What if we built a digital economy based on abundance instead of scarcity?
The first thing they teach you in any introductory economics course is that we have limited resources but unlimited wants. When resources are scarce people compete for them, and in extreme cases even fight or go to war for them. But scarcity as a basic economic problem has long been resolved in the market economy; the market allocates scarce resources through an exchange mechanism according to the laws of supply and demand.
Here is the problem though: while the market economy works incredibly well for scarce resources, it — paradoxically — works poorly when it comes to abundantly available resources! The reason for it is that only scarce commodities have an exchange value in the marketplace. When resources are abundant (think: air, water, sand, etc.) they essentially have no exchange value in the marketplace.
That may be alright for resources that require no labor to produce — even when these are necessities of life — but what about resources that require some initial fixed cost that can then be available in abundance? This applies to practically any digital content today, including articles, books, software, and so on. If there is no working business model for such products nobody would have an economic incentive to produce them.
Scarcity vs. Abundance
Up until now people have applied market economy-based business models to the web to incentivize the production of digital content. But what does this mean in practice? Since the market economy only values scarce commodities, when these business models are applied to the web it essentially means to either (artificially) create scarcity out of abundance, or indirectly use a scarce resource as a proxy to the value of content (thus distorting the content’s value).
For licensing software or content subscription that means restricting access. For advertising that means using users’ attention as a scarce resource — thus distorting content to get higher ratings, instead of focusing on quality.
No matter what market economy-based model is used, since the market relies on a scarcity mechanism in a system that is based on abundance, the result will always be inefficiency.
An Abundance-based Digital Economy
So what does it mean to have efficiency in an abundance digital economy? It means that everyone has unrestricted access to all content, and that content creators are compensated according to the quality and importance of their content. In other words, the more the content contributes to the ecosystem the more the content creator should be compensated.
Similarly, if multiple content creators collaborate to produce the content each should be compensated according to the person’s contribution. If one content creator produces derivative work, or builds on the work of another person, the original content creator should be compensated based on how much influence the original work had on the derivative work.
Since content such as major open-source projects, scientific research, books, investigative journalism, and so on requires significant upfront investment, there should be a mechanism by which content creators can request funding from investors in return for a portion of the future value of the content.
How does it work?
But if all content is available for free, if users don’t have to pay for using the content, and if there is no exchange mechanism, where does the money come from to pay content creators? The answer is that — much like cryptocurrency miners get coins as a reward for their validation work — content creators in the Web 4.0 Ecosystem would get tokens as a reward for producing content of high-quality and importance.
A Web 4.0 Token equals to the product of the content’s quality (Credibility Score) and its relative importance (Importance Score). The higher the quality and importance of content, the more tokens the content creator gets. On the other hand, if a content creator produces content with a negative Credibility Score they lose tokens (and lose credibility). Therefore, since the value of the token is directly tied to the quality of content produced, the value of the token in the system is preserved no matter how many tokens are distributed.
The role of reviewers
Obviously, the value of digital content in the system has to be determined by reviewers (although later on AI/ML systems will be developed to expedite the process). How then can we make sure that the reviews are accurate?
The simple answer is that the incentive structure for reviewers is designed to promote accurate reviews:
- First, just like digital content in the system has Credibility and Importance Scores, so do reviews. Reviewers therefore have the incentive to seek out content whose review would contribute the most to the ecosystem, independent of the value of the content (for example, reviewing an app with malware may give the app a negative value, but the review itself — exposing the fraud — would add great value to the ecosystem).
- Second, reviewers need to back up their claims with sources and evidence.
- Third, anyone can challenge the accuracy of reviews. This means that reviewers should never expect to get away with dishonest reviews.
- Fourth, the weight of reviews is based on the expertise (measured in total Credibility and Importance Scores) of the content reviewer in any particular category.
- Fifth, content reviewers are selected at random to review content, thus minimizing the possibility of collusion between reviewers and content creators.
- Sixth, for high value content, more reviewers with a higher expertise level are required to establish the score.
- And seventh, the value of the Web 4.0 Token is directly tied to the accuracy of Credibility and Importance Scores in the system. If these scores do not have meaningful values, the value of the Token would also be low.
All these elements produce the incentive structure to promote accurate content reviews and disincentivize reviewers from trying to game the system or collude to produce inaccurate reviews (see White Paper for more in depth explanation of the system).
The Web 4.0 Digital Economy
What we have then is a comprehensive solution that creates a viable digital economy where:
- All content is available for free
- Content creators are incentivized to create high-quality content that benefits society — and compensated accordingly.
- Content creators get credit when others use or build on their content.
- Collaboration is encourage and everyone is rewarded in proportion to their contribution (with no need for complex management or expensive legal contracts).
- Scientific research, open-source projects, investigative journalism and other public goods can get investment and thrive.
Instead of people competing to get a larger share of scarce resources, Web 4.0 allows people to collaborate and create high quality digital resources that benefit everyone. By shifting from a mindset of scarcity to a mindset of abundance, and harnessing the full potential of the internet’s resources, Web 4.0 can usher in a new era for the web — an era of incredible innovation, creativity, collaboration, and explosive growth for the digital economy.
But none of this can happen without the active involvement of developers, creators, and artists dedicated to creating a culture and economy of collaboration and abundance. To get involved, join the Building Web 4.0 Discord community.