Social Currency
“Reputation capital is becoming so important that it will act as a secondary currency.”
Currencies in the broadest sense can be understood as symbols that mark and map flows. The word currency itself derives from the Latin verb “currere”, meaning to flow. We are surrounded by countless types of flow, flows of goods and services, flows of participation, flows of trust, flows of access and flows of permission. We need to map these flows to enable social contracts between different parties, however we can only map certain flows, and the flows we do map affect our actions. Currencies are therefore not a value neutral medium, each favours certain kinds of behaviours and discourages others. By making previously invisible forms of value visible and recognized it is possible to change peoples’ consumer behaviour to reflect more ethical values. The adoption of new currencies also encourages further adoption by producers responding to market preferences.
One of the many avenues leading to innovation within currency design is gamification. Gamification is the process of applying game mechanics and design elements to solve real World problems and engage audiences. Trivial examples include things like leaderboards, badges, rewards and progress indicators which can intrinsically motivate people towards desired behaviours by giving recognition for their achievements and making it easier for them to interact, share, and problem-solve. The bottom line is that games aren’t a waste of time, they’re changing and challenging us, enabling to solve complex problems. Gamification techniques are playing an important component in developing business strategy and can be used in a wide variety of settings to motivate people towards goals that they would otherwise be uninterested in. When combined with social currency it becomes possible to incentivize people towards goals which enhance social welfare such as recycling.
Social currency is not a means of exchange as the name may suggest, it cannot be used up or transferred, it is not fungible per se. Instead it works as a measurement of reputation for individuals and organizations within a network, it can therefore grant access to things, just as trust between people leverages benefits. The opportunities for generating social capital from social currency are quite large. Social currency can extend one’s reputation beyond the limited circle of people who one interacts with on a daily basis to the World at large. The caveat being that social currencies are contextual to the networks in which they are created.
For example I can’t transfer my Amazon reputation to eBay or vice versa, whilst it may seem like a good thing if I could as they serve similar functions, however they have different scoring systems to represent the cultural values within a specific marketplace. A better solution would be to simply display a dashboard of metrics from various sites which I use for commerce to give the broadest representation of my experience. Another example of a social currency system can be found on the community StackOverflow, whilst nobody is paid money for their contributions, they do accrue reputation scores.
This system can then be leveraged for the purposes of employment for example. In this way, social currencies will come to replace much of the formalities of resumes and CVs, we need to assess people relative to the ecosystems in which they exist and what they contribute towards. As another example, Michael Aaij who is a professor of English Literature at a university in Alabama, recently achieved tenure based in part on his 16,000 Wikipedia contributions. Social currencies can also be used to grant access to finance, such is the case with the platform Lenddo which analyzes a user’s social graph to determine their credit risk. It may sound like a novelty, but it is enabling professionals in emerging markets to have access to financial products and services enjoyed in more mature financial markets.
Clearly, there is a need for social analytics to aggregate reputation for both social media and collaborative consumption to help us each connect, collaborate and share with others. Startups like Klout and PeerIndex are all attempts to measure the influence and trust that people within their social spheres, however they still have some way to go before they reach their full potential. Since the use of commons is based around trust, if online commons are going to be useful to business, companies need to do more work to develop protocols for identity and reputation management.
The rise of new forms of currency is a massive growth area, allowing for new forms of innovative production, consumption and distribution to take place. As such, businesses are increasingly adopting social currencies so as to gain recognition within their respective business environment and to build a community of produsers around them. As the web becomes more socially-oriented, search engines will have to accommodate increasingly around peoples’ social graph, in this way platforms which works as knowledge inventories will resemble what we could call the banks of social currency and social credit.
“The gift economy may seem like an anarchist delusion, yet I believe that sooner or later we will see that it is the only thing that will actually work.”
In a market system the access to goods and services is determined though the pricing mechanism, if you have enough money then you can buy the things you want. It doesn’t matter who you are, what you do, or whether the seller will ever see you again. In a gift economy it works differently, access to goods and services is determined by relationship. Although some people liken the Internet to a gift economy, this isn’t strictly the case. Traditionally, gift economies work in a tribal setting where everyone knows each other. Due to the open-ended nature of the Internet and the psychological limits of personal relationships, when one gives things freely on the Internet there aren’t the mechanisms or support networks in place to ensure that such altruism is mutually rewarded.
In order to make some of the principles behind the gift economy scale up to facilitate a larger social organization it must be based on exchange and not gift giving. The distinction being that when you gift something you don’t explicitly expect anything in return, whereas with exchange there is a direct transaction. Gifts are other-oriented and cannot be quantified, to do so destroys the status of the gift, for example if you were to ask how much a birthday present cost so that you could spend the same amount of the giver. Exchange on the other hand does require quantification and measurement and hence the need for social currencies. These currencies enable patterns of exchange which are neither fully gift based, nor fully market based. What this points to is that money is losing its sway as the sole arbiter of access to goods and services.
“As we move later into the decade, physical currency will be harder to differentiate from virtual currencies like Facebook Credits.”
Gifts create a sense of obligation to reciprocate which fosters trust between different parties.