Question
What is going to be the future of online credits?
Answer
Fascinating question. The tricky part in predicting the course of this is that online credit schemes variously reflect both a transactional economy that supports a trade in informational goods of real value (like Quora answers or digital gifts/graphics to decorate your online properties with), and a reputation system (a sort of indirect currency, where the value of an information good is a function of the reputation of the person offering it). Some schemes conflate the two, others (like Quora) separate the two. Others make one implicit and the other explicit. For example Quora upvotes (or upvotes on any Reddit type system) are really a kind of credit. I could agree offline to give you 100 credits if you upvote one of my answers. Some of this kind of activity will be bad for the site, some will be good. The economy organizers will need to steer with a gentle touch.
The conceptual problem is that reputation and currency cannot really be easily decoupled on the Web the way they are in the real economy. In the real economy, the state underwrites the value of a fiat currency. The reputation of the state (in the bond markets, basically) sort of averages out the reputation of the citizens and the value of the nation's natural resources as a whole. On the Web, there is no "state." Reputation defaults to individuals, and therefore currencies do too. There is SOME level of "state like" aggregation, but it is weak (a Quora credit is valuable by virtue of the fact that it can buy a slice of attention of a certain quality with a certain probability, based on the quality of the community and the success ratio of Ask-to-Answer requests... but this is hardly a solid enough foundation on which to issue Quora bonds for example...). The 2 reasons why online communities aren't really like states right now are that:
a) States monopolize unavoidable physical citizenship via social contracts. It is very hard to change citizenship, and 10x harder to be an outlaw who lives outside the global system of states. You have to physically live somewhere after all. By contrast, you can still drop out of the online world fairly easily. This may change soon where life becomes impossible if you refuse to be online. Just like life is currently impossible if you can't supply a phone number.
b) For online currencies, ALL value is currently based on the value of humans in the system. States, by contrast, are valued also based on their non-human natural resources. Hence oil-based kleptocracies for instance. The online world is just starting to acquire such "natural resources" (basically data of enduring value that appreciates over time or at least retains its value above a low threshold, like physical real estate, oil reserves etc.). Unfortunately, a lot of such natural resources, are commons style, and hard to turn into an economy. Imagine if all US natural resources were in national parks....could a country that was all national parks issue bonds? I don't think so. Unless it were earning "carbon sink" revenue...
So...
My prediction is that as the online identity game stabilizes with a few key players (Facebook, Google, Gravatar), we'll start to see "financial" integration a la the EU. This will proceed at the pace with which not being online becomes increasingly impossible, and as the online world acquires "natural resources." Are we there yet? I think we're a few years away.
Facebook will possibly offer an open reputation/credit system very soon. There will probably be some sort of p2p rival play, but I'd bet on Facebook. Google may or may not be able to offer one depending on whether G+ works out.
Pure currencies like bitcoin... I've come to the conclusion that they cannot work. You cannot really build an anonymous currency of value when the main asset is reputations attached to names. You MAY be able to build one based on the state of a true "natural resource" like Wikipedia (as opposed to an arbitrary algorithmic mining process), but there's a lot of unknowns. Is Wikipedia really comparable to the Saudi oil reserves? I don't know.
Narrower domains like Quora will need to decide if/how to integrate into such web-global systems. An aftermarket should emerge naturally (i.e. offsite, I could agree to give you 100 Quora credits in exchange for you giving me 112 Facebook credits or something), whether or not the individual sites decide to explicitly support it.
The conceptual problem is that reputation and currency cannot really be easily decoupled on the Web the way they are in the real economy. In the real economy, the state underwrites the value of a fiat currency. The reputation of the state (in the bond markets, basically) sort of averages out the reputation of the citizens and the value of the nation's natural resources as a whole. On the Web, there is no "state." Reputation defaults to individuals, and therefore currencies do too. There is SOME level of "state like" aggregation, but it is weak (a Quora credit is valuable by virtue of the fact that it can buy a slice of attention of a certain quality with a certain probability, based on the quality of the community and the success ratio of Ask-to-Answer requests... but this is hardly a solid enough foundation on which to issue Quora bonds for example...). The 2 reasons why online communities aren't really like states right now are that:
a) States monopolize unavoidable physical citizenship via social contracts. It is very hard to change citizenship, and 10x harder to be an outlaw who lives outside the global system of states. You have to physically live somewhere after all. By contrast, you can still drop out of the online world fairly easily. This may change soon where life becomes impossible if you refuse to be online. Just like life is currently impossible if you can't supply a phone number.
b) For online currencies, ALL value is currently based on the value of humans in the system. States, by contrast, are valued also based on their non-human natural resources. Hence oil-based kleptocracies for instance. The online world is just starting to acquire such "natural resources" (basically data of enduring value that appreciates over time or at least retains its value above a low threshold, like physical real estate, oil reserves etc.). Unfortunately, a lot of such natural resources, are commons style, and hard to turn into an economy. Imagine if all US natural resources were in national parks....could a country that was all national parks issue bonds? I don't think so. Unless it were earning "carbon sink" revenue...
So...
My prediction is that as the online identity game stabilizes with a few key players (Facebook, Google, Gravatar), we'll start to see "financial" integration a la the EU. This will proceed at the pace with which not being online becomes increasingly impossible, and as the online world acquires "natural resources." Are we there yet? I think we're a few years away.
Facebook will possibly offer an open reputation/credit system very soon. There will probably be some sort of p2p rival play, but I'd bet on Facebook. Google may or may not be able to offer one depending on whether G+ works out.
Pure currencies like bitcoin... I've come to the conclusion that they cannot work. You cannot really build an anonymous currency of value when the main asset is reputations attached to names. You MAY be able to build one based on the state of a true "natural resource" like Wikipedia (as opposed to an arbitrary algorithmic mining process), but there's a lot of unknowns. Is Wikipedia really comparable to the Saudi oil reserves? I don't know.
Narrower domains like Quora will need to decide if/how to integrate into such web-global systems. An aftermarket should emerge naturally (i.e. offsite, I could agree to give you 100 Quora credits in exchange for you giving me 112 Facebook credits or something), whether or not the individual sites decide to explicitly support it.