A few concepts came together for me recently. This post will attempt to summarize my views and how I see them intersecting:
- Proof of Caring (A concept made viral by Quantstamp)
- Richard Thayer winning the Nobel prize in economics for his work in Behavioral economics.
- Blockchain implemented technologies
- Becoming a father
First, I want to make this abundantly clear. I am not an expert in any of the above.
- In many ways, I'm an extreme novice in all things blockchain. I'm eagerly consuming content to try expand my understanding, but as of now, I'm a simpleton.
- My understanding of Behavioral Economics is largely informed by a podcast I listened to yesterday morning featuring an interview with Richard Thayer, but beyond that, I know little about his work in Behavioral Economics.
- And I read through the description of and videos about Proof of Caring as it was directly related to my desire to find new and novel innovations in and around the blockchain/ Ethereum network.
- My son isn't yet 8 months old.
All that said, let's begin:
Yesterday, my friend John and I listened to this podcast. After listening, the conversation sought to apply behavioral economics to the matter of the blockchain. Our conversations tend to revolve around Bitcoin, Ethereum, Steemit and Quantstamp.
In a previous "Conversation with John", I had explained the ingenious way in which Steemit seeks to solve the behavioral economic problem of crypto-speculation...
I'm not sure if "crypto-speculation" is an actual word, so I'll attempt to define it: crypto-speculation is the reason crypto-currency fluctuates in value so very much. It's the reason our conversations inevitably enter the realm of "Should I buy it or sell it today?". It is the practice of buying and selling a crypto-currency in the interest of making fiat currency gains in the short term. It ultimately destabilizes the currency and makes it harder to use as actual currency "today" without a significant amount of uncertainty over what it's value will be tomorrow.
Anyway, I felt that the Steem network and Steemit devised a fairly simple, yet elegant system that sought to solve crypto-speculation. For those that aren't familiar, Steem Power is essentially currency you can buy with US dollars. The catch is that Steem Power cannot be immediately exchanged back to US dollars. It must be cashed out slowly over a specific period of time (I believe 2 years). (Pause: I'm intentionally omitting the part about having to first buy Steem with USD on an exchange and converting that to Steem Cash or Steem Power, etc for brevity. Resume). The more Steem Power you have, the more it can be assumed that you're "bought in" to the system. Either:
- You're willing to tie up a big chunk of your money into the network or
- You've created smashing content that people love to read.
I think this is great. And I believe it addresses, in a structured way, some of the shortcomings of human behavior... the true costs of the behavioral economics of how people actually act. The "spirit of the thing" is that this network created rules that are meant to encourage "caring" (holding, participating, etc). The "Proof of Caring" is right there in the pudding.
Enter Quantstamp's "Proof of caring". To me, it immediately smelled of a soft implementation of what Steemit tried to enforce via hard rules. If Quantstamp really truly rewards people for "caring" about the Ethereum network, then, presumably, those people are getting involved "for the right reasons" and will actively work to vote confidence into the system by making "caring" decisions. I suppose a simple example of a "caring" decision in my own mind would be to hold and continue to increase interest (financial) in tokens. If everyone truly cared and believed in the system, it's success would be set in stone after the ICO... The value of the tokens would steadily but stably increase, value could be determined and predicted, and thus, the network could function as intended immediately. People would exchange currency (tokens) for the service of securing Ethereum contracts.
Enter "My Son". Parenting is a process of constantly putting others needs before your own. My routines have shifted (imploded) and most of my thoughts tend to focus first on making sure he's OK. (Sleeping, eating, pooping, gaining mobility, etc). I'll admit that I'm about to go down into that hole, but hopefully you'll see the connection I'm trying to make. On the surface, and on some particularly bad days, I'm not entirely sure why so many people choose to be parents. It is a ridiculous and grueling task. And, judging from the disappointment my own mother still experiences as it relates to me (my effort, lack thereof), there's not some obvious "payout" at the end of it. In fact, the "need for your parents" becomes somewhat more erratic, dire and consequential when your adult children "NEED" help. But, as a father with 8 months of "experience" I can say that the payoffs come in much smaller, more subtle and profoundly more meaningful ways than anything I've experienced before. And I think this applies to anybody who serves as a nurturer. The very act of giving, growing, nurturing provides meaning-- all throughout --little by little. The merit of that engagement accumulates, and the thing/child/ being survives. Maybe it thrives. But the hard work and sacrifice also continues throughout. Thrives.
Back to behavioral economics. Richard Thayer mentioned a few examples in the interview. Things like saving for retirement, working more during busy (more lucrative periods) and less during less lucrative periods, incentives like bonuses or "side income". What he mentioned is that from a strictly economic perspective, these examples are straightforward. You won't be able to work when you're old, so you save while you're young and can work. 50% of people don't do it. Bonuses allow you to pay down debt so your cumulative earnings increase. Yet people tend to spend such "free money" on luxuries. My sophomoric explanation of Behavior Economics, then, is the study and acknowledgement that human behavior doesn't always follow economic logic and sometimes lacks forward thinking.
Smart people seem to get this. They're doing things like winning Nobel prizes, writing technology meant to democratize currency, democratize democracy, verify contracts. But plenty of people with average (maybe even below average) intelligence are doing it as well. They're raising children, hoping to provide them with a better life, perhaps a better world than the one they entered. To me, that's "Proof of Caring". It's an attempt to:
- Ask people to consider the the "whole" and how their involvement impacts that and
- To try to vet out the people that ultimately want the immediate and narrowly serving "payout".
Let's wrap it up: Steemit attempted to bake their "Proof of caring" into the structure and implementation of the social network. Good content should be rewarded with "influence" and bad content or less popular content is not. Yet still, individual interest leads people (even well intending people) to seek upvotes, influence, resteem PRIMARILY and content secondarily. If you have the right combination of paid and unpaid bots and whales on your side, you theoretically can get around having sub-par content. Enough people are buying and selling Bitcoin closely following dips, spikes and trends, and not enough people are holding, spending and promoting the USE of Bitcoin. As such, it's more of a gamble or investment opportunity than a purely digital currency that can be accepted by businesses small and large without considerable risk or immediate conversion back to fiat (thus increasing instability). Great parents are wonderful and inspiring. And it's really hard to be a great parent. Good parents can create good people, and good people can create good systems. Quantstamp is making "caring" sexy. And doing it explicitly. I really hope this concept gains traction. I hope every new ICO includes a "proof of caring" clause and that the heads of startups, ones with the potential to change the shape and fabric of our world, continue to value "the good vibes" of their early investors over "easy money". And I hope that those people who successfully gave off the "good vibes" and invested early will continue to experience the small, steady and profoundly impactful validation of growing these systems through consistency of “caring”.
