wealth for content creators in reality? To understand that, I will introduce the concept of reputation incomes:

Reputation incomes

The idea of a reputation income is rather simple: You get a regular income in proportion to your reputation. For that to work, your reputation needs to be quantified somehow. And there also needs to be a source of that income. But let's stay with the first requirement for a while. How can reputation be quantified? Well, we could simply count Facebook likes of posts made by one person to get a basic reputation index for that person. The platform Klout uses a more sophisticated algorithm based on social media activity to quantify the reputation of registered persons. Still, this approach might not seem adequate enough to get a really meaningful quantification of someone's reputation.

To get a more appropriate measure for reputation, I developed a reputation system called Quantified Prestige that determines the positive reputation of its users on the basis of peer ratings in a peer to peer network. In fact, the details are relatively sophisticated and explained in the Quantified Prestige documentation. Now, the point is that the system produces a more or less useful reputation metric that quantified the reputation of its users. So, once this system is in place and there is some monetary fund, the users of the system can get a reputation income out of that fund.

Of course these reputation income funds need to be provided by someone. There are several possibilities to establish a reputation income fund:

  1. It could be donation based.
  • A company could set up a reputation income fund with a part of its profits.
  • Or it could be financed by some tax.

All of these would be distributive reputation incomes. But if we think a little bit more out of the box, we could question the need for a reputation income fund at all! What if reputation could generate a reputation income directly? This is the generative reputation income approach that is followed by the theoretical electronic currency that I call Fluido (and which is described in detail in the Quantified Prestige documentation). In the Quantified Prestige system, reputation can create an income in Fluido directly. Of course, the Fluido currency would at first simply be an electronic token system, like, hmm … Bitcoin? In fact, Bitcoin was a core inspiration for the ideas behind Fluido. The fact that Bitcoins have value proves that electronic tokens can in fact be used as valuable currencies.

Voluntary basic incomes

It gets even better! There are multiple ways in which a reputation economy can enable voluntary basic incomes:
  1. People could donate to a voluntary basic income fund in order to raise their reputation. This fund would provide many people with a basic income – while the donors profit from their increased reputation.
  • A voluntary fund could be used both as reputation income fund and as basic income fund at the same time! In this case, there need to be rules what fraction of the money is reputation independent, and how the reputation dependent part is paid out.
  • There could be a reputation independent basic income in Fluido: While a part of the Fluido income of a person is generated by positive reputation, the other could be generated independent of reputation. A quite similar approach is to grant people basic positive reputation.

Of course, these different approaches can be used in parallel and complement each other. They could even be used in addition to a more conventional universal basic income.

Incentivizing ethical behaviour

Once the importance of reputation rises, it becomes much more imperative to increase one's reputation than to increase one's conventional monetary incomes. This means that everyone will have a strong incentive to maintain a good reputation. Since unethical behaviour tends to threaten one's reputation, people will especially have stronger incentives to behave in ethically acceptable ways. And it's not only about individuals! Organizations also have much more weighty reasons to behave ethically in a reputation economy.

Therefore, a reputation economy would make the world more ethical! How surprising is that? :wink:

What is the mission of the REPDEV Network?

Now that we have seen that a reputation economy would provide really significant benefits, it should be clear that establishing a real reputation economy needs to become an imperative! This is why I am founding the REPDEV Network. It is supposed to become a network of people and organizations who work together to turn the idea of a reputation economy into an undeniable reality!

The main mission of the REPDEV Network can be summarized in one simple sentence:

The REPDEV Network has the mission of establishing a flourishing reputation economy ecosystem!

This main mission can be subdivided into several missions related to different areas of activity:

Areas of activity

The REPDEV Network has its areas of activity in its name: Promotion, Development, Exploration, and Vitalization.

Promotion

First of all, the REPDEV Network needs to make the idea of a reputation economy and its positive implications really popular. For that purpose, it needs to recruit activists and communicators who share and explain the ideas behind the reputation economy. People need to understand what a reputation economy is, and what it can do for them, and what they can do to help it come into being.

Development

Secondly, the REPDEV Network needs to create reputation systems that represent that basis of the reputation economy. Not every reputation system is well suited for that purpose. The innovative system Quantified Prestige currently seems to be the best candidate for establishing a meaningful reputation economy. But of course, there could be other viable systems that could support an effective reputation economy.

Developing reputation systems means a lot of different things:

  1. Developing the theoretical foundations of the system. This has been done to a large degree for Quantified Prestige.
  • Turning the theoretical system into software that actually implements the reputation system. Quantified Prestige is not yet available as software system, so this is logical next step that needs to be done. Klout already is a working reputation system, but it’s not optimally suited for supporting a reputation economy.
  • There needs to be a supporting (online) infrastructure that enables people to interact with the reputation systems that represent the basis of the reputation economy. Those could be centralized platforms like Facebook, or they could be decentralized systems using block chain technology for example.
  • Finally, solutions to implement reputation incomes need to be created and deployed.

Exploration

Once a reputation economy exists, no matter on what scale, it can and should be explored, researched, and experimented with. Questions like the following need to be answered:
  • What are the basic dynamics of a reputation economy?
  • What are possible error modes of a reputation economy and how can they be avoided?
  • Do reputation economies really solve big problems?
  • How can reputation economies be improved?
  • How does the reputation economy interact with the conventional economy?

To answer these questions the REPDEV Network can explore real reputation economies, or study simulated reputation economies. Something in between would be to create massively multiplayer online reputation economy simulation games, or to include reputation economies into already existing massively multiplayer online games, and to examine the dynamics of these systems.

Vitalization

Finally, once the foundations for a reputation economy exist, people need to bring it to life! They need to use it, to play with it, to experiment with it, to apply it to all kinds of problems, and to improve it further. At this stage a real ecosystem of multiple parallel or interlocked reputation economies needs to be created to unlock the full potential of the reputation economy idea:
  • Multiple reputation systems enabling multiple reputation incomes supporting many different entrepreneurs, freelancers, companies, and organizations
  • Multiple reputation economy platforms supported by multiple reputation economy applications
  • Multiple communities using multiple different reputation economies for various different purposes

This final diversity required for a true reputation economy ecosystem is the reason why the idea of a reputation economy is just too big for a single organization. There really has to be a broad network that supports all the different reputation economies: The REPDEV Network!

What's next?

If you are already convinced by the idea of the REPDEV Network, you can join the Fractal Future Forum and discuss in the REPDEV Network category about everything that you have in mind regarding that network or related ideas.

Otherwise, please read the next part of this blog post series: