The SupraSphere Economy
Filed under: cloud, economy, sphere
I had an interesting meeting couple of days ago with Andy Lippmann of the MIT Media Lab. He had a hard time seeing the connection between the idea of a secure, private, “personal cloud” and currency, so I figure I have a lot of work to do if someone so esteemed as Dr. Lippmann does not see the connection as obviously and clearly as I do.
First off, there are different connotations of currency, many of which have nothing to do with quantification and numerical accounting, particularly in traditionally understood units and/or denominations. Most people have heard of the concepts of “social capital” or “political capital”, for example. In considering different ideas around currency, there is also a question as to whether currencies are “convertible” into dollars or exchangeable into other forms of currency in other communities and networks beyond those in which they originate. As an example, many people have heard of “Linden Dollars” from the video game “Second Life”, which do have an implicit conversion rate to US dollars. Compare them to World of Warcraft Gold, which, while it used to be purchasable on eBay before eBay explicitly banned the practice, has no implicitly set conversion rate.
Because of my background, I have a fairly good grasp of traditional money and how it works as a system. Most people know that SupraSphere has several installations in some financial services institutions, particularly hedge funds. This has afforded me a pretty in-depth look at how the financial system functions and how people who trade stocks and focus fanatically on increasing the amount of money they have actually think.
Everyone knows that money makes the world go round and is the bottom line. This is why I have been so fascinated by it. It’s more pervasive and prevalent, by far, than any single other psychological construct in the world. As a mindset, it far surpasses both television and organized religion combined in its ability to generate a unified and homogenized world view. So, having grown up in a fairly socially conscious and idealistic family, I was drawn to thinking of the structure and design of money as a particularly fun and challenging lever to pull in terms of changing the world. If there were one single underlying construct where changing its definition would have the single most substantial effect on the world, it would clearly be with money itself.
That said, banking and financial systems themselves are at the core actually very simple accounting systems that only really become complex by how people try to game them, all under the guise of “creating efficiencies”. You deduct from one place, you add to another. Transferring funds is really not that complicated a process. The overall point is that as it becomes more and more the case that money exists primarily a digital phenomenon consisting of overlapping interactions of accounts (in some ways actually a “social network”), how complex is banking really that people can’t have direct control over the overall process of issuing and managing currency? The most important thing to think of in this case is the creation/issuance of money and its underlying definition and value, which is already assumed when you get into the accounting stage. However, if people have their own set of servers (spheres) that can create intersecting relationships with other spheres (accounts), we might very well be able to enter into an era of “open source money”.
Before I get into specifics about how SupraSphere can help to “open source money”, I will provide some more perspective on my background for more context. I have long been a fan of free software, ever since I first compiled a Linux kernel on an old 386 at the Shiva Corporation in high school in the early 90’s. This was before Windows for Workgroups even, where DOS still ruled the roost and where Microsoft was just starting to enter the world of GUIs that Apple Macs had been in for 10 years prior. I had a simple thought. If DOS was more popular than Macs because it was more open, easier to tinker with and fix despite being ridiculously harder to use, then Linux would eventually be more popular than DOS for the same reason, which I incidentally think also applies to Windows NT.
While I loved Linux and tried to install it everywhere I could, my father absolutely hated how I couldn’t see that DOS and Windows were more important for business and that I was investing so much time in a hobbled platform with pretty much no important or critical applications. In fact, if you ask my two younger brothers, they would attest to how much my distaste for the Windows platform actually hurt my relationship with my father who would spend hours trying to lecture me into using Windows. The smart money went with Microsoft, but I didn’t care. It was too late. I had bought into this whole “freedom and openness” thing and was still a bit too isolated from the real world of bills and mortgages to think that I was potentially compromising my future earnings.
Instead, I started to think even more abstractly in terms of currency, value, and exchange. I thought it was really spectacular that GNU/Linux, when considered together, represents the largest collaborative engineering project ever undertaken by humanity, and was being built at the time mostly by volunteers who believed in a common cause of creating a better system than Windows. I know Linus has said that he has never wanted to destroy Windows and instead only focuses on making Linux better, but those of us who adopted Linux as a platform were drawn to a common cause that there simply had to be something better than Windows (particularly because we were the ones who had to fix it for all of our friends and family), not to mention that we hated the idea in principle of a company’s making computers intentionally incompatible or hard to work with, given how hard in general it is to get them to work right in the first place.
So GNU/Linux is a system comprising attributes of emergence, self-governance, anarchy, evolution, openness, freedom, and now with some Ubuntu thrown in. But, there is no real business model for it. There are some awkward ways for businesses to make money off of it, usually involving support and customization, but those have their own problems. Imagine instead if the profit motive could be directly aligned and intertwined with open source software production.
Another area that has no proper business model is digital music. Despite the success of iTunes, I have never bought a single song on it. I hate the idea that I could lose access to what I have paid thousands of dollars for just for moving to a different computer, not to mention that it doesn’t even run on Linux. My mother can’t use it in Hong Kong and many people don’t have access to it around the world. Why would I endorse such a thing as the “proper” solution to how music should be considered in the digital Internet age? Not to mention, I have used better systems, such as AllofMP3 and OINK, which were both actually better than Napster ever was, IMHO.
I think in both cases, GNU/Linux (and other open source systems, including suprasphere) and digital music, we need to think differently about money itself in order to come up with a solution to the problem of how artists will get paid and how to ensure freedom while still being able to make money on software. The key is to think of “creating money” instead of “making money”. Given that two gigantic forces are on a collision course, the financial system on the one hand, and the Internet, which comprises digitally distributed music and video, collaboratively developed free software, the web (both 2.0 and 3.0) ;) on the other, which would you bet will come out on top?
The truth is that the transactional efficiencies and network externalities of the web put the entire financial system to shame. There were hints of this back in the web 1.0 bubble days of the “new economy”. People thought that Internet companies didn’t need to conform to old concepts of “revenue”, “profit”, and “cost of goods sold”. Eyeballs were the new currency of the day. Well, I don’t think it’s as far from what the truth could be, assuming that people allow that the nature of money itself (as opposed to just the application of it) can actually be changed. Even as people talk about a new bubble, and people wonder how companies like Facebook will ever live up to their valuation, I think we can take steps to move the entire financial system on to the architecture of the Internet and the Web, and make it open source on top of it!
In fact, I have numerous times heard the semantic web referred to as an “information bus” (TechnicaLee Speaking), and we are starting to see the convergence of the semantic web and the activities of general financial services companies such as with Reuters Calais. What else is the financial system but a global information bus? Why else would financial services companies want to integrate instant messaging into the kernel of an operating system?
Even as suprasphere contains pretty amazing technology and is a very unique and innovative application, we are not proposing as a vision something that isn’t already happening. Instead, we are trying to suggest clearly what it all adds up to, and certainly hope that suprasphere serves as a reference point outside of just giving us some credibility to suggest this broader vision.
So, here we go. What if, each time an individual or group invents a new concept in a unique semantic namespace, a currency (stock) account for that unique new namespace was also simultaneously created? Such a namespace could represent a new music album, website, Linux module, or just about any project. As other people linked to that unique namespace, downloaded from that namespace, collaborated around that namespace, the stock of of that entity would automatically rise as more people used it and interacted with it. The more interest in the creative output of the group responsible for the project, the more interest would accrue in their account. This even has analogies in the “peer to patent” proposal for how to reform the patent system.
So as currency accumulates in an account/sphere, it can be spent just like with “normal money”, but every time it gets spent (on things like clothes, food, cars, etc.), it must get spent as a proportion of the interest and the principal. As soon as the principal is gone, it can no longer accrue interest. Perhaps if it’s invested in somebody else’s sphere as both interest and principal, it can accrue interest on both. There might be an expiration point where after accumulating interest for so long, the namespace itself becomes public domain.
Or not. That was my freestyle idea of how it might work, but the exact model and details are truly open for debate and dialog, which should at the very least feel exceptionally empowering in and of itself. At this point the details of how the system can work are not as important as achieving consensus around the overall premise, where we can start to set in motion the conditions where the exact attributes can emerge and evolve. Just like the financial system (and the credit system for that matter), one can’t design and manage it centrally in a command-and-control fashion, but we can set in motion the idea that people can be in true control over their own bank account and concept of “net worth” and allow a new system to emerge in true chaordic fashion.
I realize that this is in many respects a crazy idea. I have not only been thinking and talking along these lines for a long time, but also working extremely hard each and every day to help bring this about. However, every day that goes forward the greater the intellectual risk as I spend more social capital to keep the dialog open and the greater the possibility that someday I will wake up bankrupt, not just in my bank account but in the lack of people who care enough even to have a conversation about these concepts. I have sacrificed many, many years pursuing this core idea, and ask that you forgive the raw and unbaked nature of my presentation, and instead of only finding fault and poking holes and dismissing this outright, please give it a chance. We are at a tricky time in the world, with crises and problems of seemingly insurmountable proportion everywhere we look, and as a result I think we deserve the right to think openly and freely about the nature of money, and seize the opportunity to fashion it along lines that will support each of our grandest goals and ambitions.
Posted on February 27th, 2008 by David Thomson
1 Comment
March 3rd, 2008 at 1:44 pm
[…] to use SupraSphere to share media files files, which I don’t want to do until we have the economic model a bit more figured out. :) addthis_url = […]