How Decentralized Reputation Can Help People Thrive
minute read time
May 16, 2017
August 16, 2022
If reputation is considered a type of currency, centralized reputation profiles are like arcade tokens usable in a single arcade. Both users and platforms can increase the value of their reputation currency by adopting portable reputation protocols.
The building blocks of portable reputation are blockchains, decentralized identities, and digitally signed claims. Systems built from these enable leaps in reputation reusability. To understand the role of blockchains we need to understand how “trustless” programs and reputation profiles interact.
THE VALUE OF REPUTATION
Like money, reputation gives us access to opportunities, relationships, and resources. But reputation information about people’s expertise is primarily siloed into centralized systems like Linkedin, Upwork, and college transcripts. The centralization of reputation profiles limits their value for both commercial transactions and the accreditation needed for employment.
If reputation is considered as a type of currency, centralized reputation profiles are like arcade tokens usable in a single arcade. Portable reputation profiles are like dollars that are usable everywhere. Which would you rather have?
For example, consider the difficulty of using your hard won work ratings on Upwork from 20 clients to get your first gigs on Fiverr. It could take months to build up the reviews from new clients on Fiverr even though you already have a reputation on Upwork.
We now have the opportunity to make verified reputation data usable across many digital services. Both users and platforms can increase the value of their reputation “currency” by adopting portable reputation protocols.
The building blocks of portable reputation are blockchains, decentralized identities, and digitally signed claims. Systems built from these enable leaps in reputation reusability. These new portable reputation protocols will increase trust, open doors to many new opportunities, and help more people to thrive.
THE ROLE OF BLOCKCHAINS
Blockchains play a key role in portable reputation systems. To understand the role of blockchains we need to understand how “trustless” programs and reputation profiles interact.
Cryptocurrencies and blockchains are designed to be “trustless”. This means that once programmed and deployed, a blockchain program cannot be tampered with or corrupted. Trustless blockchain programs are secured by the power of modern digital cryptography. But “trustless” blockchain transactions are not a replacement for portable reputation.
Blockchain programs, or “Smart Contracts”, automate legal and financial transactions. They affect assets stored in blockchain accounts. They automate accounting processes. They digitally notarize events. They trigger the clauses of legal agreements.
But any asset or interaction that is not data on a secure blockchain represents counterparty risk. For example, if you wish to pay me Bitcoin in exchange for apples, how do you know that the apples are not rotten? How do you know from blockchain data that the apples are delicious enough to initiate an escrow smart contract to purchase them? Why buy my apples instead of someone else’s apples?
The leap from the domain of the blockchain to outside of it (e.g. the world of apples) implicitly relies upon reputation. Unless every atom in the universe is digitized and controlled by cryptographically secure blockchain programs, trust will be necessary to reduce various forms of counterparty risk. In addition, reputation is also essential to decision making amongst possible actions.
Although blockchains don’t fully remove the need for reputation, they can play a key role in improving reputation systems.
DESIRABLE PROPERTIES FOR PORTABLE REPUTATION
From Aristotle to central banks, currencies have been designed with functional characteristics in mind. Like “reputation currencies” discussed below, a useful monetary currency is: portable, non-forgeable, uniform, and durable.
Unlike reputation currencies, a useful monetary currency is also: scarce, divisible, transferable, fungible.
When all these characteristics are satisfied, money can be an effective store of value, unit of account, and medium of exchange.
Reputation requires a different but overlapping set of properties. A desirable reputation currency is:
Verifiable — Reputation is issued by an identity to another identity. Public and private keys are well suited to this.
Portable — Reputation can be moved from system to system with minimal friction. Portability increases the value of reputation.
Non-forgeable — Like currency, the account of the reputation issuer and receiver must be securely controlled.
Uniform — A uniform format is necessary for consistent assessment, discovery and aggregation.
Timestamped — Reputation claims may be correlated with other events. The order of multiple reputation claims from entity A to B matters.
Summable — To make decisions one must be able to aggregate and assess multiple claims about the same identity.
Unique — This summing should not double count copies of the same reputation claim. Reputation increases in usefulness with copying, but copies of the same reputation should not be mistaken for multiple endorsements.
Durable — Reputation should outlast individual enterprises and technological changes.
INTRODUCING THE WORK.NATION PROTOTYPE
The CoMakery team has built a prototype with Cisco, uPort, and The Institute for The Future called Work.nation.
Work.nation uses decentralized identity (uPort), decentralized storage of reputation data (IPFS), and blockchain claim notarization (Ethereum). The technical overview and open source code are on github.
This article does not constitute investment and/or legal advice, and is strictly for education purposes only. Upside is not an SEC registered investment advisor, practicing legal entity or any other type of licensed body that can legally provide investment and legal advice. Upside is not responsible for any errors or omissions in this article, due to the changing nature of laws, rules and regulations or otherwise, or for results obtained from use of the information it contains.
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