Reputation is Orthogonal to Exchange

Posted for The Great Currency Debate

by Arthur Brock on Mar 12 2015, last modified on Mar 12 2015.

[[ Content is re-posted from my personal blog because of its pertinence. ]]

It feels like it’s been a long time since I've posted about any of the principles of currency design that I've discovered in designing, building and launching currencies over the past 10 – 20 years.

This one seems worth specific…

The Great Currency Debate Posted for The Great Currency Debate


Thanks for posting, Art. I agree - pertinent to our recent hangout indeed! I suspect that the example you give in reference to Ebay, along with pointing out that: "my credit rating (reputation) affects my cost and availability of money. My college degree (reputation) affects what I get paid (monetary). My grades (performance) affect whether I get credit (unit of account) for a course." serve well in helping people to 'get' what you mean, when you say: "Reputation currencies are predicated on continuity of identity."

I'm inclined to think that we should ditch using the term: 'Reputation Currency" altogether. It's a currency so far as its always evolving; always 'in a current', but – due to the way the term 'currency' has been used in traditional financial systems, it's causing confusion? As you say, reputation is not something that can be exchanged, but rather, it is something that is created based on association to the values on which its being gauged.

In short, reputation is not so much a currency, but provides a means to influence outcome. With regards CM's Hangout, perhaps we should replace reference to 'Reputation Based Exchange' to 'Reputation Influenced Exchange'?

What struck home for me more that anything was your note in the Hangout that our present system of exchange – the one on which traditional finance is based – uses a reputation metrics (aka Credit Rating) based purely on financial well being i.e. how much you earn, whether you pay your bills on time, and so on. Yet goods and services bought and sold, come into being because – in one way or another – they are perceived as a means to better our well being or 'life experience'. 'Finance' – or 'money' – itself is simply a tool for exchange.

Because of the way centralised finance is so inextricably linked to government and corporations, they are able to manipulate each other in a way that reflects the interests of a few. Reflecting the interests of 'the people' or planet is much harder to achieve.

The only way to overcome what is – to put it bluntly – an absurd state of affairs, is through a distributed system of exchange that embeds reputation metrics based on triple line economics: financial; environmental, and; cultural (community) accountability (referred to in our Hangout as the '3 dimensions'). As you mention in your blog, the system will need to instil metrics that seek authentic results.

The exchange system I envision for CM is one that does just this. a) Any distributed currency will be invited into the exchange; b) The metrics of the '3 dimensions' will be comprised of a combination of factors: some automated; some based on a buyer/sellers 'vote'; some regulated e.g. is the product made with local / renewable resources?

As goods and services are meant to increase well being, thinking our next hangout could explore community values. Open sharing spaces seems relevant here. What makes these P2P environments such vibrant places to be? My take is that they facilitate accountability and trust.

Link to referenced Hangout: /hangout-2-reputation-based-exchange ?id=2664