Can an economy function on a social platform?

in OCD2 years ago

I saw a post in trending and from what I could decipher, it was asking whether a social network with an economy is possible. I find the question quite strange, because - social networks are the only reason money can work at all. The only thing that gives any currency value, is a social understanding in the network that it can be traded for something else. Sure, the person likely meant a digital social media platform, but what is the difference - it is just another type of marketplace.

Well, the difference is obvious - the users of the digital platforms have been kept out of the economic loops, "protected" from the value they create. The reason that these free platforms are worth so much is because there is already a working economy on them, it is just that endusers do not have access to it.

That economy is literally worth trillions yearly through not only the data mining and add sales, but all of the applications and third-party products and services that leverage them to generate income. Trillions.

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However, introducing the end users to the potential to earning on these platforms is troublesome, not because it is impossible, but rather that we as users have been conditioned that we do not earn on them at any level. Not only are we the product, we are also the consumers that give the product value yet, the amount we generate gets skimmed off the top - and the middle and the bottom. All of it.

The problem with introducing value into the social networks is of course us as users with habits and scarcity mindsets. For example, the person who asked the question is an investor here on Steem, and one that has consistently supported themselves through alt accounts for years. Perhaps they think that everyone is the same as they are, and that obviously that is not going to work if everyone does it.

The reason it isn't going to work is that they have missed what gives a currency value - a social network. Without that distribution of currency throughout the community and without mechanisms to distribute it unevenly based on activity, the currency doesn't have value at all. There is zero point in being the richest person on earth holding every cent available, because there would be no liquidity nor reason for anyone else to participate in that system.

In that kind of scenario, what people would do is create a new type of currency. Anythin can become a currency. For instance, my father used to trade cigarette packages as a kid growing up in Malacca during the second world war. Because the packages couldn't be faked,they were ideal as a currency. They tokenized them. Does this sound familiar?

Currently, a tiny amount of people who an be counted on two hands have the same wealth as the poorest 3.5 billion on earth. It is very bad for business when you have a decreasing market due to fewer people being able to afford your products. But, the game can keep going on for a long tie as long as we play, because those rich people and the institutions that control even more wealth, do not hold cash.

They give us cash so we can spend it and pay interest on it, and then they buy real resources with what they earn using cash that is worthless, other than the collective social psyche that says it holds value. This means that they hold title of what is real, while prolonging the delusion that the currency is what holds value. Again, people need to understand that a currency does not have any value itself, what you can buy with it does.

While they buy real estate and businesses that have the potential to store and generate value, we buy consumables that will invariably go down in value and, the gap is continually increasing. The reason is pretty simple, because while we might be lucky to invest 10% of our income, they invest everything they possibly can and hold as little cash as they possibly can.

I wonder what would happen if everyone on earth said;

from now on, I want to be paid in Bitcoin.

Ah, but you aren't allowed to be paid in Bitcoin in nearly everywhere that matters, because that would make the currency that they use to control the population valueless, and Bitcoin highly valuable. Sure Fort Knox might have a bit of gold in it, but how many Bitcoin are stored there?

They'd have to buy off the markets.

But, perhaps I have got off track from the start and whether social platforms can have working economies. The short answer is:

Yes.

What people seem to fail to come to terms with however, is that an economy is never a smooth process, it is always a tug of war between supply and demand to find an equilibrium that is cross-referenced across a competitive environment all vying for what they believe are scarce resources, just like the account who posed the question.

People tend to forget that the "working economy" is highly volatile, and while currencies might not swing too much normally, the competitive nature of the environment leaves the marketplace filled with the bones and dying corpses of business and industry that didn't make the cut or are being made obsolete as we speak. Billion dollar companies being reduced to rubble, billion dollar companies being created from thin air.

Yet, most of us do not operate at the high levels of the economy and only feel the effects as endusers there too; taxes, interest rates on houses, job losses and the price of bread. We complain about the system, but have no control over it as we do not have any say over what we deem a valuable currency or not, they do. Crypto changes that.

Because we as the endusers decide on whether one cryptocurrency has value over another, we have the power to empower and dis-empower at a much greater level. While this sounds tumultuous, with enough participants it could be a much smoother ride as there is less opportunity for centralized manipulation and therefore, less opportunity for any one person to have a great deal more than anyone else in the same rate as it is in the world today. The reason is that due to the mobility and opt-in status, if the social network decides that they do not like the conditions, they opt-out.

Unlike a national currency, no one is tied to crypto.

What this can eventually lead to is a world where communities can form around currencies, or currencies around communities like could be the case with SMTs, and that community will be the deciding factor in the value of the currency they use, not some centralized authority that has no care about their community at all. If a Beanie Baby community wants to add a BB NFT they can and eventually, they won't be priced in centralized currencies, they will be tradeable across cryptos depending on needs.

I think a large part of the initial reason for centralized currencies was technological as it was only really possible to start trading widely across groups and varying products with a consistent marker. However, blockchains are able to not only track one currency, but could be used to compare values across multiple concurrently, being able to give a spot price at any given moment.

I can take a payment in Bitcoin, transfer it to Ethereum, buy a cryptokitty (Schrodinger's cryptocat project - is it alive or dead?), sell that cryptokitty for Enjin to play a game on a Samsung platform and after pwning, convert it into a token with which I can do my grocery shopping. The grocery store accepts the token because that is what they are going to convert into whatever needs they have for salaries and supply chain payments.

This was impossible for individuals to do until very recently - so we outsourced it to centralized authorities who then opted us into the system automatically with no built in opt out mechanism, other than the biological switch of death. Now we have the capabilities, the only reason we still stay in the systematic cage created for us is, we are scared to take the responsibility for ourselves and leave.

Yes, this process isn't going to be smooth, nor is it going to happen over night, but the transition and its success depends on the same laws of supply and demand that have always been in place. That which is in demand holds value and therefore, gets supplied. Stop demanding centralized currencies and at whatever rate we can, opt into decentralized options. Sure, there is a risk that we will fail and be left with nothing in the real world, but that is where we are headed anyway.

Do you take the smooth path of certain death, or the fork into the unknown?

If you do not think that a community on a social media platform can handle their own economy, Facebook is waiting for you. And they are only too happy to manage the finances so you don't have to.

Taraz
[ a Steem original ]

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There was a related TED talk recently that I included in Curating the Internet: Science and technology digest for February 22, 2020, and also shared on LinkedIn.

It was Why you should get paid for your data, by Jennifer Zhu Scott. Here's what I wrote about it when I shared it on LinkedIn.

Interesting analogy. Jennifer Zhu Scott compares today's situation with online data to the communist economy during her childhood in China.

In China, everyone had a job, but no one was allowed to own things, and everyone was poor. Then, when they introduced private ownership it lifted 850 million people out of poverty.

Similarly, on the Internet, a few mega-corporations have seized ownership of data from billions of people.

She argues that If individuals are able to own our data, the wealth from that data will be more evenly distributed, and every single person would be able to set our own unique balance between profiting from the data and preserving our privacy.

Examples she gives of steps in the right direction include the Brave Browser and the DuckDuckGo search engine.

Also, she doesn't mention these, but Verizon launched another privacy-focused search engine recently, https://www.onesearch.com/, and if you go through presearch.org for your searches, you can also earn cryptocurrency income from them.

That looks like something worth a watch, thanks!

The world of information management is changing and the opportunity for us to have some control and value from our own interaction is growing.

Definitely worth watching, IMO.

The world of information management is changing and the opportunity for us to have some control and value from our own interaction is growing.

Yep. I agree. Lots of people coming at the problem from lots of directions.

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Social tweetonomic studies

Fiat currencies have value because they are legal tender, which means that:

  1. Taxes and fees must be paid in them.

  2. If one must accept them as repayment of debt.

  3. Entities with accounting obligation must do their accounting in them.

Who gives them that value?
Legal Tender by definition is a centralized authority, and while that is the way it has been for a very long time, it hasn't always been that way, and doesn't actually have to be that way forever going forward. Things change - whether it is within my lifetime or not.

Who gives them that value?

Those who are forced to pay their taxes in them and accept them as repayment of debt, which is just about everyone.

Legal Tender by definition is a centralized authority, and while that is the way it has been for a very long time, it hasn't always been that way, and doesn't actually have to be that way forever going forward. Things change - whether it is within my lifetime or not.

Money as three basic functions, which are 1) medium of exchange, 2) measure of value and 3) store of value. The strongest fiat currencies such as the dollar and the euro work well as mediums of exchange and measures of value but they're poor stores of value. Bitcoin is an emerging asset that addresses the need to have a store of value. Bitcoin's greatest strength is that it is incorruptible because of its decentralized nature.

Gold is another but a friend of mine who had bought physical gold told me he could not get it cheaper than with a 4% markup from anywhere. He had his bullion mailed to him from England. The package was tracked an insured but having to wait for gold in the mail for days must be nerve-racking.

STEEM is a utility coin valuable on the Steem blockchain because it is needed to transact on it.

The "forced" part is the weakness as the emerging trend is to subvert force and there is now a technological possibility to do so. In the past, the immobility of economy and assets made the centralization and force easy. Digital currency moves with ease and changes the game and in time, can replace central currencies through usage, which replaces the utility of money as all three of those points, including a store of value.

If you get a parking ticket, there is no way to escape it and if the authorities want you to pay the fine in euros, you will do so. There is no choice. Also, your income tax must be paid in euros. You can try convincing the tax authorities otherwise but I can guarantee you it won't work. Also, you might want the authorities to help collect a debt, for instance, if a tenant of yours refuses to pay for their rent. If you refuse to accept euros, they won't help you. That is what legal tender means.

Bitcoin is the most valuable thing the cryptocurrency space can possibly offer. It doesn't need to scale (at least on chain) and its lack of administration is a vital feature. Bitcoin's key value propositions are 1) its monetary policy set in stone and extremely resistant to change and 2) the uncensorability of transfers on its network. It has potential become the ultimate store of value to be hoarded by central banks one central banks have ruined all major currencies by printing too much of them - they have no choice right now.

I believe that if the space fulfills on its promises Bitcoin will reign supreme as the ultimate measure and store of value. Various types of centralized or decentralized ledgers will be used to transfer it off-chain to be settled only in large batches on chain.

The success of coins like STEEM will depend on the value created by the network.

In 1990, it wasn't possible to stream 4k video either. Things change.

With NZ passing laws for salaries to be paid in crypto last year, I am guessing they also have to build gateways to use that crypto. Just because the possibility doesn't exist today, it doesn't mean it won't tomorrow and with each step, the value proposition of centralized currencies falls and becomes increasingly unstable - dropping the value further.

It always grates when I see that Warren Bezgates is worth "$n billion."
I understand we like to simplify things, but I'd be surprised if he has $1000 in his wallet, or more than $10,000 in his savings account. Money is for the commoners.
And the commoners imagine a huge pile of money and start talking about what he could do with just n% of that.
If he liquidated 10%, to give to charity; that would tank the price of his business, panic the market and wipe billions off the value of people's retirement accounts.
Making people poor, then giving them money. Slow clap.

People can't imagine these kinds of numbers anyway, they become concepts only. People talk about a billionaire these days as if they are millionaires. No, they are a thousand millionaires or at least 10,000 people earning a 100,000 a year. A billion is about a semi-trailer filled with 100s - Zuckerberg is worth about 70 semi-trailers filled with 100s. A trillion in debt is a NY skyscraper of 100 dollar bills.

Most banks don't even hold any cash now - just services.

FORK INTO THE UNKNOWWWWWWWWWNNNNNNNNNNNNN.

I imagine that must be pretty hard when you have people depending on you because if things go pear-shaped it's a lot to try to fix.

Yes, it is/ would be hard. but so is watching for example, children have their opportunities in life slowly bled out. Is it better to die with the masses because everyone will fail together?

Well if you all fail together clearly it's not your fault (never mind that it is) but if you strike out on something unproven and untested and fail then it is most definitely and irrefutably all your fault and we've talked about how blame and being wrong is something to be absolutely avoided at any and all cost ;D

I have never been wrong in my life. I have been "less than right" on the odd occasion though.

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