• What is a Reputation-based Economy?
• The Theory of Quantified Prestige
• Is Quantified Prestige Useful?
• The State of Quantified Prestige
• Is Quantified Prestige Actually Good?
• Implementing Quantified Prestige
  • Phase 1: Quantified Prestige Micro Server and Client
  • Phase 2: Quantified Prestige Macro on Nostr
  • Phase 3: Lightning Integration
  • Phase 4: Prestige Applications
• Discussion
  • Tags

At heart, I am a philosopher with a keen interest in possible futures. Since economics is a crucial part of any society determining its ability to make progress, I also took an interest in that subject. That’s why I pondered the question how the economy of the future might work. There are certainly a couple of different ideas about that out there. When I explored the particular idea of a reputation-based economy, I quickly found out that apparently nobody had thought deeply about that would actually work.

So, I turned this problem into my own personal exercise, because I thought it would be cool to integrate that into my science fiction stories. Luckily, my background in mathematics and a general familiarity with the ideas of Bitcoin helped me with that endeavor. Since self-organization usually works better than planned systems, I opted for a peer to peer system.

§What is a Reputation-based Economy?

How does a reputation-based peer-to-peer economy work? Well, to be actually reputation-based, one requirement is that you can buy stuff with your reputation. That requirement is certainly not fulfilled by most current reputation systems, since you can neither spend reputation, nor get any means of exchange from having a reputation directly.

At first, I explored the idea of “spending” reputation, but quickly realized that it is actually inappropriate. Reputation is a concept that should at least roughly represent how good an entity is at performing good actions - while refraining from performing bad actions. The idea of “spending” reputation would mean that the entity would be seen as less apt at performing good actions after the spending of its reputation! Obviously, that notion is quite nonsensical, so I discarded the idea of “spending” reputation directly.

A reasonable reputation-based economy enables incomes directly generated through reputation indices. And those incomes are something other than those reputation indices! Well fine, so I tried to come up with a system in which you get an income in - let’s say Bitcoin - through a reputation index. Since I was designing a peer to peer system, it would work by people “giving” reputation points to each other.

Fine, that would certainly be doable, but what stops these reputation points from becoming completely inflationary, and therefore rather meaningless? Well, a clearly defined limitation like that of Bitcoin to 21 million units should suffice. Setting a hard limit to the number of reputation points each participant of the network can spend, makes the distribution of those points much more meaningful and solves the inflation problem - at least, if the system can avoid getting distorted by fake accounts. Any reasonable reputation system must have sufficiently strong protection mechanisms against Sybil attacks.

§The Theory of Quantified Prestige

On the basis of these ideas I developed the reputation-based economy system called “Quantified Prestige”. It is a positive reputation system, since you can only give positive points (a deliberate design decision to avoid certain possibilities of abuse). Participants in the system can allocate their so-called Esteem Points to others, and also withdraw them again at any time. Otherwise, it would be game over, once someone has exhausted all the Esteem Points that they are allowed to allocate. The natural reputation index in this system is essentially the sum of all received Esteem Points, up to some modifications. That reputation index is called Prestige Score.

Now, how do we get from the Prestige Score to an actual income? Well, there is no single answer to that! One approach is to create a fund from donations that is then paid out to the participants of the system regularly in proportion to their Prestige Scores. Basically, it would be a donation-funded system of automatic periodic zaps.

There is another interesting solution that avoids the requirement for donations: Introducing a new token that is directly generated by Prestige and bears the provisional name of Fluido due to its continuous creation and transfer mechanics. That would certainly be possible, but what’s the point of that? Well, such Fluido tokens would have one advantage over other currencies: Those tokens are coupled to the average Prestige Score of participants of the system, which is asymptotically constant.

So, it is possible to design them in a way that makes their average amount per person constant by continually burning excess tokens (via a mechanism I call evaporation that involves a protected amount proportional to one’s Prestige Score). This would allow for excellent price stability, which would make it more convenient to denominate prices in that reputation-generated currency than Bitcoin or fiat. Granted, that does not look like a particularly powerful advantage over Bitcoin, but it may have some use cases that would justify its role as complementary currency even in a world dominated by a Bitcoin standard.

There is certainly a much simpler third alternative: Just using the Prestige Scores as mere additional information for deciding how to allocate one’s own funds. While that is a valid use case, it would not strictly suffice for our definition of a reputation-based economy, since the connection between reputation and incomes is about as indirect using this approach, as with our current economy.

§Is Quantified Prestige Useful?

Anyway, while Quantified Prestige might look interesting in theory, would it have any use in reality? Well, obviously reputation systems are useful to get a first impression how skilled people are, or how well a product is made. Arguably, Quantified Prestige is superior in that respect compared to other reputation systems due to its inherent scarcity of points that can be allocated (assuming the system has stronger effective Sybil protection).

But if scarcity is supposed to be the core advantage, then there is an interesting alternative system: One could simply aggregate the zaps received by a Nostr identity and use that as reputation index. On the surface, that seems like a reasonable approach, but it suffers from one weakness that should not be present in a good reputation system: It depends strongly on the wealth and generosity of the zappers!

Sure, the quality of the reputation estimations performed by the participants in a system may vary strongly from one individual to the next, but it doesn’t feel reasonable to assume that the quality as consumer and appreciator should be dominated by one’s wealth! Quantified Prestige uses a rather flat distribution of reputation estimations, which makes it at least decently meaningful. And if one singular Prestige Score is not meaningful enough, it can be enhanced by additional score in reputation sub-networks consisting of more equal peers like writers, programmers, artists, or any particular kind of experts.

That is why I describe Quantified Prestige as “positive reputation done right”!

§The State of Quantified Prestige

Can Quantified Prestige be used right now? Unfortunately not. Initially, I tried spreading the idea in the hope that people would be sufficiently interested in implementing it. Apparently it turned out that the idea was too far out - or controversial - to create sufficient enthusiasm. So, I attacked other projects in the meantime, for example becoming a sufficiently decent programmer who can implement such a system on his own.

In this meantime I also discovered Nostr, and realized that it’s the ideal identity and communication platform for a globally distributed peer to peer reputation network - after all, an Esteem Point allocation is basically just a message broadcast to the network. Building Quantified Prestige on top of Nostr will be much easier than building it from scratch. Esteem allocations are easily reversible and their timing is not critical, so there is no double spending problem that would require a blockchain for them. Nostr provides the most appropriate technology for handling reputation. And since Nostr is frequently coupled with the Lightning Network, setting up a reputation-dependent Lightning payout system shouldn’t be an extreme technical challenge.

The biggest principal weakness of Quntified Prestige is that it is prone to being exploited. A dedicated group of attackers or exploiters is not easily stopped in that system. I certainly have many countermeasures in mind, but none of them fixes the problem entirely - in particular because it is not perfectly clear how “exploits” should be distinguished from “regular use” in such a complex system. In any case, the general approach is that new users first need to gain trust before becoming full participants in a Quantified Prestige network.

§Is Quantified Prestige Actually Good?

Would a world with a globally established Quantified Prestige network be clearly better than one without? That strongly depends on how the system is used. If it is used to reward “superstars” who already have enough of nearly everything, it would fail to achieve its intended purpose. The system is intended to reward actually good behavior and good products, not merely stuff that looks good at first glance.

Maybe people are not particularly excellent at judging what is “actually good”, but they can get better at that though reflection. The mechanism of reallocation of already allocated Esteem Points in Quantified Prestige encourages reflection. Since Esteem Points are limited, people need to reflect on their allocation strategy and re-evaluate periodically whether their previous allocations are appropriate. This feature is missing from other reputation systems, which makes them miss out on this particular form of self-improvement.

The greatest chances of Quantified Prestige consist in making artificial scarcity caused by patents and copyright protection obsolete, and solving the problem of economic externalities (for example negative externalities like polluting the environment or positive externalities like creating economic value from releasing software under open source licences) in a decentralized and non-bureaucratic manner. That would translate to a greatly enhanced overall abundance, and an increased quality of life.

This prospect should suffice to give a highly experimental system like Quantified Prestige a chance. It will grow naturally in accordance with its general appreciation.

§Implementing Quantified Prestige

My plan is to build a first implementation of Quantified Prestige in 2026. However, the priority with which I pursue that plan will depend on the feedback I get along the way. After all, it would seem more prudent to stack sats earned through regular work, rather than focusing my efforts on a highly experimental system.

The implementation is planned to proceed in multiple phases:

§Phase 1: Quantified Prestige Micro Server and Client

For a first demo, it suffices to create a minimal “classic” web server and a minimal client. This “Quantified Prestige Micro server” manages a small self-contained reputation network for early testing purposes without any connection to Nostr. That strategy allows for rapid experimentation without any involvements of actual Nostr relays.

The Quantified Prestige client, on the other hand, will be designed to get extended for use in further phases.

§Phase 2: Quantified Prestige Macro on Nostr

This phase is where things get interesting. Quantified Prestige Macro represents a global network running on Nostr. The goal of this phase is to flesh out the dynamics of Quantified Prestige, so that it can be implemented as NIP by various Nostr relays.

§Phase 3: Lightning Integration

The focus on this phase is the implementation of the donation funds used for Lightning payouts. This is perhaps the least technically complicated phase, but dealing with actual money comes with its own set of complications.

§Phase 4: Prestige Applications

Once Prestige Scores are established and sufficiently reliable, they can be used by all kinds of applications as contextual information. Besides the raw price signals, markets can be enhanced with reputation signals, so that the quality of goods and services become more transparent to market participants.

There is no timeline for the different phases, yet. Probably, there will be some overlap between the various phases, as there are no clear mileposts indicating that one phase is actually complete.

At the moment there is a documentation for the theoretical system at https://github.com/Radivis/quantified-prestige-system, which I should probably update soon, since I have written it in the pre-Nostr era.

§Discussion

Reputation systems are a complex topic. This post is just a brief introduction to Quantified Prestige. Therefore, I didn’t dive into technical details, or explore issues like Sybil protection or privacy, even though they are crucial for any actual implementation.

This introduction is about the system in general. So, I am most interested in your general impression. More specific aspects are best discussed in other threads later on.

What do you think? What issues are you interested in? Would you be interested in using or building such a system?

§Tags

#QuantifiedPrestige #reputation #Bitcoin #Lightning #Nostr #WebOfTrust #economics #zaps #ReputationEconomy