The Credential Economy

The Importance of Infrastructure

Prosperous cultures have historically relied on innovations in infrastructure to thrive and flourish. Infrastructure such as roads, bridges, and rail have allowed nations to become empires by expanding their borders and trade routes. Control of those trade routes through strategic construction and fortification has been key in maintaining power and authority over their governed. Nations, states, and other entities still rely on these methods to gain and maintain power, but the primary forms of infrastructure and the commodities that they are carrying have fundamentally changed.

Data is now the most valuable commodity in the world. It’s no surprise then that we as a society have allocated a significant amount of resources and time to develop methods of sharing, storing, analyzing, and ultimately owning it. Whoever controls the channels of collection controls modern day trade routes. The most important modern infrastructure innovations are no longer focused on moving physical goods from A to B, but instead bits of information through massive networks.

Over the past two decades, Web2 search engines, marketplaces, and social media platforms have mastered the creation of channels to acquire and leverage the most important type of data; ours. These companies are the new empires. Just like nations of old they expand their borders (marketshare) and fortify their trade routes (acquisition channels) to control the trillions of dollars of value flowing through the internet. Their wanton quest for power slowly and almost imperceptibly allowed cracks to emerge that are now large and obvious fissures.

Tools that were designed to better connect us and to instantaneously share information have been weaponized to separate us and maintain the status quo of power structures. We face regular infringements on our privacy in order to sell our personal secrets. We are targeted by algorithms designed to keep us just happy enough to be compliant. We are barraged by misinformation designed to divide us into factions. For the most part we have just accepted these manipulations as tradeoffs of using these platforms, but how much longer can we take it? Isn’t there a better option? Can’t devs do something?

We are entering a new age. Web3 infrastructure utilizing cryptography and blockchain technologies have the potential to right many wrongs of Web2. Concepts such as decentralization, self sovereign identity, and on-chain accountability have the power to level the playing field. Truly, we find ourselves with an opportunity to take back control of the “trade routes” and collectively own and govern the infrastructure that will allow our culture to thrive and flourish.

On-Chain Contributions

Over the next several years we will see a multitude of industries begin to blossom within Web3 as a result of the excitement surrounding DeFi, NFTs, and DAOs. These financial, cultural, and organizational innovations have opened the eyes of millions to the wonders of Web3. People are clamoring to get more involved. They want to build, contribute, and create in this expansive ecosystem. As the ecosystem grows and opportunities to contribute become more available we will need to develop infrastructure that can handle the influx of new traffic.

Currently, the best way to start contributing is by joining a DAO. Over the past few months there has been a flood of tooling to help solve DAO efficiency problems. Most of these tools have been organizational facing though. Many are vital and needed, but in order for the ecosystem to onboard the next several million users we need tools that make contributors feel like they are more than just cogs in the machine. Web3 is driven by contributors and the environment needs to reflect it better. So how do we start to address that issue? We start with infrastructure to better track on-chain contributions and platforms to showcase them.

The public ledger of the Ethereum blockchain is already capturing a massive amount of these on-chain contributions, but we have yet to organize and aggregate it in a meaningful way. This is where building infrastructure comes into play. The issue is that contributions are complex. There isn’t a one size fits all solution. In every organization there are tangible and intangible contributions as well as different tiers at which people participate. For example, a core team member that handles admin work most likely contributes more than a dev completing a bounty. However, that may not be apparent in the data available since the only verifiable on-chain data we have at this time to track contributions are monetary transactions, on-chain smart contract deployments, and governance activity.

Given the complexity of the data sets there will be a need for a number of protocols that reliably gather specific aspects of these contributions very well. When that data is combined and aggregated we will be able to better showcase the skills and achievements of individual contributors and assign credentials to inform others. Aggregations will act as new and improved resumes and interoperable profiles. These “resumes” are not like those of old though. We will use these new lists of credentials for more than just getting a job or landing a position on a nonprofit’s board of directors.

Credentials and shared accreditation activity will help us better understand each other and find common ground. They won’t just refer to our professional skills or education. Our social credentials will begin to play a more important role as well. Credentials will help us not only meet new colleagues, but also make new friends. Contribution history and assigned credentials associated with every wallet will touch almost every aspect of the Web3 metaverse.

The Credential Economy

“The Future of Work” is a marketing term that has been grossly overused. However, with that being said, we are already seeing signs that Web3 may be the solution everyone has been searching for. Work is easier when we’re happy doing it. If you have spent time building or creating in the space then you know that it is a blend of work and social life unlike anything before. There is still a massive amount of work to be done in order to ensure that it remains so going forward. This is where verifiable credentials can help.

By aggregating and analyzing the sum of on-chain activity, payments, and credentials we can begin to create identity networks that provide meaningful clarity to individual contributors and organizations. These identity networks are the result of several hierarchical networks; credential networks, credibility networks, and reputation networks. Reputation networks are comprised of credibility networks, credibility networks are comprised of credential networks, and credential networks are the result of the sum of applicable verifiable credentials. Together, this web of networks lays the foundation for the credential economy’s infrastructure.

Fig 1. Identity Network Hierarchy
Fig 1. Identity Network Hierarchy

When credentials are measured at scale they can provide non-monetary values to individual credentials, contributors, organizations, and networks themselves. These “non-monetary” values can also be thought of as the social value and the net score of those shared credentials allow us to gain credibility and reputation. These social values are ultimately what are used to compare contributors and organizations to others with or without those credentials. Once a history of these social values is established then they can be used to drive efficiency and clarity to credibility and reputation networks and in turn allow entities to monetize or be rewarded through tokenomics.

Credential networks allow us to derive meaning from one or more credentials across a population of those same credentials. They give insight into the value and influence of those credentials for certain contributors. In other words they create a baseline by which contributors can be compared at scale. They provide signals that inform others about a contributor or organization’s competence, proficiency, or expertise. Credentials alone give only a partial picture though.

Fig 2. Credential Network
Fig 2. Credential Network

It is the comparison of differing clusters of credential networks that give insight into the trustworthiness of those credentials and the level of experience that a holder likely has. Credibility networks help set experts apart and establish confidence in the genuineness of their credentials and beliefs.

Let’s think in terms of medicine; say you’ve had some concerns about your blood pressure recently. You have mentioned it to Dr. Alpha, Dr. Beta, and Dr. Theta and they each give you differing advice. How do you know who to trust? On the surface their credentials look the same. They all have Dr. in front of their surnames, so surely they are all qualified, right? This is where credibility helps. By comparing the differences in the sum of credentials you are able to determine Dr. Alpha is a professor, Dr. Beta is a dentist, and Dr. Theta is a cardiologist. The choice becomes obvious and if you want to address your blood pressure you should probably take the guidance from the cardiologist.

This is a pretty simplified scenario, but the implications are the same in any situation when we have limited context of credentials. Credibility networks give us clarity and help us quickly distinguish the difference between an MD, DDS, and PhD like in the example above when surface level credentials can’t be relied upon alone.

Fig 3. Credibility Network
Fig 3. Credibility Network

Reputation networks rely on a mixture of tangible credentials and intangible social metrics to bring the identity network hierarchies together. The social values are a bit harder to quantify, but very possible at scale. Where credibility networks measure how qualified a contributor or organization is, reputation networks attempt to measure whether people think a contributor or organization should be qualified. This question isn’t actually an arbitrary measure, but instead metric based on data. (Protocols like Coordinape are attempting to capture social sentiment through the P2P distribution of participation tokens). However, since people are inherently different there isn’t a black and white answer to this question either. It is more of an art than a science to assign a value.

Fig. 4 Reputation Network
Fig. 4 Reputation Network

Reputation networks can be utilized for an incredible amount of good in Web3. Uses include tools and protocols that prevent scams, identify bad actors, bring light to overlooked contributors, reward users for good behavior, etc. The possibilities are nearly endless. The problem is reputation networks can also be very dangerous if wielded incorrectly. Let’s explore some examples of reputation networks in action.

The Importance of Decentralization

As we’ve seen with centralized social media platforms, attention grabbing material is highly rewarded. People make millions of dollars optimizing every aspect of their content to exploit algorithms and amplify media not on its merit, but instead on the number of impressions it generates. These practices squash creators and builders with smaller audiences even though they may be more qualified or creative. This is where reputation systems can help. Is there a place for attention grabbing material, yes? But should we rely on it as our source of news and credible information? It’s probably why they say journalism is dead. Hard hitting journalism doesn’t hit as hard anymore. Well, it doesn’t capture our attention like it once did. What if we were able to elevate content based on credibility and reputation instead or at least juxtapose it to give us a selection of more well rounded points of view? Could we make the world a little better by being able to verifiably trust that people have a certain degree of credibility and reputation? How might this work?

As Web3 identity networks begin to blossom we will be able to begin analyzing the activity of credentialed users more thoroughly. What are they like? What are they sharing? What are their beliefs? Who are they interacting with most? Who are they most similar to? Unlike data companies in the past we can start using that information for good. We can find the most knowledgeable experts and give their voice weight using the law of averages and mechanisms to crowdsource in a decentralized manner. Let’s refer back to journalism. Using a baseline established by credential networks we are able to begin comparing journalists by their credibility. As they establish a history of interactions with other journalists that data can be used to give weight to a given wallet’s reputation through social activity. The more weight that a wallet has the more “voting” power or “influence” it is able to use on the content that it interacts with. It matters not how many followers an account has, but instead the weight of reputation that each of their “followers” have at any given point. (I think now would be a good time to mention that the concept of followers may be unnecessary in many applications once reputation networks are established.) The heavier the sum of a wallet’s reputation, the more likely that they are an expert in their field.

The implications of crowdsourcing experts in this way are overwhelmingly positive. Imagine using weighted reputation to hire the best talent and find the right investors specifically tailored to your needs or to better inform voting on DAO proposals by giving weight to experts or informing whether or not the proposal writer is credible. Using reputation to surface contributors that deserve recognition will change culture and society in immeasurable ways. However, this is not a fool proof system due to the inherent centralization of one platform even if it is decentralized and is where true decentralization matters to fix the errors of our past and prevent us from making more grave ones in the future.

There will be a need for innumerable platforms and protocols that measure reputation systems. We require checks and balances for efficient systems. As the saying goes, “there are always two sides to every story…” Even if one platform is truly decentralized it is still inherently centralized because we cannot rely on it as the single source of truth. There is great danger lurking when platforms and protocols are able to be gamified to raise the reputation of a wallet or hide and obfuscate relevant information.

Take this scenario for example. You are voting between three candidates to become leader of the free world. Candidate A relies on astrologists to help make important decisions, has had two mistresses while married to his faithful wife, chain-smokes, and drinks eight to ten martinis a day while working. Candidate B has been kicked out of office twice, regularly sleeps past noon, used opiates in college, and drinks a bottle of champagne every day and a quart of brandy every evening. Candidate C is a decorated war hero, a vegetarian, a lover of animals, doesn’t smoke, only drinks an occasional beer, and has had no illicit love affairs. Which do you choose? The choice is easy, right? Candidate C is the best candidate based on their merits! Well, turns out candidate A is Franklin Roosevelt, candidate B is Winston Churchill, and candidate C is Adolf Hitler. Sure, this example is old and riddled with fallacies, but it is illustrative to the point. When we are forced to make assumptions and decisions based on one source there is a good chance we are not getting the whole picture.

Centralized accreditation can cause major problems. We have seen examples play out in recent history in real life, most notably with the ‘08 financial crisis when rating agencies were misrepresenting the investment grade of financial instruments that much of the market relied upon. We see it everyday in social media companies where users are elevated based on their following and impressions instead of the merit of their content. Systems for scoring need to be decentralized to ensure bad actors and those looking for power cannot control the ability to credential. Centralized control of these systems would create imbalances through greed, fraud, and corruption leading to further socioeconomic disparity. Misuse of centralized reputation networks could even lead to frightening, dystopian social scoring where people are limited in their freedoms based on their actions in the past.

The fact is these systems are already being built using the technology and infrastructure of Web3. Credentialing will be an industry in itself and will help bridge our experiences in real life and the metaverse. The question is how will we safeguard the infrastructure to protect our privacy, power, and sovereignty? We as a community must support and invest in grassroots infrastructure that lays the groundwork to withstand centralization. Our freedom as free-thinking, sovereign individuals depends on it.

If you find this information useful or want to talk about how we build the next phase of infrastructure please reach out via twitter.

This is my first Mirror article and therefore my first official on-chain credential as a writer. If you made it this far and want a credential that verifies you can read then mint from the link below. Could be cool to have for the future, who knows?

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