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Mesh networks and saving the world2012-09-24 23:17:53

Back when I first blogged about reciprocity networks, I said that a reciprocity network similar to Airbnb could be implemented for car-sharing and could compete with something like Zipcar. Well, as it turns out, Robin Chase, founder of Zipcar, has done just that - her latest venture is called Buzzcar and is basically peer-to-peer car rentals. It's currently only offered in France, but I imagine it won't be long before she brings it to other places as well (and actually there are already other companies such as RelayRides offering similar services).

Anyway, it gets better. There's a 2007 TED talk: Robin Chase on Zipcar and her next big idea. In it, she describes how she'd like to get a US-wide wireless mesh network going by making every car a node. This makes possible road usage pricing, which has the potential to dramatically reduce car usage, emissions, and delay the onset of global warming. I particularly like that she's calling for a standards-based (and open source) mesh network, that's free for all to use.

Mesh networks themselves are reciprocity networks - more so than the Internet itself. That just makes the whole thing even more awesome, in my mind. I admit, a country-wide mesh network is something we're unlikely to see anytime soon (for reasons technical and political), but I still think it would be pretty amazing. That it can help reduce emissions and help with global warming (probably the single biggest threat to our current way of life) is icing on the cake.

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Reciprocity banking2012-05-26 09:37:39

Scott Adams had a post yesterday called No Banks on Mars. It was kind of interesting to me, since I've been thinking about the banking industry in general recently. I mostly agree with what he's saying, but think that there's an alternate system that could exist alongside traditional banks. He's right in that the loan business is where banks make their money - they're basically a middleman between people making deposits and people getting loans. And they make billions of dollars doing it. What if we could eliminate that middleman and use the Internet instead?

What I'm thinking is that the loan side of banks can fundamentally be replaced with a peer-to-peer crowdfunding site. This website would have a set of properties:
(1) allow anybody anywhere to participate as both lenders and borrowsers
(2) allow borrowers to specify how much interest they are willing to pay on their loan
(3) allow lenders to fund partial loans

All of these properties exist on various microfinance websites today, but I haven't found one that does all of them together. See for example Kiva, Amifi, Prosper, Zidisha and so on.

Right now I think Zidisha is the closest to what I'm thinking, because they follow (2) and (3) without using any intermediate agencies. However they don't let just anybody sign up and ask for loans, they're focusing specifically on borrowers in Kenya, and are still somewhat playing the "it's cool to help out developing nations" angle. From a financial point of view that angle is irrelevant, though, and it's still a reasonable way to make for lenders to make a decent return on their investment. is also good, and is one of the ones that takes out the "help developing nations" part of it, and just has the peer-to-peer crowdlending stuff. Unfortunately it's only restricted to the US right now, as far as I can tell, so I haven't been able to try it out.

Websites like these are already great because they allow borrowers to get loans that they wouldn't otherwise be able to get, or at lower rates. They also allow lenders to earn higher interest rates on their investment, and allows them to diversity their investment portfolio much more (i.e. imagine lending $50 to 100 people each instead of having to sink it in some mutual fund which may or may not make money). Everybody wins.

What of fraud, you ask? People could sign up as borrowers and then just run off the with money. With a bank at least you're insured against that, you say. This is the trickiest part of it, I think, but this problem can be mostly solved by having reputations assigned to people. If they repay their loans on time then their reputation goes up. If you don't want to make a risky loan, then don't lend money to somebody with a low reputation. There are other approaches that could be borrowed from other fields and applied here too. I bet eBay has a lot of fraud detection heuristics and algorithms that could be adapted to this purpose. I'm sure there are other techniques as well that are more in line with the idea of a reciprocity network.


RetroShare2012-03-05 08:57:11

RetroShare. I've been looking for something like this for a long time, and I'm amazed I haven't heard about until yesterday (via Slashdot, no less). It heartily gets my stamp of approval. It is a truly decentralized communication platform. If anybody is interested in trying it out and wants to add me to their network, grab my public key from this page.

[ 1 Comment... ]

Reciprocity networks2011-06-20 11:56:16

I was thinking more about my previous post on decentralization and I realized that I was overloading the term "decentralization" in a potentially confusing way. There are some things that are "decentralized" in that there is no single central authority, but do not fall into the category of things that I was thinking about. For example, hotel rooms. I linked to Airbnb as an example of decentralized room rentals. But rooms in hotels are also decentralized - in most countries, there is no one single company that does all hotel rooms; instead, there is a decentralized network of competing hotel chains, each offering hotel rooms of different kinds and for different prices.

So I decided to come up with a new term for the specific subset of decentralized networks that I was thinking about - reciprocity networks. The distinguishing principle of a reciprocity network is that each node in the network can act as both a producer and a consumer. This seems to be what separates a network like Airbnb from normal hotel chains - people that use hotel rooms don't really provide hotel services to other people; but all users of Airbnb can act as both providers of rooms and consumers of rooms. The same is true of EBay auctions (minus the companies that sell stuff there), loans, and Fon WiFi.

Now that I understand the distinguishing principle of these networks better, it's clear that many of the advantages of these networks come from how the power is evenly balanced between producer and consumer. Also important is that when the nodes in the network are people, they generally abide by the Golden Rule, resulting in higher levels of satisfaction for everybody involved.

What would be cool is building reciprocity networks in domains that do not yet have them. Airbnb does this beautifully, in a domain that I would not have thought possible. Letting some stranger live in your home seems like it has trouble written all over it, but they make it work. A similar system could be implemented for car-sharing, and I think, could successfully compete with existing networks like ZipCar, which are not based on reciprocity.

Coming back to the Internet arena, Diaspora is an attempt at building a reciprocity-network version of Facebook, and although I think the idea has great potential, I'm not so sure about this particular implementation. In fact, I think the idea is so powerful that it's just about the only thing that can now topple companies like Facebook and Google.

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Decentralization2011-06-17 14:07:24

Back when I was going through interviews for co-op positions (circa 2005), one of the questions I got asked was "what technology in the last decade do you think has had the greatest impact?" (or something along those lines). I thought about it for a few seconds, and then said Napster, because it really brought the concept of P2P to the public's mindset. (I didn't get the job.)

Fast-forward a few years, and the trend towards decentralization and peer-to-peer transactions has expanded into all sorts of different areas. Open-source software has always been one facet of this. Other, more tangible facets are things like auctions, peer-to-peer loans and even room rentals.

Decentralization has some obvious benefits. It allows for reduced dependence on single points of failure. It distributes much of the burden back to the individuals involved in the transaction, who actually have an incentive to perform well. It allows for greater customization. But it also has disadvantages. You lose the ability to mass-produce and take advantage of economies of scale. It's harder to ensure a consistent experience, and therefore harder to guarantee a minimum feature/quality/support baseline. Like most things, it's a trade-off.

I think most things start out in a centralized system because it's more convenient. It requires less of a commitment from the user to try. For example, if you've never bought a gizmo before, it's usually more convenient to go to the nearest hypermarket and pick one up than it is to scour the web and try to decide between the umpteen billion different varieties out there. However, as you buy more gizmos, you become aware of your specific needs, and are willing to pay more for specific features (and also not willing to pay for features you don't need). Then, scouring the web becomes a better option. Taken further, you might even decide to build your own gizmo because none of the umpteen billion varieties are perfectly suited to your needs and requirements, or because finding the perfect one is just too hard.

This is why I think it's hard to introduce a decentralized system for a new product or idea without first going through a phase where there is a centralized version. It requires too much of a commitment from the individual at a time when they do not yet fully understand the benefits it could provide. However, once they have had a chance to try the generic centralized version, they realize the benefits, and are more willing to invest the effort required for the decentralized and customized version.

Exercise to the reader: apply this idea to social networks (e.g. Facebook) and cloud storage and sync (e.g. iCloud), and see where it takes you. Please post your thoughts as comments.


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