From: "Vladimir Z. Nuri" <vznuri@netcom.com>
Date: Fri, 10 Nov 1995 08:33:41 +0800
To: cypherpunks@toad.com
Subject: the revolution of microcurrency
Message-ID: <199511092347.PAA22507@netcom14.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain



the topic of "microcurrency" has come up on this list before and
is reappearing with considerations being given to small charges
for Web pages. I've been thinking about this a bit and thought I'd
share some interesting ideas. (YMMV!!)

1st, there was a really excellent article on microcurrency in the
Economist I believe that was really touting it as a revolutionary
change in the economy. I agree with this wholeheartedly. the possibility
that people can

- exchange extremely small amounts of cash without the cost of overhead 
- and virtually instaneously, 
- over large geographical distances, 
- potentially even seamlessly with regard to different currency exchanges, 
- and a large infrastructure exists to distribute intellectual property for 
  free,
- (possibly invisibly to governments)

will all contribute to a REVOLUTIONARY effect on culture.

my key idea on all of this is that the whole idea of copyright
is going to melt when you introduce cash, not be strengthened. there
are a lot of people out there who think that one has to try to put
a lock and chain on web pages or whatever that one is "selling", 
and the horrible problem of the net is that anything can be copied.
and these people are feverishly working on specious "solutions" to this 
"problem" right now.

WRONG!!

this is precisely the view from the old ideology that says, "you
have to protect what you are selling from other people or you 
won't make any money". this theme will increasingly be discredited in 
the cyberspace world, which works inherently differently in a 
remarkable manner.

I submit that things like the release of public domain standards
and products like Java and Netscape for free are not merely blips at this 
moment but increasingly are going to be the marketing plan of the future. the
idea is that you give away your product for FREE, and then people
pay you if they like it. this new ideology will be relevant to 
products that are not "things" but in fact are more in the realm of
intellectual property, i.e. writing, software, cyberspace web pages, etc.

the beauty of this system is that NO LONGER is "unauthorized" 
distribution" the "enemy". it is your FRIEND, a key aspect of profit!!
the company that doesn't think in terms of this new ideology will 
try to control the distribution of their product. they will set up
draconian systems that try to restrict the flow of the product
to "authorized users". (i.e. those who pay in advance). our entire
society thinks within this paradigm, including the government, which
is makes noises about ways to restrict copying on the internet by 
introduction of actual physical safeguards. NOPE!!

a rather extraordinary new economy can replace this, that of voluntary
payment. widespread distribution becomes your FRIEND. you DISDAIN
things like copyright, because they prevent your "product" from reaching
the eyes of potential customers. your goal is actually to distribute
the product as far as possible, in a sort of pyramid-like scheme.
you want your "customers" to distribute your product to their friends,
so that those "friends" potentially become customers in an endless
cycle.

this approach works amazingly with writing. imagine that if John Markoff
suddenly QUIT the NYT and just wrote articles on his own. and imagine
that at the bottom, you see a message, "for more of the same, send
.5c or more to markoff@liberated.com". I submit that in the future, 
Markoff will probably be able to make more money than he does at NYT,
because he is eliminating the middleman. the newspaper company is 
primarily built as a *distribution* channel. suddenly he doesn't have
to pay anything out of his own salary, so to speak, for distribution.
distribution is *free*. he doesn't require anyone else to do it for him.
he puts his article in an apropriate place on the net and it circulates
like a VIRUS if it is well received. the more people that see the article,
the more people that pay him money.

in an information system, individual objects have no value. what has value
is the FLOW of quality information. if Markoff continues to flow with that
good information, people will continue to pay for it. they will perceive
that "by paying him, the quality information flow from him to me continues
or increases".

this same idea works with software. you don't see software as an end
product. you see it as something that is evolving over time. and whenever
you send money to a company for software, in this new system the idea
is that "I like this software, and I want to see it grow. here is my
contribution to that".

another interesting area is that of patents, and I see this dissolving
in the same way. a patent is like trying to put a lock on an idea. but
gradually people will realize, only ideas that are implemented have
any value. you can't profit and lock an idea at the same time. 
*dissemination* of ideas is what leads to profit, not locking them up.

hence there will be an economic incentive to an inventor to give away
his ideas for free, at first. in the old system, where one thinks of an idea 
as a "thing", this sounds preposterous. but in a new culture where ideas
are seen as things that need to be cultivated and grown to work, it will
seem eminently sensible. the inventor is releasing his idea to the world,
saying "I can expand on this idea, even turn it into a reality, if
you send me money". other people can of course steal the idea, but there
is no value in the idea itself: the value is in the development of it
into evolved new states, or the intellectual expertise of the inventor.

in short, microcurrency could have quite a liberating and revolutionary
effect on economics as we know it. in the current system, people are not
paid for tiny contributions to the whole. the contributions have to be
"packaged up" into something like a magazine before individuals can get
any profit. a new system may allow people to be compensated directly
for things that are hard to quantify.

 how much was Markoff's last article
worth in the NYT? that's impossible to figure out. but if you had a 
microcurrency, you can calculate exactly how much money people sent to 
Markoff for his last article. say, across the world, it totalled $843.16.
such a sum is not inconceivable. and over time it would be enough for
him to make a salary over the whole year on, perhaps!! I'm arguing that
this is increasingly going to become VIABLE over the next few years
with cyberspace and microcurrency.

the beauty of this system is that this increased granularity filters
down to individual pieces such as a single piece of writing, a single
software program, single contributions by individual people that can
be rewarded tangibly. that's all that currency is, in its most basic
form: a system whereby members of a society say to each other, 
"please continue to do that for me, do more of it, and do it even better--
because I value it *this* much!!"

there is a lot of ink in the press lately about the Netscape/Java
assault on the Microsoft bastion. I think there is something more
important conceptually going on at a lower level. Microsoft has never
released a product for free to the world. they are still in the old
paradigm, "you have to control something to prosper". they are at
this minute coming out with a PROPRIETARY (read: "you have to lock something
to profit from it") alternative to Java. Netscape understands the contrary
philosophy BEAUTIFULLY. you write the software, and DISTRIBUTE IT FOR FREE.
same with Java: you create OPEN STANDARDS. these companies don't fully
understand what direction they are going in (notice how they are only
committing to the idea of free software or standards "from the start", but
not afterwards), but I think they are the precursors to a radically 
transformed economic system based on cyberspace microcurrency. 

the microcurrency situation can even be set up in a company. "whoever
codes this computer problem will receive [x] dollars from the company".
the whole economic system becomes a fluid, pulsing entity that filters
down to the tiniest fraction of value and gives each individual a 
quantitative value on his contribution. companies talk about "incentive
systems" today, but perhaps the entire economy will become an enormous
incentive system in this way in the future!!

in this system, ultimately, I think the whole concept that someone "buys a 
product" will dissolve into the idea that "one rewards intellectual
productivity to bring more of the same". it's as fundamental and 
intuitive as the difference between atoms and bits.