December 16, 2012

Broadly Technical at Mobile Payments Startup (while musing on the impossibility of the reliable social network)

I'm now back in the payments space after a long hiatus. To draw a line from the past, I had a go at updating LinkedIn (yes, that business social network site that everyone complains about and everyone uses) to reflect that, and it just gave me the sense of how bad these systems really are. Minor point is that it insists on a job title - which means what? More oddly, the site led me into the endorsements section and the inevitable flood of claims over people I know.

The end result was? Noise. Looking at the results such as others endorsements over self, there is so much noise -- impossible claims, unlikely falsehoods and let's face it, lies -- in the system that the overall result is unreliable.

I mean that in a specific sense -- The system's only value is found when you are not relying on it. Therefore worthless, QED.

As my friend Ken has it, any claim is only worth the risk you take on it. Since social networking involves no risk, value is capped at somewhere between noise and zero.

But it doesn't have to be that way. In deep contrast, a claim made in CAcert's community of Assurers is worth something. The risk is that you can be arbitrated against for false claims, and people have been. That's a risk -- it might not be easy to put a number on that risk, but it is still a tangible, touchable and definable risk. It's painful when it happens, it's unforgettable.

Other systems and places in society have this worked out. For example, they make you sign statements on paper with words to effect "I make these statements as if in front of a judge and will be found guilty of perjury if I lie." So it is not as if the solutions aren't out there, and by some lights, what happened at CAcert was simply a copy of these other systems. To make light of the CAcert success - it is engineerable and it can be done.

We can imagine a reliable social network, but it seems an unlikely fit with the current vision.

Where existing social networks will fall down in my opinion is that they are too light-weight, almost risk-free. One cannot see the marketing-heavy approach working, one can only see the network collapsing as mouthpieces try and turn their customer base from a lightweight graph into a reliable society. Making someone reliable means turning thumbscrews on them, and every social network is based on exactly not doing that - they promise a pain-free environment, and beyond a certain measure of customer mass, this ensures a value-free environment.

And, counterintuitively, this is why I'm back in the payments space. It is my view that if you want to create a reliable community, you need to do it with thumbscrews. In this case, the payments world has the contractual thumbscrew known as the payment. If Alice pays Bob, they've both got skin in the game, as the North American expression has it. The payments world already gives us cryptographically basis for payments, and therefore for reliable claims.

I'm not talking here about Java crypto and secure receipts and invoicing messages and so forth - all the good old cryptoplumber magic in the last cycle. The really interesting question is the old FC7 thesis -- what are we going to do with it? I don't know the answer as yet but I do know what I'm thinking at a conceptual level: the reliable society.

Posted by iang at December 16, 2012 03:14 AM | TrackBack
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