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.

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I am heavily quoting an article below from the DOW JONES NEWSWIRES written By Tom Barkley because this situation leads us into a discussion about alternate currencies in which Conversational Currency is applicable.

We predict that the structure for an innovation economy will be built on a platform of Social Media where conversational Currency is the currency of trade.  We admit that this is a far cry from a declaration of government foreign or domestic, sorry about that.  We also admit this is a far cry from what Corporations, Banks, Insurance Companies and traditional media barons would espouse, Ooops.

The best management policy is to accommodate what people are already doing.  People are ADOPTING Social Media in a frenzy of applications which were not even predicted by those who developed the platforms – this is a reality, not a fantasy or a blip in the radar screen.  Social Media will have an extraordinary role in the value of currency – if people don’t like it, they won’t trade it; Game over.  The next Global Currency will be represented by human productivity traded in social media.  The most productive country will hold the most currency – this is a game that the US can still win.

WASHINGTON (Dow Jones)–U.S. Federal Reserve Chairman Ben Bernanke waded into the international debate over the fate of the dollar Thursday, pledging to do his part to avoid what he sees as a longer-term risk to the dollar’s status as the world’s predominant reserve currency.

[China and Russia have been the major drivers behind calls for an alternative reserve currency, blaming the U.S. for the global crisis and worried that its growing debt load could pose a further threat to stability. That view gained some additional force this week when World Bank President Robert Zoellick predicted that the dollar would face increasing as a reserve currency and its status would depend on how well the U.S. can manage its debt.]

Here is the Social Media Pitch:

[The G-20’s plan to reinforce country measures to address imbalances through peer reviews “would perhaps strengthen the mechanism” for enforcement, he said.]

Social Currency?

At the end of the day PEER REVIEW will be the global vetting mechanism that supports the value of a currency.  What part of Social Currency are we not understanding here?

Google 10^100 award voting is Launched.  There are two sectors that we believe would have the greatest impact on the greatest amount of people; building a better banking system and funding social entrepreneurs.  You can’t have one without the other – if Google funds these two sectors in concert, the outcome would be incredible.

Build A Better Bank

In the old banking system we assume that we have the knowledge to execute a business plan and we go to the bank to borrow the money.  In the new banking system, we will assume we have the money and we go off in search of the knowledge.  Social Media is an excellent “public accounting system” for knowledge assets.

Our current banking system has gotten it backwards.

Technological change must always precede economic growth. The supranational currency may be backed by productivity and not debt.  Social media provides an excellent platform upon which to design such a banking system. People trade “social currency” at a tremendous rate.  This is evidenced by the amount of destructive innovation is occurring in many legacy sectors due to social media.

Better Banking Tools for everyone

“Partner with banks and technology companies to increase the reach of financial services across the world. Users submitted numerous ideas that seek to improve the quality of people’s lives by offering new, more convenient and more sophisticated banking services. Specific suggestions include inexpensive village-based banking kiosks for developing countries; an SMS solution geared toward mobile networks; and ideas for implementing banking services into school curriculums”.

Suggestions that inspired this idea

1.    Enable prepaid cell phone bank accounts for millions of people working in the informal economy
2.    Create a community-level electronic banking system for rural areas
3.    Build IT-enabled kiosks which provide access to financial services
4.    Create a single world bank or supra-national currency, uniform rules and transparent public accounting

Fund Social Entrepreneurs

Venture Capital is ridiculously expensive. Corporate innovation serves shareholders value over social priorities.  Some say that the financial risk of funding innovation is too high. The top ten reasons why start-ups fail are due to knowledge deficits, not money deficits.  A new banking system that trades knowledge as currency would solve this problem.

The key is to match most worthy knowledge surplus to most worthy knowledge deficit.  Google is perfectly able to build a search app for knowledge assets if there were an inventory of knowledge assets.  With the most worthy match, Risk can be reduced and new financial instruments can be developed such as the innovation bond, innovation insurance, tangential innovation markets, and destructive innovation transition contingency options, etc.

Help social entrepreneurs drive change

Create a fund to support social entrepreneurship. This idea was inspired by a number of user proposals focused on “social entrepreneurs” — individuals and organizations who use entrepreneurial techniques to build ventures focused on attacking social problems and fomenting change. Specific relevant ideas include establishing schools that teach entrepreneurial skills in rural areas; supporting entrepreneurs in underdeveloped communities; and creating an entity to provide capital and training to help entrepreneurs build viable businesses and catalyze sustained community change.

Suggestions that inspired this idea

1.    Provide targeted capital and business training to help young entrepreneurs build viable businesses and catalyze sustained community change
2.    Create a non-profit, venture capital-like revolving fund to invest in high-impact local entrepreneurs
3.    Send young American entrepreneurs to underdeveloped communities to help create small businesses that would economically benefit those communities
4.    Create schools in rural areas to teach local people how to become entrepreneurs
5.    Create a private equity fund to help immigrants in developed countries finance business development in their countries of origin

Can the value of conversation fluctuate when compared to a “basket of conversational currencies”?  The translation is as follows;  If several conversations are taking place at the same time, does yours hold more or less value depending on the value of the others?

Same as a Lie?

If you ask a newspaper whose lead story was trumped by an unexpected celebrity death, the answer is yes.  If you tell a political activist whose rational message is lost to  more radical activists, the answer is yes.  If your speech is interrupted by a heckler, the answer is yes.  If you are caught lying about your Nuke Plant, the outcome is unintentionally the same – a loss of credibility, value, equity, and associated increase in risk, volatility, etc.

In today’s world of floating currencies, almost every currency rises and falls against other currencies at one time or another. But a currency that is persistently weak or continually falling relative to others presents a problem. If the dollar’s value were to continue to fall to new lows, eventually this would trigger rising inflation pressures. That’s because inflation can be defined as the loss of purchasing power of a unit of currency.

Inflationary Pressure on Conversational Currency?

Likewise, weak and falling conversational currencies are also bad for growth, since they scare away investment by another conversant. Who wants to invest time and knowledge in a conversation if there exists the real possibility that one’s investment will be eroded by a falling currency? At the very least investors require special incentives (i.e., premiums) to invest in an conversation with a weak currency.

Incentives Packages of Social Media Space

Weak conversational currencies are symptomatic of a variety of factors: cheap talk, lack of references, weak economic growth prospects, lack of confidence in the other participants, weak currency demand, and bad fiscal policies (e.g., wasteful discussion, high cost of participation, low quality venue or presentation). Strong conversational currencies, on the other hand, typically reflect tight topic control, vetting policy, strong growth prospects, confidence among participants, strong currency demand, and good fiscal policies.

The Critical Breath Mint

For better or worse, in order to “mint” conversational Currency, a discussion must be made accessible to largest audience possible.  The discussion must also be directed to those most “qualified” to engage in the discussion. When the value of the conversational currency reaches a low level threshold in either factor, the discussion ends with no resolution to continue and no tangential discussions taking place.  This can often be attributed to disruptive innovation making old conversations obsolete.  But it can also happen to worthy conversations infected by a parasite such as spam, hecklers, radicalization, flame wars, and emotional versus rational articulation, vendetta, sabotage, etc.

Critical Level of Conversational Currency

The critical level of conversational currency is where supply and demand cross.  The value of conversational currency will be determined by the ability to match the most worthy knowledge surplus with the most worthy knowledge deficit.  We use the financial analogy because the idea is the same – a currency is a currency.  Many of the same rules, methods, and calculus hold.  What is missing in Social Media are an inventory and accounting system for knowledge assets. While such systems are emerging on FaceBook, Twitter, Linkedin, etc.  Some intervention is needed to integrate a social media system we can bank on, literally and figuratively.

Image credit

dev-oClear and Present Value

The value of conversations is real, clear and present – especially in the actions of those who profit wildly from them. I saw this in the negotiations of NAFTA when it was clearly in the best interest of the some negotiators to keep engineers poor weak and disorganized.

I saw it again in corporate America.  Imagine if Boeing was to publish a complete accounting of the incredible intellect, ingenuity, talent, and creativity that roams their hallowed halls – the world would dismantle them piece by piece.  The “knowledge inventory” is a company’s most closely held secret.

Keeping secrets from the secret:

Sometimes it seems that the biggest secrets are held from those who represent the greatest real value. Corporations pay their engineers the minimum amount of money required to get them to their desk in the morning.  Then they resist organization of engineering professionals, and they give them little or no power over marketing, human resources, accounting, and sales promises related to the engineering outcome.

The problems get worse when this big “secret” becomes public. For example: Steve Jobs has now been identified as trying to collude with Ed Colligan, the CEO of Palm, to not poach each other’s employees.

A Currency Collusion Collision Conversation

“Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” Colligan said to Jobs last August, according to an article Bloomberg reported.  Jobs succeeded in making such an arrangement with Google, according to published reports. The feds are investigating and the Palm allegations only make Apple look worse.

It is quite amazing that companies would expose them selves to such risk if conversations among engineers were NOT in fact extremely valuable.  Why else would Apple engage in such disrespect to engineers and others who actually create the products Mr. Jobs gets credit for?

The liberation of Knowledge Assets

The IPhone that rolls off the assembly line is not an innovation.  Rather, the millions upon millions of tiny incremental ideas, conversations, and shared thought are assembled into what does eventually roll off the assembly line.  The role of the CEO is significant, but still a minority task in the larger picture.

More than ever, social media is empowering people to hold equally productive and focused conversations outside the construct of corporation.  With the ability to measure and track impressions comes the ability to pay royalties to those that produce, direct, and sustain conversations.

With the Obama justice department and other federal regulators already looking closely at Apple over the iPhone and handset exclusivity and the sharing of board members, Jobs’ alleged anti-poaching efforts only add to the fire that is growing around him. If social media continues to integrate at a rapid pace, the biggest fire that Mr. Jobs and other CEOs may have growing around them is the autonomy of creative, social, and intellectual staff.

Special thanks to a post written by: Veteran industry-watcher David Coursey who tweets as @techinciter and can be contacted via his Web site.

bad-leadership-causes-failed-itPeople look for leaders that inspire them to achieve innovative breakthroughs. People trust, or so we think, CEO’s to effectively lead their organizations so that employees can continue to get paid.

The confidence in leadership is waning and a new “leadership” is emerging. The new leadership is from and by the people. The reason for a shift in leadership is as follows:

1. Politicians have failed us with self interest and politics as usual. Usual no longer works for the people

2. CEO’s and management have failed to listen to the markets of conversations

3. Greed is out, efficiency is in and the old market is not adapt at “lean, mean and fast”

4. The people has lost trust in media, politicians and old management schemes

5. Advertising and marketing methods of the past are dead. 96% of the online ads get no responses. A rate of 3% at best is the return on direct mail, coupons and broadcast ads.

6. The market is no longer listening to the old market rather the market is listening to the people

7. People have been empowered and engaged to create their own markets and they follow a new kind of market leader. A leader who enables them to learn, grow and share with others whom have an affinity to their interest and beliefs.

8. New leaders are now  conversing with their own audience and there are many of them.  There are also a few leaders who are enabling many to engage, converse and build our own audience.

9. Conversations have never been so fluid, so reaching and so powerful.  The irony is that the power of speech has always been and will always be disruptive. History proves it so but we are in an era of making history that reinvents itself daily from the conversations.

10. Old leaders either adapt very quickly or die. The old game is over and the longer you try and play it the more it will cost the market, your investors and the people whom supply the market with commerce, the people.

Admit It, You are Out of Touch And Blinded By The Past

For politicians and corporate leaders the downfall of your empires is directly related to markets changing and you denying the change. If you haven’t noticed markets are now transparent. There is nothing you do that the market won’t notice and freely comment on, good, bad and indifferent. When you do good the market with follow you. When you do bad or do the same thing the market will leave you. Unless you recognize this shift your dead in the water.

Time is your enemy and denial is your your deathbed.  Being dead in the water means the next wave will topple your boat because its force is too big, too large and you can’t move fast enough to navigate around or over it.

Then again you may simply not have time or attention to even recognize that it just may be true and real.  In that case, move over for the new leader to replace you sooner than later.  Leaders are failing because they fail to change and fail to listen. Sorry for being so frank but I don’t have time to be politically correct. Get it?

The following commentary was posted last week  in  Wall Street Journal Op Ed. This is an opportunity to consider the term “Conversational Currency” at it’s most literal meaning. People pay money to talk to each other. Other people want to control how when and how much people can talk to each other. The battlefront is technology, like rockem-sockem robots, technologies duke it out in this trillion dollar struggle to control our conversations.

Who benefits … shareholders?

The irony is that each and every titan is the beneficiary of conversation. The 135 year old Alexander Graham Bell era is about to End. Will patricide or scionism prevail? Will unified voice systems integrate all mediums and devices into a single channel? Will the elimination of conversation “frictions” also eliminate innovation “frictions” (you know, all those things that make innovation impossible to capitalize by regular people; Patents, risk, velocity, market intel, 1000% VC, etc.).

It’s about the data, stupid

Mr. Kessler proposes a National Data policy – after all, voice, text, video, etc., are simply different forms of data and should be treated as such.  Any device should work on any network and data should flow freely.  What’s with owning airwaves? Who came up with that idea ? – it creates more interference than it is touted to solve. Ditto for exclusivity contracts – who needs them, except those who stifle innovation.  And finally, the mother of all frictions, restricting speed and bandwidth.  Sure, I like driving with the emergency brake on – it improves my eligibility for “cash for clunkers”.

Resistance is futile

The truth cannot be hidden by economic tyranny.  Noble institutions like journalism, education, and entrepreneurship are being sacrificed in the name of shareholder value. People communicate freely and freely they shall communicate.  These are the profound questions of our era that play out every day in the news. Please read this and our other posts at CC with great optimism that a new paradigm is arising where an innovation economy will be built on a social media platform outside the construct of corporations:

Bank-of-Wal-Mart-Note--40279The New Reverse Order

If someone can track your spending, they can predict your behavior.  It is also true that if someone can track your behavior, they predict your spending.   The next economic paradigm is simply a higher order of the same.

On the next higher order, if someone knows your “Knowledge Inventory” they can predict how you will manage changing conditions – that is, how you will innovate.  Likewise, tracking how people innovate exposes the development of new knowledge assets (the ‘gold-standard’ of conversational currency).

Everyday some new headline shows that we are getting closer and closer to that point – for better or worse – where humanity learns to manage an innovation economy.

Profound Issues Arise.

The following article about Wal-Mart adopting the debit card (Wal-Mart to Staff: Bye-Bye Paycheck, Hello Debit Card) as a means of issuing paychecks represents a quantum leap in the monetization of knowledge assets.  We expect many more will closely follow in one of the most important financial developments in financial history – virtual currency.  If food stamps can be delivered on a debit card, why not frequent flier miles, Disney Dollars, coupons, rebates, tulip bulbs, beanie babies, or a new global currency such as the Rallod?

A Vetting Zoo

The only questions that remain are related to Vetting.  By all accounts Social Media is developing into the mother of all vetting mechanisms.  Who controls the card? What system is it replacing? Who can pull money off?  Who charges fees to whom and why? Who gets the business intelligence?  What is the PR spin?  Can advertisers interact with the card to apply discounts and rewards?  What types incentives motivate what types of people and can it go on a debit card?

A Steep Departure

Each of these questions, and the companies they spawn, will live or die by Tweet and Blog – this is a steep departure from the past.  For example; 30 years ago, if every American were told that their social security number would be tied to a credits score that is tied to their driving record, employability, insurance premium, health care, mortgage rate, and, yup, their debit card – the cities would have burned in protest.

Nobody could have seen this future except those who designed it.  Today, the designers are you and I – see the future now, see the future here at Conversational Currency.

The idea of trust as social currency is appearing in more articles, conferences, and books.  This is all highly consistent with the TIP thesis on Innovation Economics which describes the necessity of a vetting mechanism among the knowledge inventory as a means for the emergence of a currency in a market – that is, a conversational currency.  People need to trust the currency if they are to trade the currency.

Shefaly Yogendra provides some excellent insights below.  Keep in mind that American Culture does not have a monopoly on the definition of trust.  It should not be an American expectation to define the conversational currency in our own image.  Indeed, convertability of such currency will be, and must be, global.

I kept the analysis sparse on this article because it is a valuable exercise to form one’s own perspective on trust prior to diving into someone Else’s opinion.  After all, it’s your currency – you own it.  Good luck.


by Shefaly (please see her Bio here)

Trust is a non-negotiable essential in business. The post linked here refers to web-based business-to-consumer interactions. But as social currency, Trust is the most significant in interactions amongst organisations, customers, employees and regulatory bodies.


Wikipedia defines social currency as “information shared which encourages further social encounters“. Social currency is different from social capital which refers to “connections within and between social networks and individuals“.

Social currency – some characteristics

a) No distinction between ‘physical’ and ‘virtual’ worlds

b) No distinction between ‘individuals’ and ‘corporate entities’

c) No distinction between validity of negative or positive normative labels

Determining the value of Trust as social currency

a) Verifiable Identity and antecedents

b) Consistency

c) Reliability

d) Peer recognition

e) Value of the network

f) Individuality and collaborative consciousness

The original article can be found here and it elaborates on each of the points above.

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Flip-floponomics is a term that I just coined with this post which means:

1.    A traditional business method flipped on it’s back to reveal a new business method
2.    A mirror image of a previously accepted economic paradigm
3.    sing. n; flip-floponom; A phenomenon of flip-floponomics.

Let’s demonstrate how this works.

Flip-floponom A:

Twitter has announced that they will mine user generated data and process it into business intelligence which they will sell to corporations for a whole lot of money.  As such, corporations who were unable to figure out how to charge people a whole lot of money money to “watch” social media can now be charged a whole lot of money to “watch” social media

Flip-floponom B:

YouTube can’t make money on ads because viewers don’t care.  But with user generated content such as Jill and Kevin’s wedding (with 12 million views), Chris Brown landed a land slide of sales for the song “Forever”.  The audience is now the Brands positioning themselves to be “user-generated”.

The Mother of all Flip-flopona:

Before flip-floponomics: entrepreneurs assumed that they had the knowledge to execute a business plan and they went to the bank to borrow money.

After Flip-floponomics: entrepreneurs assumed they had the money to execute a business plan and they go to social media to borrow the knowledge.

Next economic paradigm:

With the continuing integration of social media, every single business transaction has the potential to be re-invented in the mirror image if itself using the principles of flip-floponomics.  The opportunities for future entrepreneurs who figure out this class of business activity can be described as nothing short of astonishing.


Image Credit Picasso