Sunday, August 22, 2010

Social currency unlocks value for individuals and organizations

Social currency, shared information which encourages further social encounters, is transacted through social economic networks.

From an economic perspective, the role of social economic networks is to unlock and monetize hidden value. This value is mainly in the form of information asymmetry as buyers and sellers hold information that is useful to each other. Both buyer and seller realize greater utility than if the social economic network did not exist.

Social economic networks are impacting both individuals and organizations at the global and local level. Transactions may be between anonymous parties or parties who know each other. For example, in the Groupon / Peixe Urbano group-purchasing model, individuals pre-commit to a purchase to obtain a discount if a minimum number of people participate.

With social economic networks, organizations can unlock intellectual capital (social business intelligence) in ways that were not possible before with tools such as prediction markets (a mechanism for collecting and aggregating opinion using market principles). The concepts are attractive on a global level and can be implemented on a local level with the democratizing power of the internet.

Social economic networks could likely grow in the next several years, particularly in the type of assets created, and in the venues and models for their exchange.

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