An exploration of trust and cooperation that led me to the concepts that this blog aims to explore.
When you’re first born, you can’t even trust your eyes. Your brain doesn’t know what to make of the neurons that fire across your brain in response to this new thing called “light”. Over time, you learn to trust your senses more and more, and save for the occasional dream or hallucination, your senses do their jobs.
And while we say that “seeing is believing”, we all know that really the truth isn’t just what’s visible. The world is navigated competently by the blind, and all our senses are just ways of learning about the underlying truth of things.
We never seem to quite nail down the truth, though. Our best seems to be a sort of “leap of faith”; even gravity is just a theory, a single contradiction would throw it out the window, and yet we gradually build up theories of the world that we put more and more of our weight on, that we rely on with every step that we take.
As we grow and mature we build more and more leaps of faith into our world view, and we take more and more things for granted, and this lets us function at higher and higher levels. We are educated, and learn to read, and before long we’ve learned to trust much more than our eyes; we now have authors and journalists and news network conglomerates, and at a certain point we might even become so wise as to realize that many of these aren’t actually trustworthy, but even then it seems as if there’s always an exception, where the least credible seeming tabloid breaks a big story, or the adored politician is caught in a horrible lie.
While early on we may have just read the books our parents or friends referred us to, and believed them as fact, at a certain point, we might start checking sources, and at a certain point, we might become exhausted of fact checking. Who can you trust? Even Snopes can lie. It can be exhausting trying to figure out who to trust, what to trust. Some people just give up on news and politics altogether. Maybe we’re just pawns. Maybe we’ll never get back at the truth.
At our current historical moment, we have reached a culmination, an absolute tipping point in regards to whether or not we are able to establish credible trust over distance. Just twenty years ago anyone could point to a newspaper they generally trusted and not think twice about its repute, but today, people’s trust has been ravaged time and time again, leaving our collective psyches damaged, wounded, defensive, healing, yet continuously abused.
And so we cling tightly to the things we do trust, and feel betrayed every time one of those proves less than perfect. Long gone are those soft fuzzy eyes of the infant, patiently waiting for the madly firing rods and cones to come into focus. Here, the fuzz does not gradually come together to form a sensible picture, but instead seems almost artisanally crafted to confuse and mislead us.
We have access to more information than anyone in history, but we haven’t learned to sieve it for ourselves, with social networks selling our eyes and minds to the highest bidder. Fortunately, there are some new tools we have available that help exactly this kind of problem. A growing community of us believe that we have discovered tools for building credible lines of trust.
Proof of Integrity
What we need is not another charismatic leader who tells us “The previous politicians were all dishonest, but you can trust me.” That’s the broken record that we intend to break. What we need is a much more accountable way of performing our collective will.
We have amazing platforms for communication, we couldn’t ask for much more, except that these channels are owned by the powerful, and full of propaganda, to the point where people barely trust anything they hear anymore. What we need is a reclaiming of truth. We need to rebuild the foundations of our shared trust and understanding.
We need a way to gradually extend trust, prove trustworthiness, and truly put our weight behind the things we really do believe in. Through a combination of computer networks, cryptography, and cooperation, we are seeing an explosion of verifiably trustworthy collaboration patterns.
First, the invention of public key cryptography gave the world a way to take some information, and by merely mixing it with a secret, imbue it with a sense of identity that anyone else could prove. From that very simple building block, we gained secure websites, digital banking, global digital commerce.
But it wasn’t until Satoshi’s Bitcoin paper that we learned these same signatures could be used to create public protocols that could be executed by machine, but still enforce a sort of identity: A public to join protocol that is tightly secured per account. Anyone can see it is running as fairly as it claims, because it is transparent, and all verified using public key cryptography.
With the Ethereum white paper, Vitalik Buterin demonstrated that this kind of public protocol wasn’t only good for cash or any fixed purpose, but could be used to create evolving sets of rules: absolutely anything a computer could be programmed to do was fair game.
We are beginning to have the technology to build new sets of rules, new alternative currencies, and novel mechanisms of creating value that are resistant to manipulation, so the question I’d like to turn to is what new social protocols should we be developing?
Why Build a New Society on a Blockchain?
If you aren’t familiar with blockchains, you might ask why myself and others would propose that new social…
Establishing Trust and Governing
Dealing with your own business and personal relationships may seem like enough, but in hard times we are tasked with large problems, and today we are faced with problems as big as they get.
Climate change could very well mean obliteration of our food supplies, displacement of billions, and extinctions of unknowable biodiversity, all lost in a blink because we could not coordinate fast enough.
Once you are dealing with problems on a large enough scale, you will inevitably find that you are forced to trust some people or organizations that manage some of the many aspects of this big world that you cannot personally tend.
When you have to pay someone else to deal with a problem in good faith, we could say that you are electing a governor.
In this sense, to govern is to be trusted with the responsibility of allocating funding for a group’s interests. Even a house cleaner gets a key.
Governors should be paid enough to stay honest to their constituents.
Constituents should have the ability to revoke governorship easily when trust is broken.
Transparency of the public funds entrusted is a fundamental tool in identifying broken trust.
Discovering a charity subverted your trust is likely to end your donations.
Companies similarly allocate funds to employees, and fire them when trust is broken.
You could say a chain of command is also a chain of trust. The commander is actually prone: It’s up to everyone else to do as they’re asked.
As soon as the funds are out of your hands, you’re just hoping they’re still in your interest.
We can describe two roles, which are not exclusive: Governors and contractors. Governors take their pay to be trusted to honestly delegate additional funds to contractors who are capable of fulfilling their goals.
Like branches of a tree, the governor is made up of the sum of their allocations or leaves. Governors can help fund sub-committees and sub-governors, making them just part of a larger network. In a way, governors are contractors.
Venal (adj): A person willing to sell their trust for personal gain.
What does trust cost? What should a governor be paid? Senators can set their own pay yet many still many remain venal.
Since some governors and contractors are venal, the trust extended to them must be tenuous, cautious, and watchful.
We should create a highly liquid delegation process, make it easy to revoke trust when it’s broken. If trust is broken, it should organically break up to the point of rot, but not beyond that point.
Is there a pattern for allocating power so the risk of betrayal is always less than the benefit of the delegation?
That is the hard question, and I think it’s worth stopping there and chewing on it yourself. Go ahead, think about it before going on. It took me around a year of chewing on it before I had my answer, and in retrospect I feel foolish because the answer feels so clear.
The answer is a resounding “no”. There is no hedge against trusting another person. Trust is a gambit. A leap of faith. If a person’s trustworthiness could be proven , there would be no value in identifying it.
Insurance companies never had this cracked, they just over-charged customers and were aggressive at denying claims.
The credit companies didn’t know who to trust, they just had a guess, again, over-charging and of course excluding huge populations from their services.
Instead of any concrete trust meter, establishing trust is maybe the most valuable service in the world. Credit Agencies, Amazon, Ali-baba, Netflix, Uber, Airbnb. Not to mention content ranking, which brings in Google, Facebook, WeChat, etc., all have build some of the largest companies in the world by becoming exclusive experts on what you can trust in their domains.
On all of those platforms, the value is crowd-sourced. The reviews, ratings, purchase and view histories, web histories and more are valuable because they take the data that ordinary people assembled, and made it digestible.
The credit card companies only ever had your purchase history, and they’re treated like the gods of your trustworthiness when it comes to getting a home or car loan.
All that power, all from the data equivalents of table scraps falling from the feasts of your life. Of course they still have to charge a high interest rate, to make up for the risk they’re taking on (i.e., despite all this power, they still aren’t actually sure they can trust you).
What if you owned your own small credit company, and insurance brokerage, lending bank, or venture firm? What if networks of individuals unlocked the powers of leveraging trust that have been entombed in financial behemoths? Could they build something better?
What if it turned out that trust was the most valuable commodity in the world, and was also the most evenly distributed?
Rather than trying to mimic the current lending industry with tiers of investors, loan agents, and borrowers, I will start a proposed model from the simplest example I can:
Let’s imagine two people agreeing to work on a project together. They each have $500, but need to purchase $700 worth of supplies.
Let’s imagine person A would trust person B with up to $100, and person B would trust person A with up to $300 of their own money.
To make a purchase of $700, it is clear that only person A could make this purchase. Person B can trust person A with their $200, person A could return with the supplies, and then give change.
Now imagine if instead of giving person A the $300 at the last minute, that person B had a special kind of bank account that said “Person A can spend up to $300 of my money at any time.” Now Person A could have made this purchase on their behalf without even coordinating with person B in the first place, assuming they had that kind of strong relationship (Not a small assumption!).
Chains of Trust
Now let’s imagine a third person, C, who trusts B up to $100.
Also, since A was so honest last time, now B trusts A up to $600.
Notice that in this case, person B actually trusts person A with more money than they have, and in this case, this represents that they are willing to trust person A with some of person C’s trust in them. This is similar to the way a governor signs bills for larger projects than they could ever individually afford.
By allowing chains of trust to compound, what started as a simple pair of friends who trusted each other (already a socially beneficial arrangement) has already grown to resemble a small government. Imagine what can happen when more people are involved.
If you’d like to jump ahead to more advanced examples now, this article is a natural sequel:
In economics, this observation that networks of people who naturally trust each other can be composed into larger networks is known as social collateral. Other articles on this blog discuss it.
A Note on Digital Trust
When I first began this blog, I had just hatched the basic concept of how lines of credit hop across networks of people, but I’ve since learned that this basic principle of how trust is safely extended also has a long overdue thread in computer science, known as object capabilities.
In essence, the same logic that allows people to tentatively extend financial trust also applies to literally any type of power at all, from trivial digital permissions like activating your web cam, to accessing your medical history.
In time I hope to write more deeply on how these two principles combine, but for now, a peek at a couple possible theses:
As we digitize an increasing number of our resources and needs, we can enable new kinds of collaboration and crowdfunding that don’t even need to be based on money, but can be based on the actual capacities we require to thrive and succeed at our most ambitious goals.
Object capabilities outlines a model for composing computer systems from the minimum authority required to achieve an operation, and this same basic mechanism can be used by groups of people to extend their own valuable assets to one another, but in human systems the amount of authority needed to address complex goals can be immense, and so to I propose that social collateral serves as the other end of a spectrum with the principle of least authority, where the space in between is the space where individuals can safely explore collaborating with one another in creative ways.
I suspect there is a tax to distrusting people. It results in your investments serving as insurance instead of leverage. You are taxed continually to distrust people, and if we could more easily build reliable trust, we could leverage that community beyond our…
Trust and Social Collateral in The Quarterly Journal of Economics, August 2009 by Dean Karlan, Markus Mobius, Tanya Rosenblat, Ahttp://www.personal.ceu.hu/staff/dam Szeidl
“Defining Social Collateral in Microfinance Group Lending” https://link.springer.com/chapter/10.1057/9781137399663_10
Maybe money is any promise that can hold its value between exchanges http://unenumerated.blogspot.com/2016/02/two-malthusian-scares.html
“Defining Social Collateral in Microfinance Group Lending” https://ideas.repec.org/p/sol/wpaper/2013-152950.html http://www.socialcollateral.org/Risksharing/mainpaper.pdf http://www.socialcollateral.org/papers/Files/AltruismReciprocity/qje_website_final.pdf http://www.socialcollateral.org/papers/Files/AEAPP2007/sizeclosure.pdf
If you’re eager to learn more before I write on this again, I have begun keeping some notes in a mind map, which you can find here: