Owning the future of trust
Jun 15th 2008NiaLLLarkinUncategorized
All social systems are based on trust. That truism scales from groups of friends to distributed economies. It is trust that lubricates commerce, whether that is the social commerce at an informal social gathering or the market commerce in a stock market.
If you position yourself to own the future of trust, you are well placed to put yourself at the heart of all commerce.
That’s why this recent patent application interests me. It taps back into the natural form of social trust. That is, the trust rating that is natrually socially assigned within a community as opposed to the trust rating assigned by some institution. And uses that as a more reliable rating of creditworthiness.
Sociofinancial systems and methods
Lenders (including peers, financial institutions, merchants, and the like) in the more developed areas the world typically use a credit score as a measure of an individual’s or entity’s creditworthiness. Roughly speaking, a credit score categorizes or assigns a probability to the likelihood that an individual or entity will honor a debt.
Credit scores were developed to accommodate merchants and banks that needed to extend credit to individuals and entities that were not personally known to them.
Credit scores are a relatively recent phenomenon in the history of credit. For centuries if not millennia before the emergence of credit scores, lending decisions were made on the basis of trust relationships and codes of conduct between individuals or groups within communities. In many offline communities, and especially in offline communities that are in less developed areas of the world, this is still the predominant form of lending.
Recently, online communities such as Facebook have emerged. A major function of online communities is to capture and encode relationships between people, groups of people, entities, groups of entities, and so on. Based upon these relationships, it is possible for members of the online community to share applications and content with one another. Also, in some cases it is possible for computing applications to access these encoded relationships and use them for some purpose.
There exists a need to capture and encode financial trust relationships in online communities, and to enable borrowing, lending, repayment, collections, and related actions based upon such relationships.
2 Comments »
Alexia Golez on 15 Jun 2008 at 1:01 pm #
And I thought your primary motivation for designing trust systems was philanthropic! :)
NiaLLLarkin on 15 Jun 2008 at 6:05 pm #
I think that any systems that really promotes trust is philanthropic by definition. Systems that successfully increases the sense of trust amongst all members of a community will make life much more pleasant and rewarding for all involved.
The great thing is that there a virtuous circle here. Look at the way the Quakers applied a system of trust and honor that catapulted them to such prominence in business in a way that benefitted all that did business with them and all that worked for them.
A new system of trust, designed for the realities and opportunites of the modern world will kick start communities and economies where there were none before.
If you are interested, Francis Fukuyama is quite good on this subject. The deeper you get into it the more you realise its the question at the heart of all the great political and economic debates of the modern age.