[Dave Birch] At this year’s South-by-Southwest Interactive (SXSW) in Austin, Texas, I went along to a session called “Identity + 30“, which was run by Sam Lessin, Head of the Identity Product Group at Facebook. The idea of the discussion was, if I understood it properly, not to be “right” about what identity would actually be a generation from now, but to create a framework for discussing identity now. Sam is a pretty interesting guy, and he got me thinking right from the start of his session, which I mean as a serious compliment, because to be completely honest this was not true of all the sessions I went to.

The core of his argument was that when sharing is expensive, or when it makes an individual less well-off, then people don’t share. Society has to deal with this, trade being the root of our prosperity, so it develops trust networks to connect more trading partners and collect more information about those trading partners. Sam had a useful way of thinking about this, which was the idea of what he called “social hacks” to deal with the historical problem that the speed of bits and the speed of atoms are different (I might disagree with the shape of his pseudo-graph, but I think his points hold). These hacks (diplomas, badges, dress codes and banking) help us to get by, but they are by no means optimal.

However, we now have what Sam called the “superpower” of being able to instantly communicate with anyone else on Earth so we will no longer need those hacks. I may be paraphrasing incorrectly, but I think his way of looking at the existing business models around identity as being hacks in response to incomplete identity, credential and reputation information is a good way of framing some problems and a very helpful way of exploring the solutions that new technology can present. I strongly agreed with his big picture technology roadmap and have written before about about the “William Gibson World” where all of the technologies that will have any impact on corporate strategies to any foreseeable horizon already exist, something I always emphasise when we are working on client roadmaps. The trick is to look out of the corner of your eye and see where the technologies are being used for purposes that might disrupt business models, not to imagine new technologies. Given my predilection for using Dr. Who as my design authority, I also enjoyed Sam’s choice of common culture SF narratives to describe the future! His view is that the current generation is moving toward a “Borg system” not a “Hal system”, so new business opportunities are about the mass sharing of structured data.

Anyway, on to some of Sam’s key points, all of which were excellent:

  1. Information will centralise and cluster. (APIs are better than protocols.)
  2. We will share a lot more about ourselves. (Economics, not culture, will dictate this.)
  3. Everywhere will become local. (“I want to go where everyone knows my name” Cheers-style.)
  4. Only poor people will own things. Rich people will just rent whatever they want.
  5. Social capital will get ever more fungible, so (for example) going to Harvard will mean less than it does now, which means that it will be worth less than it is now. You can see exactly where this headed. Just look at the way we use LinkedIn right now. In the old world, I would use the social hack of finding out which university your degree came from as a sort of proxy for things I might want to know about you, but I no longer need to do that because I can go via LinkedIn and find out if you are smart, a hard worker, a team player or whatever. So there’s no premium for you learning, say, biochemistry at UCL rather than Swindon Polytechnic: so long as you know the biochemistry, my hiring decision will be tied to your social graph.
  6. The cost of using social capital for transactional purposes will fall below the cost of trust intermediaries such as notes and coins, so there will be no need for cash any more. In other words, identity is the new money.

(When Sam put up that last point I nearly cried, because earlier this year I was commissioned to write a book on exactly that topic! I thought I was the only genius that had realised that trade based on social graphs would eliminate physical means of exchange, so now I am crushed. Back to the drawing board, even though I hadn’t actually drawn very much so far.)

The argument here is, to my mind, unanswerable. Suppose I am wandering through Woking market and I want to buy a doughnut. I give the trader £1. The trader doesn’t have to trust me, he only needs to trust the £1, and the cost of failing to detect that my £1 is a counterfeit is quite small (despite the large number of fake £1 coins in circulation in the UK) compared to the cost of establishing my trustworthiness and creditworthiness. Other traders deal with this problem by paying banks and card schemes to manage the problem for them, but this costs them money. But now I imagine that I wander up to the trader to buy a hot dog and through his Google Glasses my face is outlined in green, which means that the system recognises me and that I have good credit. The trader winks at me, and a message pops up on my phone informing me that I am being charged £1. I press “OK” and we go about our day.

More than £4m worth of fake one pound coins have been seized by detectives.

[From Police Seize Record Haul Of Counterfeit Coins – Yahoo! News UK]

Until the invention of the mobile phone and its connection with the interweb tubes, I think it was reasonable to assume that for small transactions there was no way of using identity, credentials and reputation in small transactions, which is why it made sense to continue to use notes and coins to settle retail transactions. But now? The replacement of notes and coins in this way all hinges on the trader recognising me. Once this has been achieved, the issue of trust can be instantly resolved by computations across the social graph. If I understood correctly, this is why Sam said that “trust & trade” is the layer above the basic “recognition & memory”.

Money is technologically equivalent to a primitive version of memory.
Kocherlakota, N. “Money is Memory”. Journal of Economic Theory 81, p.232-251(1998).

Is it possible to imagine a trust and trade layer based on the social graph rather than third-party credentials? Yes. I remember that at the excellent Nixon McInnes “Social in the City” seminar last year, Will McInnes made a really important point right at the beginning of the day. “Who do we trust”, he said. “We trust people like ourselves.” Quite. And I also remember that in the discussion on trust at the Digital Agenda for Europe Assembly for 2012, I got into a mild argument with someone in the break, because I said that the idea of sticking web badges on sites (“this is a trusted European e-commerce merchant” badge, as an example) was ridiculous, and a strangely Victorian approach to vetting tradespeople. We need those badges as a pre-networked society substitute for actual information about trust. (Clearly, what Sam would label a “social hack”.) Once the social graph enables you to determine trust, they don’t make any sense. Look at it this way. Why would I care whether a hotel has the “British Tourist Board Seal of Approval” (I’ve no idea whether this exists – I just made it up) when I can go on Trip Advisor to see what everyone thinks about it? Or, more especially, I can go and see what my friends, my work colleagues and in general, people like me think about it?

I don’t know about Sam’s thought experiment of New Jersey suburbs becoming cool, but I thoroughly enjoyed his session and greatly appreciated his window into the kind of thinking that is going on in Facebook.

Incidentally, Sam referred in passing to “peak cash”, which I thought was such a nice idea that I have sworn to plagiarise it mercilessly. I’m working on a blog post around this for next week sometime.

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers

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