Exchanging Value: An Exercise in Priorities
The economy is a value system, where physical resources like time, skill, insights, identities, and information can have value, if applied & combined in the right context.
Context x Resources = Value
As an example with the resource of information - some information only has value if private (like the recipe for Coca Cola, which anyone could make if they had the recipe) whereas other information only has value if public (like which laws a politician broke, which can inspire valuable improvements to government, or scientific discoveries that can inspire thousands of minds to ask new questions or achieve new insights, thereby increasing everyone’s standard of living).
Similarly with other resources like insights - some insights only have value if combined in the right way, or implemented with the right design, or in the right culture or market environment.
So we can see that context changes the value of a resource. But what’s going on behind the scenes, driving these contextual influences?
Priorities & Usability Drive Contextual Resource Value
The forces driving these changes in value depend on priority context like:
- which priorities are incentivized by the resource (like justice or education), which signals either a value or a perspective (set of positioned values)
- which groups or individuals benefit from those priorities, and how much power they have to act on this opportunity
as well as usability context like:
- whether the resource is easily re-usable, as with a structural insight like a secret recipe, reliable joke formula, or site design tip based on psychological insights
- the abstraction level or granularity of the resource (does it apply to many contexts or not? is the problem space in which the resource exists a universal or local space?)
- the interchangeability of the resource (is it easily replaced?)
- the inefficiency of the resource (is replacing this resource incentivized? Does it create problems or solve them; what is its problem-solution causal ratio?)
- the foundational nature of the resource (is it an input building block for other resources, or an output product?)
Now that we’ve recognized the relationship linking context, resources, and value, we can examine how & why value is exchanged between people.
Thought Experiment: Perfect Information
Imagine a world where everyone has perfect information (universal access to all information), where every claim is verifiable, and every bit of knowledge is find-able on a global blockchain search engine. In this fictional world, anyone can check anything you say, and determine whether it’s true. You can check what other people tell you and determine its degree of truth as well.
What would happen in this environment?
First, there would be witch hunts, to find the liars and punish them, assuming this technology would develop in a culture that values honesty. This brief savage history would lead to a culture where no one would ever make a decision or take a risk or maybe even communicate at all, they’d be so wary of engraving a permanent mistake on their identity.
At that point, we’d be in a state of economic gridlock, constantly checking what everyone says for truth, and trying not to give any information or other resources out ourselves so no one can hunt us. The degree of resources spent on people verifying each other’s claims would crash & stall all our systems.
At this point, we might arrive at the question:
It’s so expensive to constantly verify all these claims, why not just choose to trust certain people?
And we’d return to a similar system to what we have now, though empowered by a new insight advising against giving personal/local information to those with universal/monopoly power, and advocating trust (or approximate trustworthiness) in our local communities.
Trust locally, distrust globally; a formula for coexistence.
What would add value in that environment is an efficient way to analyze a truth probability distribution with a logical model. So rather than calculating the answer to: did this person make transaction X at time Y? We build a logical model that can answer the question: would this person make transaction X at time Y, given what I know about their priorities Z?
Then the tool assigns probabilities to each possible answer, and outputs the likeliest answer. This tool would save resources spent on expensive verification requests and would give people a “truthy” replacement for those parties they trust, so they can save their expensive verification requests for the untrusted parties they do business with.
Decentralized and universal truths point in opposite priority directions. Optimally you would do a little of both; you’d isolate yourself into a decentralized community where you trust everyone in that local community & your identity is unique, valid & safe, and then you’d use verification systems like blockchains to safeguard transactions with untrusted parties outside of your decentralized local community that may not recognize or validate your identity.
Not all resources are meant to be transacted on the universal scope; the comparison of “I’m the best at X because all my friends & family say so” vs. “the whole world voted me as the best at X” illustrates the diverging value of decentralized vs. universal information.
Blockchains will diverge when priorities collide
Blockchains in their current implementation are essentially invalidating the idea of identity because it becomes irrelevant who you are, the chain hash just verifies the transaction legitimacy. But identity may be incorporated into the participation rules in future; chains may prevent those with trust scores lower than X from requesting transactions on their chain, which is where priorities come into play. A chain that values honesty may block out the same user that is welcomed into a chain that values wealth or another virtue.
However identity is important in local communities, so using different blockchains (one that uses truthy verification vs. one that uses mathematical verification) will be a common strategy.
Verification markets will commoditize security
Then bundles of truthy transactions can be sent to the global truth chain once verified & incorporated in the global chain with a git replay type of feature, if a community decides to submit their truthy transaction bundles to the global community & if their transactions are verified.
Permission to participate in a market will be determined by your choice of blockchain.
Verified communities will then be able to participate in official global markets, and totally decentralized communities may not. But decentralized communities may decide to only do business with other decentralized communities, thereby counteracting the monopoly on verification.
In this way, members of decentralized communities will be represented by the actions of their group, so initial decisions on who to trust & what groups to participate in will have compound impact and must be made with care.
Blockchains will commoditize priorities
With blockchains, the abstract concept of priorities (whether abstract values like justice & education, or concrete personal values like honesty) can be commoditized and broken down into a concrete resource in the form of a numerical priority ranking, a resource that is also tradeable on an exchange.
There will then be truth rankings; the most trusted people will execute all of their transactions on the global chain, verifiable by anyone.
There will be brain configuration tools to help us allocate our transactions to different chains according to our certainty; for those informational transactions we’re less sure of, our brain config tool will help us allocate those to interactions with our decentralized communities; for those informational transactions we’re more sure of, our brain config tool will allow us to exchange that information on the global chain.
In addition to honesty, many other virtues can be assessed using the transaction history on each chain.
The Commoditization of Intent
If other metadata is included with transactions (metadata like intention to use the newly gained resource, implementation plan for actualizing this intention, intended vs. actual Return On Investment of the resource, the price range you would have paid for that resource, and other value-signaling metrics), you’ll also be able to tell who is the best investor of their resources, what priorities a person plans to have in future, who is the best planner, and many other values besides.
To assess the trustworthiness of a stranger, we might request a calculation of their ranked priorities, representing the symbolic hash of their identity, based on their blockchain transactions with varying degrees of verification. This will give us a snapshot view into their decision strategies, as indicated by their transaction history. Then we can run simulations on the interactions we’re considering with this person: will person A do B when I request it, given their priority hash C?
This environment will empower us to better navigate the complex systems governing our interactions.
In the endgame, the most optimal combination of priorities will be so clear it will be laughable that anyone ever spent time contemplating it. At that point, we’ll only value other individuals who can build algorithms to improve our thinking & understanding.
But the near future will be a fun spectacle of watching priority-signalers wrestle with their formulas to derive truth. You can skip ahead with me if you want, and arrive right at the doorstep of algorithm valley.