Reputation, ratings and currency

I had the great pleasure of sitting next to Cory Doctorow once. We were taking part in some sort of roundtable about privacy and surveillance. I was excited about this because of my Edwardian policy on Twitter: I only follow people that I’ve met. I don’t follow companies, celebrities or computers. I only follow people, and I only follow people that I’ve met. Hence, there are lots of people that I want to follow, but I can’t because I’ve never met them. Needless to say, I was very happy to be able to start following him. I’m embarrassed to say that I can’t remember what the event was, but I do remember that Cory made some typically insightful and very well-phrased comments. He makes me think, and he did again with his recent piece for Locus Online.

Reputation is a terrible currency.

From Locus Online Perspectives » Cory Doctorow: Wealth Inequality Is Even Worsein Reputation Economies

Now, as you can imagine, since I’m very interested the concept of reputation currencies and the potential to find better ways to implement the functions of money in our connected future (or, to put it another way, identity is the new… well, you know) I was most distressed to read this headline. But it’s a brilliant piece, and it helps me to develop and clarify my own thinking still further, which is why I cannot resist sharing the thinking to test it further. But first, a bit of nitpicking since I am blinded by terminology, a reflect of my technological perspectives in contrast to Cory’s.

Currencies need to serve as units of account – so you can price every thing from vintage Star Wars figures to anti-fungal cream and calculate their total worth. They need to serve as media for exchange, so that someone who has Ken ner Star Wars figures and needs anti-fungal cream can convert one to the other. They need to serve as stores of value – so you can convert your action figures to something more stable that you can use in your dot age, in case Star Wars ceases to be cool in another 50 years.

From Locus Online Perspectives » Cory Doctorow: Wealth Inequality Is Even Worsein Reputation Economies

I’m not sure about this. A currency is a unit of account, but money can be a store of value (e.g., gold) without being a unit of account. None of the prices in my local Waitrose are quoted in gold, despite the fact that I intend to bury gold in my back garden in response to to government economic policies. Similarly, money can be a means of exchange without being a unit of account. In fact, for most of history, payments were commuted from stores of value that people didn’t have via a unit of account into a medium of exchange that they did have. The example that I use in a book I’m writing on the topic uses the example of the American Colonies where the unit of account was the Pound Sterling (which most of them had never even seen) and payments were commuted from gold (which no-one had) into wampun, the medium of exchange of the indigenous population.

Right, that’s got that out of the way. Now on to the actual point of Cory’s post.

Reputation is pretty much useless for any of these things. Instead, they’re literally popularity contests: ‘’more people like me than you, so I win and you lose”… The Internet has been trying to figure out how to make reputation work for decades now. Those scores that appear next to Ebay sellers’ names and on the profiles of ‘‘sharing economy’’ workers profile pages – Uber, Lyft, Airbnb – attempt to establish a basis for strangers to trust one another.

From Locus Online Perspectives » Cory Doctorow: Wealth Inequality Is Even Worsein Reputation Economies

I think these examples are excellent, and they illustrate a couple of key issues about the different between a real reputation economy and a “review economy” that Cory quite rightly suggests cannot function as a money substitute.

Ebay’s reputation system is one of the oldest surviving ones, and it’s a good example of how explicit reputation systems fail to solve their major problem. Most people who buy and sell on Ebay do a good job of it, because most people aren’t crooks. A few people do very badly, and get downranked and eventually punted off the system – something that a normal complaints tipline would handle just as well.

But reputation is useless as a hedge against the real nightmare of a setup like Ebay: the long con. It doesn’t cost much, nor does it take much work, to build up sleeper identities on Ebay, fake storefronts that sell un-remarkable goods at reasonable prices, earning A+++ GREAT SELLER tick marks, even for years, until one day, that account lists a bunch of high-value items on the service, pockets the buyers’ funds, and walks off.

From Locus Online Perspectives » Cory Doctorow: Wealth Inequality Is Even Worsein Reputation Economies

If I have behaved well for years and then leg it with your cash, that’s not a failure of the reputation economy, that’s just fraud. A failure of the reputation economy is that I can fraudulently claim a reputation that does not belong to me and you cannot tell. But suppose we had a genuine identity infrastructure so that when people register as sellers, even with multiple identities, they cannot forge reputations?

I don’t want to get diverted into technicalities at this point but I can see in outline how this sort of thing might work properly. I register with eBay, eBay bounces me to my bank (which of course implements strong customer authentication, SCA, in accordance with the relevant European legislation) and I successfully authenticate myself to the bank, at which point I’m bounced back to eBay with a unique virtual identity from the bank. The virtual identity isn’t “Dave Birch” (in fact it contains no identifying information whatsoever: it simply has a set of relevant attributes associated with the pseudonymous virtual identity: is_a_person, is_over_18, is_UK_resident, has_bank_account, or whatever else) it’s just a unique ID. If I set up another account with eBay, my bank will return the same ID. If I set up an account with AirBnB, my bank will return a different ID. Now when you buy something from me on eBay you can be comfortable that even if eBay doesn’t know who I am, they know someone who does. More than that, they know someone who had a legal requirement to put me through know your customer, anti-money-laundering and other filters.

I written about this many times before because I think bringing real reputation into eBay, airBnB, and goodness knows who else in the sharing economy, but doing so in a privacy enhancing way, would be of great benefit to everyone. In essence it would turn reputation into a currency because there will be marketplaces that I would not be able to enter, exchanges I would not be able to make, without that reputation. Money wouldn’t be enough.

Here’s a thought experiment to finish with. What if we take the concept of the reputation currency to another stage, a cross between Edward de Bono’s “IBM Dollar” and Nectar points. Why shouldn’t I be able to buy things with “Bank of Dave Money”? Obviously, it would trade at a pretty substantial discount to, say, “Bank of Madonna Money” because the public want Madonna to do things more than they want me to do things. Nevertheless, with computers and laser beams we should be able to work out the price of something in Waitrose. Perhaps instead of social security or a national minimum income in Sterling, the government would simply put a reserve price on its citizens’ currencies, so that it would guarantee a minimum price to Waitrose for “Bank of Dave Money” in payment of taxes. Stranger things have happened.

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