Update June 2014: Mini proposal
Update January 31: Some things have been simplified, but I am not taking the time to update the info just now. The main principles remain.
Castpoints: A universal management system for collaborative allocation of: scarce (goods, services) and non-scarce (digital content) resources by mimicking Nature’s way of allocating value. A synergy of:
- Free market economics — Private property, privacy, transparency, low entry barriers, subsidiarity.
- Universal trading engine — Specify any wants and offers easily and dynamically.
- Trusted transactions — Reputation, localized expert conflict resolution, insurance.
- Securitization — Any resource can be compared, traded, promoted.
- All things have value — Arbitrage promote miss-valued and marginalized (yet un-exploitable) resources.
- Hierarchy and taxonomy — Used to organize, rather than ostracize.
- Fun — Only adding value works (thriving), not defending, nor attacking (surviving).
The Castpoints platform maximizes physical and digital resource allocation by correctly securitizing (segmenting, organizing, and pricing) any resource. Barriers to entry are near zero because contracts, reputation, localized conflict resolution, and performance bonds keep participants heading toward what works.
Scientific Elevator Pitch
Castpoints is likely the next major step in digital communications. It unites Kurzweil’s Singularity, Davidson’s Sovereign Individual, and Taleb’s Antifragility, via a self regulating platform. All resources are managed as directly as possible based not on beliefs, but on supply and demand, conflict resolution, reputation, transparency, fractal subsidiarity, and private performance bonds. Scarce resources are allocated via a universal trading engine. Non scarce resources are managed via an optional cost to post for: paying value adders, winnowing and promotion of value, and making untruths expensive (via paying untruth finders). People WANT to participate because the more they add value, the more they can profit, and it’s fun!
Expanded Use Cases And Supporting Content (Although Castpoints simply organizes the internet, the huge paradigm disruptions make it hard to understand. These links give practical reference points.)
- Critiques of topical articles, especially collaborative consumption
- Supportive snippets and quotes
- From the point of view of forums and blogs
- School phone tree that simplifies communication for parents, kids, teachers, and administrators. (coming soon)
- Proposal: School phone tree and emergency response system
- Use case: School phone tree and emergency response system DRAFT (updating soon again.)
This Set Of Problems…
- People often don’t own their content.
- Information overwhelm.
- People can’t easily pay other people.
- Difficult to know the value of content.
- Difficult to know how content is related to other content.
- Correcting information and conflict resolution can be very challenging.
- Censorship; manipulation; propaganda.
- No simple and effective way to screen things from children.
- Can’t easily buy and or protect copyrighted material.
- Can’t just make a great video and get paid for it; rarely paid for adding value.
…Is Solved With Free Market Initial Conditions…
|Free Market Principle||Fancy Term||Nature’s Analog||Notes|
|Value||Resources||Joule, Light, calories||Content, goods, services|
|Skin in the game||Capital at risk||Direct participation||It’s just hot air until someone puts cash on the barrlehead.|
|Private property||Node||Cell’s, tissues, organs||People’s blogs, forums, and websites. Everyone is their own profit center, and owns and manages their own reputation.|
|Low entry barriers, structure, contracts||Connections||Roots, relationships||Groups of nodes are related by formal role based contractual hierarchal networks. Everything is connected. Cells, tissues, organs, organisms.|
|Competing currencies||Value units||Hemoglobin, chlorophyl||Effective allocation of resources uses an abstracted, and likely scarce, resource that enough people agree on. Default units are shares of stock. But anything can be used.|
|Transactions based on supply and demand at a specific price.||Evolution||Life, movement||Based on agreement, not force. Since decisions are not based on politics, mal-investment is minimized .|
|Subsidiarity, Transparency, Verification, conflict resolution||Feedback loops, reputation||Teeth, claws||Management by the smallest, lowest, and or least centralized authority capable of doing things well, support the balance of privacy and transparency. Hormones.|
|Fullfilment||Sanity||Be-ing||If people offer projections, illusions, and unfinished traumas, the feedback will likely be less money and positive suggestions. If people don’t know their value, they can iteratively, at a small level of risk in a supportive environment, experiment. When people start to offer their unique value, they will feel good, make money and receive complements.|
Solution: Theory, Metaphor And Overview
Chaos theory suggests that a complex system’s behavior is highly sensitive to initial conditions and slight changes of those conditions. The current dominant cosmology theory of a big bang suggests that the universe was born from a singularity, where “many laws of physics break down” and there is no specified origin for the singularity itself. In other words, the genesis of the universe is currently the belief that, “Many things are the way they are because we say so.” This manifests as the belief of “Divine right of Kings.”
The universe appears to be iterative with simple rules according to Stephan Wolfram and others. So a major iteration of the big bang theory is watered down to produce “Natural Law”, Natural “rights”, and government in an effort to reconcile a divine right of kings belief with reality. This does not work, yet many more laws and regulations are iteratively created attempting to force harmony. Finally society can’t withstand the economic burden of the cognitive dissonance, and fails. Although the new society has vitality because it’s focus is on what works out of necessity (needing to get commerce going again quickly), it’s still hobbled from the core belief of royal absolutism and will one day fail, again.
An alternative cosmology, Null Physics, suggests that in the beginning there was literally nothing, a void. If a bit of that nothing was removed, well, now their is something! Specifically there is a separation between things, but if put all together again, the “equation” sums to zero. This can translate into the universe’s initial conditions of, “Things are the way they are due to separation, each bit/relationship is unique compared to every other bit/relationship, and not only is that okay, it’s fun! But it is not special.”
The genesis of trouble is constantly mal-investing to prove that separation has some type of “special” meaning, rather than the RELAXED state of noticing that “separation” just means “difference”.
Iteration produces a separation that not only denotes “this” and “not this” but also mediates interactions between both. This is the basis for almost all biology as currently defined: the semi permeable cell membrane. Not considering viruses, etc., the next main complete and successful system is the cell. Cells are the main functional unit of most biomass on Earth. The reason Castpoints works, is because it mimics the cellular purpose, structure, relationships, communications, and resiliency in a fractal way: A physically healthy cell has strong boundaries. A psychologically healthy person has strong boundaries. A strong building has a strong foundation which is the boundary between the building and the ground.
Cells naturally and immediately excrete what they do not need anymore. If they don’t, they get toxic. Philosophically, suffering (not pain) is caused by not relaxing and holding on to things that no longer have value. Metaphorically, grabbing a rose and getting pricked by a thorn is pain. Clenching onto the stem and thorn is suffering. Relaxing and letting the rose fall is healing.
Castpoints fixes that by securitizing everything, stewarding trade based on the common denominator of value with minimal trading barriers (friction), and quickly letting go of what no longer serves specific individuals.
Their is a heavy focus on intrinsic motivations. Extrinsic motivations, like money, are not necessarily used to motivate people, rather to allow comparison of things that are hard to compare.
Conservative example: Tumbler, a very large site, has about 7 million image posts per day, with each post reblogged an average of 9 times. Paypal charges about 3.5% + 15 cents per transaction. If 1% of posters used Castpoints at a cost of 1 cent, that would generate $700 per day, $20,000 per month, in revenue.
Airbnb, an apartment rental site was recently valued at $2.5 billion. All they do is manage a transaction between people who want or have a place for rent, for a 6-12% fee (including customer support, payment handling, and insurance). Castpoints all sources customer support and insurance and so charges probably less than 1%, to offer transferrable reputations, built in “taxes”, and manages most other net transactions as mathematically efficiently as possible.
Castpoint’s role based way of managing resources is based on the Incident Command System (ICS) that is used by many (most?) emergency response entities. The few implementation quotes I could find ranged from $150,000 to $3.25 million. The fact quotes are scarce can mean ICS systems are serious money, and far from a commodity). There is no web based version available for any price.
Investing in Collaborative Consumption: Venture Funding in 2012 …collaborative consumption ventures will continue to be a hot area for investors in 2013. Investments in startups topped $431M in 2012, up from $400M in 2011. While not a significant increase in overall funding, the collaborative consumption space has received consistent venture capital over the last 12 months from leading investors such as Sequoia, Union Square Ventures and Floodgate.
That article shows each niche market of money, travel and accommodation, fashion, ride sharing, pet sitting, etc., getting individual attention, yet uses the same pattern. A properly designed universal transaction engine like Castpoints could enfold all the niches. As collaborative consumption defragments, “…the rise of identity and reputation tools focused on further reducing friction in p2p marketplaces will be a hot investment area in 2013.”
FORBES estimates the revenue flowing through the share economy directly into people’s wallets will surpass $3.5 billion this year, with growth exceeding 25%. …have raised $120 million to date from Sequoia, Greylock Partners, Andreessen Horowitz and Y Combinator. A $112 million funding round in 2011 gave the startup a $1.3 billion valuation. Chesky and his partners are currently trying to raise another $150 million at a valuation of $2.5 billion…
Simple small transaction fee paid via an event’s shares. That way, CP and participants’ interests are directly aligned. An event has to be profitable enough to generate dividends. Event’s that don’t generate income essentially operate for free. Notice how the definition of “non-profit” is automatic, not arbitrary, and requires zero regulations, etc.
- Anyone who adds value will be paid in 7 days.
- All transaction, including with advertisers, are win-win.
- Castpoints is built on capital, not debt. Capital makes prosperity. Debt makes slavery. “Credit” simply labels the slave master.)
- People own their “own” information, and can control who sees what, when, and how long. Events own aggregate information.
- Because people are their own profit center, they can issue stock (at the node level).
- People can offer to buy and sell anything. This means all currencies and scripts compete on a level playing field. People can be their own “central banks” and manage their own money supply. (“Give me control of a nations money supply, and I care not who makes it’s laws.”)
- Conflict resolution migrates from ponderous government fiat, to fast contractual local experts. Contracts, not laws are used. Laws by definition are win lose and backed by guns (force) and punishment. Contracts are mutual agreements and therefore win-win. Contract breakers have pre agreed to amends and often those amends are already escrowed. Consequences are the only things “enforced”.
- Copyright payments are automatic. Content creators automatically get paid with no extra effort on their part when their content is used by others in such a way that it generates income.
- Adult material can easily be labeled, screened, and enforced.
- Point of sale “taxation” is built in, correctly implemented, and transparent.
- Since any web user can add value to any website (node), a company can gain value to from non-employees. This is called “all sourcing” as compared to outsourcing. (This is partly what drives a simpler “tax” structure.)
- A simple search will display an item’s supply and demand in a structured way, and market size information.
- Many marketing campaigns can run themselves. Content managers can easily and VERY effectively spend “advertising” money by offering a transaction fee of, say, -10%. This would quickly attract quality value adders because they get paid to participate. (Low quality value adders are not attracted since their rating is too low to make money.)
What Happens To…
eBay uses centralized reputation, has multiple fees, and charges 2 to 13% of final sale price. Castpoints uses decentralized reputation and has one transaction fee of (likely) < 1%. (Low fees are partly due to all sales being final on castpoints. Conflicts are handled by the conflict resolution process, or return policy.)
Why trading with limits is preferred over auctions:
|Limit Method||Auction Method|
|Price risk||Lower risk. Both parties control the price they are willing to trade at. And the limit prices bracket the probable tansaction price.||Higher risk. The transaction price can vary a lot.|
|Time risk||Lower risk. Both parties control their time window.||Higher risk. The choices are Buy It Now at a set price, or 1, 3, 5, 7, or 10 days.|
|Transaction fees||Lower: about <1%.||Higher: 2-13%.|
|Conflict resolution||Better since it is diss-aggregated. Local participants with near direct knowledge of the situation, and high value ratings, decide quickly. Also, insurance is handled directly be competing insurance sellers.||Aggregated in the transaction fee. Decisions come from eBay employees wich is relatively indirect.|
|Price management||If a buyer or seller wants to trade about 10 items per day the software will automatically set the price so that supply and demand balances out at about 10 items per day.||Not available as far as I can tell.|
|Securitization||Better. Apples can be compared to apples. A resource is listed by a short descirption that describes about 80% of the resource and produces an ID. Optionally the condition is added, and number for sale, etc. When somenoe searches, they are really using the description ID “and” the condition ID, etc.||Poor. Currently there are over 18 listing for Harry Potter’s complete 7 book set. Min price is $2, max price is $212, AVG is 49, Median is 32, and STDEV is 49! That is price discovery?|
|Price depth||Because of the above securitization, a simple search produces price depth, just like a price ladder for a stock.||Poor. Just guestimate.|
|Shill bidding||Immune. Once an oder is in, it’s live for at least 2 transaction cycles.||Not immune 🙂|
Google search primarily indirectly values web pages by looking at who else does and the results are a flat, unstructured list. Then people try to game Google’s algorithms, creating an arms race. Castpoints is immune to arms races. “Money talks” and the cream rises to the top as a natural part of typical communication. Also, search results are structured, categorized, and likely have a timeline and location. Search results for “egg shells” could look something like this partial sample:
Last (Hour, Day, Week, Month, Year).
Within (±1°, ±2°, and or 25km, 100km, 500km, anywhere)
Min value rating: 50% (or min performance bond: 3x)
Min value: 1 CAD
|Eggshells||• 50 Pre-cleaned eggshells for crafts, 10 CAD
• Children’s stories mentioning eggshells, 2 CAD
|• 99% Pre-cleaned eggshells for crafts. 200 @ 10 CAD each, by Jim Spencer
• 99% Pre-cleaned eggshells for crafts. 50 @ 10 CAD each, by Julie Smith
|• 99% Pre-cleaned egg shells for crafts. 100 @ 1 CAD each, by Larry Lizard
• 85% Children’s stories with about eggshells 5 @ 10 CAD each, by Nacy Drew
|Uses||• 95% Ten ways to use eggshells, 12 CAD
• 94% Holiday eggshel crafts, 17 CAD
|• 60% How many eggshells for compost? 10 CAD|
|Images||• Eggshell sculpture, 5 CAD||• 68% Eggshell dolphin etching 4 CAD||• 80% Eggshell dolphin etching 2 CAD|
|Proper Names||• Eggshells, resturant in Lake Zurich, IL. 60 CAD||• 78% Eggshells.com 300 CAD||• 95% Eggshells, the 1969 movie DVD, 8 CAD|
|Children’s Story||• 85% What are eggshells made of? 2 CAD||• 85% What are eggshells made of? 1 CAD|
|Movie||• Chick hatching, 10 CAD||• 75% Chick hatching, 15 CAD||• 85% Chick hatching, 14 CAD|
“Local, ±1°, 25km…” Location can be denoted as simple distance, or by actual structural distance between nodes. This way, friends and local networks are able to keep value (money, reputation, conflict resolution, power) in the community.
The percent values at the beginning of the line can change a lot. Better business will likely have very high ratings, while just a person ordering from home could be much lower because they might only have a rating from a forum. This is why it’s important to allow people to manage multiple ratings. Just because someone has a low (or high) rating in one area, does not mean they are horrid (or spectacular) in all areas.
Part of the point is that with one search, people get a snapshot of the economic “eggshell” universe and can start interacting with it. Of course there would be charts, and maps associated with everything. Including historical and current price, location, volume, etc.
Specific Cases Of Infatuation
- Advertisers – For the first time in written history, ads are welcome because people either get good info, or get the advertisers’ money.
- Copyright holders – This is an evolution of copyright: paid for adding value rather than fighting to protect value. Transparency promotes paying others for content, even what is “fair use”, so they don’t look cheap.
- Forum owners – Finally have a built in conflict resolution process to manage trolls and flame wars.
- Regulators – Takes a huge load off what government is “supposed to do”. Now proven competent local people , who are also, held accountable, make money and increase reputation by participating in conflicts.
- People with no money – If they add value, they will get money. They can start with literally zero money and, say, organize a FAQ page, correct typos, etc., and be paid in 7 days.
- Small publishers – Can have much more fine grained and direct info regarding supply and demand of their topics of interest. If a post goes viral, they can make a lot of money and increase reputation very quickly with no additional effort. Just answering questions about their viral post exposes them to more compensation.
- Lurkers – Can explore and enjoy an environment with a minimum of trolls and much more confidence about the quality of information.
- Email readers – allows senders and readers to prioritize messages. Makes spamming not worth it.
- Entrepreneurs – Velocity of money and capital productivity should be very high engendering prosperity and excellent feedback on allocation of resources.
Mini Use Cases
- Free kittens? Just do a simple search in your area. Supply and demand will appear (graphically hopefully!). If you zoom out, you might notice that there is a demand for kittens 50 miles away and you just happen to be traveling out that way tomorrow. (Just found out there is a real need: A New Matching Market for Dog Buyers. 1) How does one avoid puppy mills, and “Th[e] problem of geographic displacement in the animal rescue market is a problem I would love to see a brilliant economist help solve.”) Walmart is getting int the act: Wal-Mart may get customers to deliver packages to online buyers.
- Need 10 pounds of bean seeds delivered within 1 month? Look up current prices and place a limit order for 20% below the current price with the option that the price will increase 1% per day until the order is filled.
- You manage a restaurant that is busy mostly between 7 and 9. Yesterday was a slow day and you have a fair amount of food you will have to throw out son. So you offer 20% off for customers between 5 and 6:30. Who needs Groupon?
- Want to sell 25% of your cell phones bandwidth peer to peer at current market prices? Place the order. When the paid for, the buyer automatically gets a “smart” receipt that sends itself to their phone which then allocates the bandwidth (or MB’s).
- Starting a company? Post the proposal on a incubator forum for say $200. Use all the feedback to refine the business plan. Estimated fair value is about $20,000. So on your blog (your node) offer 1,000 shares at $40 / share and have the price drop $1 / day. People will start buying at maybe around $25 / share and buy the last available shares at $18. Now the shares are trading freely at $18. The company can buy back the shares at any time.
- Starting a local currency or script? Same process. The currency can be backed by gold, bulbs, hours, or just be fait.
- Want to trade one currency for another. Just place the order.
- Say you are driving to the mountains and wonder what conditions are like 2 kms forward. There will likely be people indicating exactly what conditons are since it is profitable to them. The Universal Transaction Engine lets one specify any location and note the conditions. Or people can simply post the conditions and be paid for it. People anywhere can simply hook up any sensor and start selling the data.
- Want to know the current supply and demand of office space, organic vegetables, jazz music, digital storage, almost anything, in the system? Simply look it up. That level of research is currently costly and time consuming.
- A student could pay their way through an African walkabout by employing a quick look at demand for African songs and dances and record the most wanted.
- Schools can easily create phone trees for communication and emergency use. Our current system is only a one way broadcast. There is no structured way for a parent to signal for their kid to be picked up by a neighbor.
- Easy to set up a private or public focus group. The point is to have a scarce resource for people to back their selection of a few items from many candidates. AND whoever picked the successful items gets more compensation over time.
- “Famous” people can publicly state that they respond to queries that are backed by a minimum amount of money, or from a person who has a minimum rating. (FaceBook is just now very crudely experimenting with this.
- StreetLine raised $25 million for the ability to monitor parking space availability. “… thinking about how to effectively package Streetline data for other kinds of customers, such as “the Googles of the world.”” That’s indirect. Castpoints connects supply and demand directly, offering the best realtime value to users (private, city, sporting events, BART, etc.).
- People want to ship fish from a port to a town, but their are problems. Who pays? If the contract specified that the fish source is to prepare the fish for transport and doesn’t, the transporter collects from the seller. If the road suddenly washes out and the fish spoil en route, both the shipper and receiver split the loss since neither one made a mistake. Both will likely have insurance, minimizing the impact. Also, both have the option, like everyone, to only transact with people how have enough of a performance bond, or insurance to cover problems.
- A reporter checks topics in an area of expertise and finds that demand is high right now but quality seems low. Reporter finalizes fact checking and posts article at a cost of 100 gAg. A) Success! Other’s give article high value ratings with conviction. When dividends are paid at the end of 7 days, the reporter is paid 125 gAg. B) No so successful. Other’s give article low value ratings with low or high conviction. When dividends are paid, the reporter is paid 50 gAg. The reporter can study replies for constructive criticism, and rate a few good ones.
- Proofreader replied to newsletter poster about a few typos with a value rating and zero conviction. The newsletter poster replies to the proofreader with a high rating and some conviction. This particular forum uses settings that if a poster has a rating of over 75% but zero conviction, the site pretends the poster has a conviction of 10 gAg. So with zero money down, the proofreader makes a bit of money after 7 days from this “marketing cost”.
- A middle person sees a post on a small website they think has a lot of value. They promote it to a large website at a cost of 1,000 gAg. A) Success! The middle person gets paid 1,200 gAg in 7 days, and the original poster gets (say) 100 gAg due to their use fee of 10%. B) Not so successful. Middle person gets paid about 700 gAg (loses 300 gAg), and original poster gets about 70 gAg due to their use fee of 10%.
My daughter is home sick today with a 102.3° temp. If our school was using this system, and was connected to the CA school system (optional), which was then connected to the USA school system (optional), then the world (optional), etc… The parent, not the school admin (reducing costs), would indicate the absence and reason (temp 102.3° F). Data is aggregated and distributed, so privacy is protected. Anyone could in near realtime see the absences and reasons (barf, avg temp, etc.) at any level (county, state, nation, world, etc.). (Raw numbers are likely free, nice statistical maps and historical data, probably not free.) With zero changes, because it’s user’s own content and categorization that creates the context, the Castpoints framework works for GDP, soil conditions, health records — basically any supply, demand, and transactions of anything, and people own their own stuff and privacy is built in. This is completely at odds with (and will subvert 😉 the typical Facebook model where the aggregators own the users information. A current example: K-12 student database jazzes tech startups, spooks parents.
Castpoints Internal Structure
Infrastructure costs are minimized by heavy use of distribution, very asynchronous communications, and retaining minimum amounts of data. CP avoids storing content, and can run on a cell phone.
Universal Trading Engine
An offer consists of a category, a title, optional tags, and stipulations. All specifications must be met to execute transaction. Everything is dynamic and optional, so the local traders themselves optimize the organization and level of detail that maximizes added value to them.
- Order types: want or offer, at a limit price or better.
- Time in force: A start time, and stop time. And if it repeats. Minimum is, say, 12 seconds. The system ques transactions to be executed in 6 second intervals. This HUGELY reduces the need for big servers.
- Orders can be published anywhere, but the transaction and fees happen at the CP node that offers the resource.
- Category. If existing categories are not appropriate, the trader simply adds one. As long as the market finds it valuable, it will stick, otherwise it’s automatically deleted.
- Order titles capture about 75% of the order. Say people want to trade a few redwood 2” x 4” x 8’s. If the title is already present, the person just uses that phrase. If not, the person enters the category and redwood 2” x 4” x 8′. The market determines which mix of title and tags are optimal. Dynamic titles allow for rapid adaptation to changing conditions. Unused titles are deleted.
- Tags are general and can describe almost anything.
- Although value can be displayed in any currency, base currencies are Joules, and ownership of events.
- Dynamic limit price: Current order price, min and max transaction price, scale price increment, scale time increment, max time increment.
- Dynamic unit price. Prices can be set up to automatically change based on supply and demand of the underlying unit. So if a person can make one dresser per day but people are buying 2 dressers per day, the price will automatically increase until only one dresser per day is sold. But, say, after holidays, people don’t want dressers, the price will naturally drop to the builders minimum price. Conversely, people buying dressers have a max price. This uses the same supply and demand equation as determining a cost of posting in a new thread.
- Location: Latitude, longitude, and possibly altitude supersedes street address. For privacy, pre-transaction could use fewer significant figures so people don’t know where you live. Post transaction would reveal the exact location to shippers, etc.
- Possible stipulations: Shipper, shipping conditions, insurance, performance bond of all parties at least X% of item value, shipping pick up / delivery time window, shipping temperature range, etc.
- When the transaction is executed, a receipt is generated that can trigger other actions in other applications.
Responsibility, accountability, and roles are formally organized and based loosely on the standard Incident Command System. Participating in a structure means that people make agreements that include amends. For starters, people agree to do all they say they will do, and not infringe on others or others property. Specifics will be tied to a role’s tasks. Agreements will be short and clear or else people will go elsewhere. Nobody wants to actually read legalize on a cell phone when they have real money on the line.
The fractal hierarchy tree is flexible and can expand, contract, and adapt rapidly. Basically after about 6 people are added to a node, another node is automatically suggested in the areas of Operations, Planning, Logistics, or Finance / Admin. These roles are dynamically defined and managed by the people who need them most which dramatically reduces information overload.
A person can be part of many structures. Their neighborhood, school, local community, multiple friend / interest based groups, etc. In other words, people will have a place to belong which builds community.
“Nature bats last.” Castpoints structure is created as a byproduct of what people are doing, and trying to do. Nobody has to design a company organization chart; the company’s members actions create the chart. Theoretically:
Any organization that designs a system (defined more broadly here than just information systems) will inevitably produce a design whose structure is a copy of the organization’s communication structure. — Neil Schulman’s 10th of June post may also be alluding to Conway’s Law
Practically: Apple: America’s best retailer, by Jerry Useem:
“One of the best pieces of advice Mickey ever gave us was to go rent a warehouse and build a prototype of a store, and not, you know, just design it, go build 20 of them, then discover it didn’t work,” says [Steve] Jobs. In other words, design it as you would a product. Apple Store Version 0.0 took shape in a warehouse near the Apple campus. “Ron and I had a store all designed,” says Jobs, when they were stopped by an insight: The computer was evolving from a simple productivity tool to a “hub” for video, photography, music, information, and so forth. The sale, then, was less about the machine than what you could do with it. But looking at their store, they winced. The hardware was laid out by product category – in other words, by how the company was organized internally, not by how a customer might actually want to buy things. “We were like, ‘Oh, God, we’re screwed!'” says Jobs.
But they weren’t screwed; they were in a mockup. “So we redesigned it,” he says. “And it cost us, I don’t know, six, nine months. But it was the right decision by a million miles.” When the first store finally opened, in Tysons Corner, Va., only a quarter of it was about product. The rest was arranged around interests: along the right wall, photos, videos, kids; on the left, problems. A third area – the Genius Bar in the back – was Johnson’s brainstorm.
Valuing Non Scarce Resources
Basically a value based rating system with feedback. People select where to post there valuable content based on supply and demand and estimated ROI. Marc Stiegler’s 1999 science fiction book, Earthweb, coined “castpoints” as a way for humans to manage billions of real time suggestions dealing with incoming marauding aliens. He graciously gave permission to use the term “Castpoints”.
“…how do you spot a good idea or a good forecast? Obviously, you make people put their money where their mouths are. Let them back a forecast with real bucks, and the serious ones will go for it, while the rest just hang out in the chat rooms. No muss, no fuss. No debating. No mediocre compromises.” — Marc Stiegler
- Posters of valuable content earn money and build reputation.
- Those who successfully challenge non-truths, or posting of stolen property, get paid.
- Valuable content is automatically promoted to higher levels of visibility and revenue by others – because it’s profitable to all involved.
- Real time supply and demand info highlights what the market values so content posters can deploy resources efficiently, while content consumers can narrow their focus.
- Private performance bonds are built in.
- Conflict resolution is built in and handled quickly and profitably by local experts.
- Deterrents and amends result from contractual consequences, not fiat force.
- People actually want advertisers to participate. People will either be informed of valuable products, or get some of an advertiser’s cost to post.
- Advertisers want to participate because they get sales and or valuable feedback.
- Most variables self configure based on supply and demand.
- Money enters via:
- Posting a new thread.
- Rating any post.
- Voluntarily, publicly, and verifiably – paying for use of content. (a small part)
- Money exits via payments to:
- Dividends to value adders.
- Transaction fee to forum owner.
Most new projects in the realm of crowd sourcing and prediction markets march toward the nexus of Castpoints. Early efforts are basically futures markets, burdened with regulations, high specificity, and derivatives. Recent efforts work around this by applying aspects of free market economics to a particular project. Stepping stones:
- Idea Futures, 1995 Wired article by Robin Hanson.
- Google. The main idea is to rank content on how others value that content. This is indirect and allows others to game the ranking system. Castpoints is immune to gaming since the posters rank information directly.
- The U.S. Idea Futures Exchange (USIFEX) (defunct?)
- The Foresight Exchange Prediction Market
- Allvoices. Payments seem arbitrarily chosen and it appears the revenue model is ads all over their site.
- Kickstarter Has “rewards” for helping fund projects. Very vertical; seems to work.
- Hitrecord. Open collaborative production company. Looks fun.
- http://www.consensuspoint.com/ Looks well done and seems to be the leader now (interesting examples). Robin Hanson is the chief scientist. It seems rather vertical. Many “market parameters” are reportedly fine tuned and or have oversight. Castpoints adds private performance bonds, conflict resolution, generality, natural hierarchy. It appears people bring info to Consensus Point to be securitized, while castpoints securitizes info at, and by, the source.
- The Collaborative Lab gets it!!! Check out their chart on The Big Shift, and Welcome To The New Reputation Economy by Rachel Botsman
- The apparent success of Gumroad validates the idea of simple peer to peer sales (node to node), and lets value adders not deal with hosting, payments, and delivery. However, conflict resolution is the traditional indirect model of working through the company, there does not appear to be a reputation system. It seems to be a great step in the Castpoints direction.
Litmus test 1: Do criminals find it useful? Yes: From crowdsourcing to crime-sourcing: The rise of distributed criminality.
Litmus test 2: Is it fun? Consensus Point’s GE example noted how participants had fun. This is a critical point. When people are having fun, they are doing what the love to do and are intrinsically motivated do it well.
Publishers pay to post a new thread. They use realtime estimated ROI’s to publish where they will likely be profitable. Publishers can also conditionally publish so that the post is only published if specific criteria are met. Such as a minimum estimated ROI of 25%.
Consider the “Current Costs To Post New Thread In…” sample screen shot.”
- Category: The different forum labels. If a forum was all about birds, the categories could be, “Northeast Birds, Southeast Birds, News, Bird song, etc.”
- Current publishing cost: The cost to post a new thread immediately. Formula described below.
- Mean value rating %: The rating for all posts in a category. The lower the rating, the more a valued post can earn. If the number is high, a post has to be pretty valuable just to break even.
- Estimated ROI based on publisher’s current rating: using the current cost to post, and a posters current rating in that category, the estimated ROI is shown with a confidence interval of 90%.
… and then fill out the publishing form to start a new thread:
The Challenge category is used to formally question a post’s assertions, or an entity. Participation is required, or else challenger wins.
The (maximum) use fee comes into play if much or all of the post is republished in full (promoted). This is the max percent of all income the original poster gets from any republishings. If a arbiter thinks a post is good, they can take the risk and or reward of republishing it on a big site where the post costs are high. The lower the max use fee percent, the more likely, the post will be republished.
New post cost is automatically determined by real time supply and demand: Last post price + STD( last 30 publishing prices ) * the average time between last 4 posts [basically it the next post is sooner than the average, it costs more; less than the average, it costs less]). (And things like a Minimum Maturity Level: Anyone, teens, grown ups, other.” since it can finally be enforced.)
Copy-Done-Right (for non scarce resources)
Instead of hat tips and not being able to easily pay people for value, people can credit a poster directly. Say an old post has a max use fee of 10%. If a new post uses 5% of that old post, the old post receives 5% of the new post’s income. If a new post uses 10% of that old post, the old post receives 10% of the new post’s income. If a new post uses > 10% of that old post, the old post receives 10% of the new post’s income. This is how something self-defines as “commercial” or “non-commercial”. If it’s valuable enough to make income it’s commercial.
Example: A 500 word post quotes 11 words (2.2%). Clicking the “Credited…” link will verify the basic stats of the transaction.
… A problem with science, then, “isn’t that most experiments fail, it’s that most failures are ignored.” (Credited 2.2% to Seraphina Fox) It’s challenging to ignore valuable information when money is involved…
Others can optionally rate what posts are worth to them.
- Republish credit is the info that is attached to a post that allows Castpoints to know who to pay based on their indicated use fee percentage.
- “% Valuable” is what percent of the post the rater deems valuable and or adding value to the thread.
- “Conviction” Optional. Indicates how strongly the rater feels about their rating. As in life, currency units can be anything. The numerical values range from 1 to the max of (highest the user has used in the past month, or the highest on the post so far). The scale rises exponentially for about 15 specific numerical choices. ~$x = exp( ( log( $row[max_reply_conviction] ) / 6 ) * $i ).
A rated post’s subject and author lines displays simple initial statistics:
“84% V” is the conviction weighted median percent value rating: people decided that 84% of the post is valuable by putting their money where their mouths were.
Weekly Payments From Rating
Every 7 days after a post, and indefinitely as long as republishing and or replies continue, the value adder gets paid. The formula is the product of a poster’s value ranking and total conviction, with distribution skew balanced at 50% of a thread’s mean value rating. If a thread mean rating drops to say 45%, the distribution skew rises to pay out 5% more to posts rated above 50% which attracts more valuable posts. It is easy to identify where a little value can make relatively large returns.
Any value in inactive accounts (over 1 year with no push activity) is put into the dividend fund.
Conflict Resolution, Private Performance Bonds, Insurance
Insurance was apparently a key aspect of the initiation of modern commerce. Against the Gods: The Remarkable Story of Risk documented this well. Basically England’s ships needed investors to share the risk in order for trade by ships to take hold. The cost of a lost ship was just too great to be bourn by 1 or 2 people.
In Castpoints, each node, or person, has a performance bond that is funded by withholding about 10% of each transaction up to a safety factor of 3 which is based on an average of industry standards. So if a person loses a challenge, their escrow account is out 1.5 times the transaction that was challenged.
Posts that don’t follow a sites contracted rules of conduct can be “challenged” by anyone with a performance bond account greater than the challenged. The basic contract for each party: (Partly from Richard Maybury.)
- Do all you say you are going to do.
- Don’t infringe on other people or their property.
- Make the difference between fact, and non-fact, clear.
- Be able to back up facts before posting them.
- Make amends by cleaning up inevitable mistakes.
This is strict…
- NOT challengeable: “I think people will love the taste of this new recipe.”
- Challengeable: “People love the taste of this new recipe.” Better be able to show proof within 6 weeks, otherwise don’t post.
- This has nothing to do with inefficient “precedent”, nor “punishment”, nor “laws”. Either a contract is honored, or not.
- A “challenged contract” case is settled within 6 weeks.
- If the challenged does not respond, they default.
- Resolvers are self selected and post either “Did Not Honor Contract” or “Honored Contract” with reasoning based directly on verifiable facts.
- A resolver’s post can also be rated, commented on, and “challenged”.
- It only takes one resolver’s decision. If more than one resolver posts, 75% need to agree, or the challenger is held responsible. If no resolver posts, the challenger is held responsible.
- If the challenged is found NOT responsible, the challenger’s performance bond pays the challenged the 1.5 times amount of the disputed transaction. If the challenged is held responsible, their performance bond is pays out 1.5 times the disputed transaction. If the challenger is not the entity who owns the property, the property owner and challenger split the payout 50:50. (People can challenge someone on behalf of someone else.)
- Resolvers basic rules: Only consider independently verifiable facts. Another resolver has to add value, not just a “me too.” Otherwise they can be challenged.
The problem is this would have A LOT of money just sitting around — which is a tempting target. To mitigate that, nodes can offer a percent share in the revenue stream for a percent share in liability in case they lose a challenge. Now it’s easy and simple to see how “trusted” a node is – just look at their dividend, stock price, and float. Anyone can ride on the coattails of a trustworthy node and make a small amount of money.
Insurance contracts compete via the universal trading engine. People in the middle of nowhere can offer insurance, and also get insurance. This is also made possible in part because the abstraction layer of the universal transaction engine allows for many insurance contracts to be a commodity and therefore easy to trade.
When people trade with conditions like shipping, etc, they can also add a condition of insurance. So as node A (producer) is on their 2,000th shipment to node B (user) via node C (shipper), node D (insurer) can actually calculate the amount of insurance based on past shipping problems. 2 MAJOR things to note: This info is (mostly) public, so anyone can calculate the insurance. And this info is so easy and accurate to calculate, it can be automated. So potential shippers can set up the universal transaction engine to automatically offer insurance at a specific price or better dynamically. In trading there are market makers — historically it was/is a lucrative position due to direct access to the raw data flow. For resources that have a lot of uneventful transactions, the whole thing can be automated in real time and still be win-win for all involved. Meaning these types of fixed costs fall to the minimum mathematically possible.
Almost impossible to do on a large scale because all money goes into the dividend fund and is distributed by merit after a 7 day time lag. If participants try to create an overly large dividend on a small forum, that will quickly attract arbiters which defeats the purpose.
At some point the pros of ignoring ever bulging red tape (regulations, laws, permits) become greater than the risks of ignoring them. This creates the opportunity, corruption and danger of grey and black markets.
The unofficial economy easily competes with the official economy because it has much less overhead.
It’s simple arbitrage: more red tape creates greater profit opportunities, which infuriates the “kings” who respond with more red tape controls, which creates even greater profit opportunities until enough of the real economy eclipses the controlled economy and the “king” loses power.
Castpoints is a self-correcting system that minimizes parasitic and criminal behavior BECAUSE it is maximizing ALL human potential. However, all complex systems have some parasites and are a bit messy because healthy systems have friction, aka, choices.
Systems use feedback loops and control structures to manage themselves (growth, communication, conflict, etc.) In Castpoints, the “control” mechanisms are transparency, reputation, agreements backed by performance bonds, localized decisions by stakeholders, and basically no barriers to entry. Therefore, there is no systemic and significant economic advantage to operate outside of the castpoints system. In other words, Castpoints is how nature works: it has no competition. It provides and manages a level playing field for trading any resource.
Privacy And Reputation
People own and control their info. Typically, unless otherwise indicated, a node can only see info up to 2 nodes away. Further than that, nodes can only see summarized data (usually only if there are at least about 30 data points). People can associate specific info with a URL link (NetRep) to reveal different data views to, say, accountants, the public, a specific interest group, other castpoint accounts, etc. The link in an email would be something like:
text, text, text, text.
Taxes are win-lose fiat decisions and so not used. CP employs “use fee” agreements at the point of sale. These fees are preferentially tied to a node’s physical location and automatically paid to the local borough as part of the contract to live in the borough. Boroughs, cites, states, etc. compete with each other like Neil Stevenson enclave’s. By default, each node can only spend and receive use fee money within it’s node plus or minus one level. So a city can only trade and contract with residents, and or the county. The county can only trade and contract with cities, and or the state it’s within. Details.
Regulatory burdens, laws, and central banks are the main challenge. The are all based on the idea of the devine right of kings, aka win-lose relationships. Castpoints, and many other collaborative consumption endeavors, are based on agreements, aka win-win relationships. It’s unlikely the status quo will acquiesce to the competition. Economically, the flow of capital changes from moving from debt (slaves) toward credit (master), to flowing between sovereign individuals (freedom, prosperity).
This is happening in New York City where Airbnb’s business model is “illegal” possibly because hotels spent “millions” protecting their market (passing laws, etc), instead of bettering their product. Airbnb participants spend their money offering valuable products that are often unique. More.
What works better?
- Expensive regulations that have serious systemic flaws as evidenced by the mortgage fiasco, MF Global and allegedly corrupt CFTC regulators that go uninvestigated.
- Transparency and reputation that apparently have no overtly notable reported problems after 10 million transactions world wide (other than annoying the status quo), and are incredibly cheap.
Intrade shuts out American bettors …due to legal and regulatory pressures, Intrade can no longer allow US residents to participate in our real-money prediction markets… U.S. regulators on Monday sued Intrade, saying the company illegally let customers bet on options that must be traded on regulated exchanges.”
Yet, the opaque 600 trillion Over-The-Counter is mostly unregulated. Probably because this is a large arena where the “too-big-to-fail/jail” banksters operate. On the basis of the world’s 80 trillion GDP, the OTC market is levered by at least 7.5 times with minimal margin.
In aligning with Pareto’s 80/20 Principle, Castpoints focuses on maximizing human potential using about 80% of best practices. Not everyone will be happy, at first 🙂 All complex systems contain parasites. (Healthy systems have friction [choices])
Castpoints reduces fear in many ways by naturally reducing unknowns while increasing support. When there are many unknowns, and or the environment is not perceived as safe, people naturally hold back and get defensive.
- Putting a cross cultural price on options allows one to compare apples to apples.
- With little risk, a person can try new things out. For example, if a person sings a song, they can post it for very little cost to a tertiary music site basically anonymously and see what happens.
- Transacting with others becomes very safe: A person can check out past judges and outcomes in completed conflict resolution cases; can transact only with people who have a sizable performance bond; know that feedback will mostly be very helpful, while unhelpful feedback will be pointed out by *others* (meaning the budding singer won’t have to defend their self).
Positive things flow once everything have a specific price, and people are held responsible for their actions. The more people use it, the more they benefit. In other words, castpoints is literally self directed, and self paced, therapy.
- Get the thing done!
- Addition of sophisticated statistical analysis and pre posting decision trees and keywords via open architecture.
- When enough momentum to support money changers is present, currencies and scrips will compete freely. (monetary freedom)
- After an email plugin is available, people can conveniently rank their email by how much conviction senders put behind it, (spam dies).
- People start realizing that non Castpoints resource management simply can’t compete with resource management facilitated by Castpoints. (Reason accelerates the death of devine right of kings.)
- To be more useful, capital will likely move closer to transaction points (away from central banks and debt). Yet due to the Singularity’s exponential advance, money just sitting around becomes glaringly inefficient. So each Castpoint entity could offer dividend paying stock in return for performance liability. This dramatically increases the velocity of capital. (trading decentralizes)
- Centralized control simply can’t keep up. The differentiation between a companies customer service, intranet, product, and or service becomes blurred in a Castpoints framework. The definition of an employee will also blur: who’s managing the FAQ’s, suggesting valuable ideas, finding bugs? Could be anyone. Add the pressure of “politicians” being asked to use Castpoints and constantly losing money. People could realize centralized politics (control) has a lot of friction (expensive, slow, corrupt). (ability to add value transcends hierarchies, labels, identities, and roles. (Not outsourcing: all sourcing))
- What people put out returns very directly in a measurable and honest way, which provides helpful feedback about behavior. Meaning: we learn to critique in supportive ways while increasing everyones’ psychological sanity. (auto-self-actualization)
- Sovereign Individuals become their own central stores of value while doing what they love to do and do best. They are distributed, localized, and expert profit centers backed by performance bonds.
A Provisional Patent was filed on June 4th 2012. (and expired 🙂
“Castpoints: A method that securitizes information directly, via self regulating: winnowing and promotion of value, conflict resolution, reputation, and private performance bonds.”
Going to extremes…
Why do people die? As far as I can tell, there is no agreement on why people need to die. Do you know of one?
Suppose one purpose of death is to give souls a fresh start because their rate of adaptation was not keeping up with evolution in general. Therefore, if people were able make better decisions faster than required for evolution, and were able to quickly let of of what doesn’t work, the body could then reflect this by regenerating faster then breaking down.