Moving beyond "Reputation"--the Market View of Reality

[Tim May]

For many years some of us have argued strongly for "reputation" as a 
core concept. Someone, perhaps even one of our own, even coined the 
phrase "reputation capital."

Reputation is an easily understandable concept which explains a lot 
about how imperfect protocols in the real world nevertheless "work." I 
won't go into what reputation is, even as defined by folks like us.

But there are many aspects of reputation which lead to problems:

1. The assumption that an agent or actor possesses a "reputation." A 
kind of scalar number attached to a person, a bank, an institution, or 
even a nym.

2. When in fact different people have different assessments of some 
agent's reputation. Thus suggesting strongly that reputation is not 
something attached as simply as above.

3. All of the nonsense about how "Alice's reputation has been harmed," 
deriving from the faulty notion of this scalar property attached to 
Alice.

Aren't we stuck with reputation?

No, a broader ontology of objects and beliefs about them is a better way 
to go.

The "reputation of the dollar" is related to my belief, and the belief 
of billions of others around the planet, that for whatever reason a 
piece of paper with the right markings on it will in fact be accepted by 
billions of others, by millions of small banks and moneychangers, and 
even by the U.S. Government. And the related belief that loans, IOUs, 
promissory notes, bonds, and numerous other instruments denominated in 
these "dollars" will very likely be accepted or exchanged, blah blah, by 
millions or billions of other actors. Such is not the case with Monopoly 
money or even with E-gold.

Thus, what is the "reputation of the dollar"? Is it because of foolproof 
anti-forgery measures? Is it because of the laws of the U.S.? Etc.?

No, it is a kind of collective hallucination.

Before James Donald freaks out and cites Objectivist arguments that Some 
Things Are Real, etc., let me point out that "collective hallucination" 
is mostly a cute phrase. In actuality, our perception of reality is more 
than just an opium dream. Empiricism, falsifiability, Popper, all that 
good stuff. But our monetary system is vastly less provably real than 
the world of atoms and stars is. Because money is fundamentally about 
bets on the future: will something be exchanged for something else, will 
governments support what they print, what will the dollar be worth in 5 
years, etc.

All crypto is economics. All money is based on belief. All a matter of 
"betting," of risk/benefit analysis. Related concepts, of course.

Even slightly flawed protocols still "work," given the right embeddings 
in other systems. (For example, a common flaw cited with remailers is 
that if there is not enough cover traffic, traceability still exists. 
But exactly the same flaw exists with money: try getting untraceability 
with coins if only a few coins exist. Ditto for bearer bonds. Ditto for 
lots of things  where the "protocol fails for small N" but works 
reasonably well--in the "betting" sense--when a lot of actors are 
trading a lot of coins and currency.

The value of a monetary token is NOT something that is determined by 
precise mathematical protocols. It's a value based on _belief_ or 
_expectation_ about the behaviors of other actors, and about the future. 
Currency suspected of being counterfeit may sell for 10 cents on the 
dollar, to a sophisticated buyer, while currency suspected of being 
legit may or may not sell for at or near face value. (Even perfectly 
legit currency would sell at a discount in large quanties, probably, 
because a buyer would be a money launderer. Hence the discount for risk. 
That is, a market decision based on the obvious tradeoffs.)

Back to reputations.

Seen as part of a larger ecology of a "market construction of reality," 
there are no fixed or absolute values, no fixed or absolute truths. Some 
assertions are "many nines" likely to be true, and some are even 
constructed to be true (*)

(* As in "2 + 2 = 4," though the streetwise person who says "What's the 
trick?" is realizing that even "known to be true" assertions may not be 
true, as in base 3. Magicians and con men have known this for a long 
time.)

Thus, there is no fixed "reputation" of either a person, an idea, or a 
unit of value. Everything is a matter of belief, of expectation...

Instead of an ontology of objects and their attached methods and 
property lists, including "reputations" and "monetary values," we should 
be thinking in terms of these objects as just other actors, with each 
actor maintaining his own internal model of "possible worlds" (how he 
thinks the other actors will behave, what he thinks may be future 
outcomes, what his own goals and expectations are). Seen this way, there 
is no "reputation" or "value" that is universal. Everything is relative. 
Everything is seen through the light of internal states/possible worlds.

This is the market view of reality. There is no "Reality." Just 
ensembles of actors, various facets, incomplete knowledge...all 
lubricated by betting. Every street kid knows this.

Digital money is just one facet of this worldview.

--Tim May
"He who fights with monsters might take care lest he thereby become a 
monster. And if you gaze for long into an abyss, the abyss gazes also 
into you." -- Nietzsche