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Published on Jun 25, 2018

Tokens and Economies

Social tokens

by Andrew Lippman
Published onJun 25, 2018
Tokens and Economies

Tokens and economies

Dan Ariely made a nice distinction between financial economies and social ones.  They are different and moving from one to another is not easy or reversible.

The poster child for this is the famous Israeli childcare case.  The problem was that the mothers were always late picking up their kids.  They solved the problem by instituting a penalty of $20 for being late.  That was it.  But…  it did the opposite.  Now, instead of being shamed into being on time, the mothers made a financial decision:  was the fee worth it.  All to often the answer was yes and they were late again.  Money doesn’t solve all social problems.

Similar to that, as Dan noted, if you invite me to dinner and i bring a bottle of wine, that’s nice.  But if I thank you for dinner and give you $20, it’s an insult.  To an economist, $20 and a bottle of wine are the same thing, but they aren’t equivalent to a host.  One is a social value, the other a monetary one.

I think we can explore the same idea using crypto tokens.  We can create a way of rewarding or fostering beneficial social action using a token as a representation of participation or as a merit badge.  For a nice example of this, there is a nice Planet Money program about food bank distribution that did something similar.  (https://www.npr.org/sections/money/2015/11/25/457408717/episode-665-the-pickle-problem).  They created “shares” to allow participating food banks to allocate and determine which banks got what from a central repository.  I recommend listening to the program. It is not necessarily a model, but it is a nice start.

We considered merit badges for fifty-nifty:  points for calling congresspeople, more for enlisting other calls.  Like affinity points, they have no real value, but they could be worn with pride, or perhaps used to get a ticket to a political rally.  They associate something you can show that arose from your  participating in the political process without transforming it into buying votes.  The tokens in both FiftyNifty and the food banks did not qualify as a currency — they were not really a store of value as they were used or hypothesized. But they did help allocate a resource or externalize some social value.  They were bottles of wine, in essence.

Of course, there is the danger that anything to which we can ascribe a value will accrete one.  Yes, one could sell a front row seat at a political rally.  Yes, you could game the food bank distribution system.  But the social environment works against it.  It is embarrassing to have bought your way into an event where everyone else worked to get there.  At least so we would hope.  (If we don’t know, then we experiment…)(Who knows if the Israelis ever solved the problem of late mothers…)

The bottom line is that I think we can try to consider developing non-financial, non-asset-based tokens that are a social good.  In our case, we use the political context.  I like merit badges.  Boy Scouts wear them with pride; there is no economic value to them.  But we need a name that evokes that pride without tainting it with a coinage.

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Kalli Retzepi:

Merit badges don’t have any economic value, but emotional and moral value. What holds emotional value for people, in a political context? I think this is what we should be designing for, even if there are hundreds of different answers to that question.

Bail Bloc https://thenewinquiry.com/bail-bloc/ is an acceptable example of using a cryptocurrency for its literal (financial) value. It lacks the “engage the public” character though, since it essentially is something that you install in your browser, and let it run.

Maybe we can think of it this way: we need to identify whether we can design something:

  1. that makes it easier for people to communicate, leaving what happens after than open-ended (softStack is going there I think)

  2. or easier for people to take action independently, where we clearly define “action” (fifty-nifty is an example of that, bail bloc too).

  3. or both? can we have both?

Agnes Cameron:

This is a compelling way to engage people who might already be motivated to be involved in political action. It’s heartening to have some record of the ‘work’ you have done, and it gives you a sense of progress toward a goal that you care about. For example, the seeing the accumulation of little green squares on GitHub over time gives you a feeling of having done dedicated work (see also pedometers etc). The nice thing about these is that they represent nontrivial but modular effort: they are the ‘strong signal’ that judith talks about, but also reinforce the idea that small efforts over time can make a big difference.

I think that the limits of this may lie in people who don't care so much about political action — maybe they need a different network model to be engaged.

Andrew Lippman:

Nice analogy to github. Agree that the harder part is getting people who are not already motivated. I think the best we can do there is engage real friends. For example, a “help me vote” app/campaign would get you talking to friends about voting. That is stronger than another mass mailing from an org.

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Andrew Lippman:

The idea of the social token is not new. We considered it long ago and again with FiftyNifty. But it is timely. For two reasons:

FIrst, there is too much attention to tokens as an asset. The opposite is under-explored.

Second, we are becoming the center for non-financial uses of blockchains. This may be a case where one doesn’t consider “why do you need a blockchain?” Rather we take a system that can or does work without it, then we add it as a way of managing duplication, management of a distributed system, and building consensus.

For these reasons, I think we should fold a token into the political discussion.

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