Monday, August 24, 2015

Network Economies: Economic System as a Configurable Parameter

We personalize everything else, why not economic systems too? Starbucks selectability comes to economic system participations! Some interesting implications for personalized economic system design arise per a recent post about ‘Decentralized Reddit.’

The New World: Network Economies of Abundance (chart)
There are two archetypal economic systems. First is the usual indirect model that we are used to as consumers: content is free to consume, and supported by advertising, where personalized data might be sold in the backend to other parties in any number of undisclosed ways; this is true for radio, TV, and Internet content. Second is the direct model of content producers and consumers existing in a network where users (content consumers) might pay for content or for certain premium actions they can do with content like up/down-voting it. The business model is that consumer micropayments support content providers and the cost of content-hosting – this is a true peer-to-peer network ecology. The direct model is now possible due to having large and available liquid networks where supply and demand can meet in an automated auto-discovered way. Examples of decentralized p2p network concepts have been Tor, Napster, the Internet itself, and also now Bitcoin, cryptocurrencies, and blockchain technology. One way to implement the direct model is through micropayments, where users click on icons to allocate pre-specified amounts of Bitcoin or token to take community actions. The central issue in decentralized p2p content systems to be prototyped and tested is user willingness to micropay for content operations.

Economic System as a Configurable Parameter is engaged in developing a software platform for decentralized content hosting communities. Conceptually, this could be like a standalone decentralized reddit. The software platform could also be deployed by existing centralized content communities (like Stack Exchange and Stack Overflow) as an offered parameter at the launch of new communities. Community participants or facilitators could choose the economic model for their community, either 1) advertising-supported (the centralized indirect model), or 2) peer-supported (the decentralized direct model). Other web properties could experiment with this platform to test both kinds of economic models, for example offering private-labeled decentralized versions of Instagram, Twitter, etc. Already-existing blockchain-based decentralized versions of social networking properties like Diaspora, Twister, Gems, Reveal, and BitCloud could further extend their functionality with the decentralized content-hosting platform.

What is decentralization?
In this potentially burgeoning era of personalized economic system design at every level ranging from individual agents to group participations, there is a questioning and defining of key parameters. For example, an ongoing question is ‘What is decentralization?’ Decentralization is more than peer production. While peer production and peer participation might be a feature in decentralized economic systems, true decentralization connotes that the model itself should be decentralized, with decision-making made in a flat, non-hierarchical manner. For example, ‘peer production properties’ like AirBnB, Wikipedia, and Reddit are still centrally organized, hosted, and coordinated, and users or community participants are not able to participate in decision-making, for example about how the content they contribute is monetized, or if some of that monetization could be returned to them as content creators. The content is produced by decentralized peers, but decisions about the economy are centralized.

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