It’s Time for a Reputation Based Currency

Many people know that the events that inspired what now has become The Ingenesist Project originated with my personal observation and experience of the Mexican Peso Crisis as a visiting professor.  Very few people in America realize the implications of a real financial crisis and associated currency collapse. Unfortunately, many people in the World have – perhaps we should listen to their ideas.

The Good, the Bad, and the Ugly

As recently as 1999-2002, Argentina experienced the type of worst-case financial collapse that America narrowly avoided only a few months ago – but that may eventually happen. The simplest reality is that when things go really really bad, people need to continue trading among each other for basic needs using a functional and relevant currency.  When things are really good, people need a currency that reflects productivity, not debt – i.e., social capitalism priorities, not necessarily Wall Street capitalism priorities.

Ground Zero

It is not surprising to me that great applied currency applications would be  coming out of Argentina today.  The Whuffie Bank is an exciting new project that introduces a reputation based currency inspired by several science fiction authors of the past, specifically Cory Doctorow.   Likewise, the founders of the Whuffie Bank demonstrate the perfect combination of humility, openness, and inquisitiveness that is required in the emerging social media space.  Everyone realizes that the Whuffie is not a perfect currency, but the story has to start somewhere and TWB has something important to say.

It’s Time for a Reputation Based Currency

I’ll talk more about the Whuffie Bank as I learn more.  First, it would be best to describe the origin of the term.  I lifted the following description from Wikipedia:

Whuffie is the ephemeral, reputation-based currency of Cory Doctorow’s science fiction novel, Down and Out in the Magic Kingdom. This book describes a post-scarcity economy: All the necessities (and most of the luxuries) of life are free for the taking. A person’s current Whuffie is instantly viewable to anyone, as everybody has a brain-implant giving them an interface with the Net. (Cory’s Blog)

The term has since seen some adoption as a synonym for Social capital, including its use in the title of the Tara Hunt book The Whuffie Factor.

The usual economic incentives have disappeared from the book’s world. Whuffie has replaced money, providing a motivation for people to do useful and creative things. A person’s Whuffie is a general measurement of his or her overall reputation, and Whuffie is lost and gained according to a person’s favorable or unfavorable actions. The question is, who determines which actions are favorable or unfavorable? In Down and Out, the answer is public opinion. Rudely pushing past someone on the sidewalk will definitely lose you points from them (and possibly bystanders who saw you), while composing a much-loved symphony will earn you Whuffie from everyone who enjoyed it.

A gross Whuffie score looks the same to everyone viewing it, but a weighted Whuffie score is subjective. This meta-Whuffie takes into account right-handed Whuffie (the amount given by people you like) and left-handed Whuffie (given by people you dislike). Another variety is pity Whuffie, given to those who are down on their luck.

In Down and Out, some judgments based on Whuffie are automatic and require no conscious thought; the same technology that allows brain dumps is used for weighting and for finding interesting things. As brain dumps allow machines to carry consciousness, the machines can do the thinking for the people and allow them to know automatically.[1]

There are few details in the book about how this system actually worked; most of the explanations given are very general, like this one: “Whuffie recaptured the true essence of money: in the old days, if you were broke but respected, you wouldn’t starve; contrariwise, if you were rich and hated, no sum could buy you security and peace. By measuring the thing that money really represented — your personal capital with your friends and neighbors — you more accurately gauged your success”.

A person with a score of 0 is just as capable of giving and revoking Whuffie as someone with a score of 1,000,000. The person with the million-point score would be invited to a lot more parties and shows and other exclusive and elite events, while his bottomed-out counterpart would get dirty looks from people on the bus and would probably not be allowed into any reputable clubs or restaurants. But both of their opinions on somebody else would count for the same amount of gross Whuffie.

Like all economic systems, Whuffie has effects that seem undesirable to many. For example, it might tend to favor popular speech at the expense of public discourse, and it could be frequently uninformative: if a person has a high Whuffie score, is it for guitar playing or auto repair? However, both of these are already the status quo under the existing capitalist system, and the concept of weighted Whuffie helps make better decisions on a person-by-person basis, and thus is more flexible than rating someone by their bank account. Also, the Whuffie system might keep a public history of how each person’s Whuffie was earned, unlike the secret origins of other people’s money in a capitalist system.

It’s Time for a Reputation Based Currency

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