# the math of p2p economics

Using a relative-value algorithm, SEA (similar to Google Page Rank), social accounting is simply a matter of tracking subjective enumeration. Value is enumerated by each person, and it is not ‘abstracted’ or ‘shared’ or ‘transacted’. Reading this article, for example, you evaluate it as 3 out of 10. This is just one evaluation out of all the evaluations the reader comes up with during a day’s living, whether it is enumerating the contribution of colleagues, foodstuffs, even the weather if they want. Thus, the reader accumulates a ratio of subjective enumerations. By applying the relative-value algorithm, a ‘priority list’ of evaluations is derived — without any external bias. In a pure p2p network, there is no ‘objective’ or ‘externalised’ enumeration, and thus no currency. It really is as simple as this; it worked for google, and made the internet navigable.

## how do you go about evaluating?

Let us look more closely at how a person evaluates. In the example above, the reader gives the article a value of 3 out of 10. What are they estimating to have a value of 3?

• the reader is rating the article
• the reader is rating the article’s author

These three interpretations derive the quality of economics. In the first, the reader is evaluating a thing, in the second a person, in the third, their own experience. The first interpretation encourages the thinking that all subjective enumerations of the article can be totalled up and an average value derived, much like the totals for eg Amazon seller. The second interpretation is the operating interpretation of ecosquared, which emphasises the importance of a pure p2p evaluation system; things like articles and foodstuffs and so on conform to a resource economy primary based on sharing. The third interpretation essentially tracks gratitude.

All three are valid, and books will be written to share how one goes about evaluating one’s subjective enumeration. After all, some evaluations will lead us to saving this planet from environmental disaster, and other evaluations will continue the degradation. As a pure value-game, it is left up to each and every individual, as it should be for a p2p system.

## where does money fit in?

To shift from our current system of an externalised unidimensional accounting system, that is money, to a multi-dimensional social accounting in a pure p2p system, we need to examine the parameters of our current economics. Money has evolved from a basic coupling of number-thing, and yet it is only functional in time, eg using the £10 I received yesterday to pay for something today. Because the basic application of number to social accountancy in money does not contain ‘time’, various ‘add-ons’ have evolved such as interest and compound interest, and with the application of negative number, our current economics is unstable. MTTP, or Money-Time-Trust-Protocol, decouples money-thing and replaces it with money-time, eg £10 is roughly equivalent to an hour. Money thus becomes “well behaved” in a mathematical sense.

Thus, we can invite people to co-create value using the MTTP social contract whether £10 for an hour or £100 for a day or £1000 for a week and so on. It performs the same function as ’employment’: participants have a guaranteed source of income. Notice, there is no bounded entity, no company or government or organisation; MTTP is a purely p2p protocol. The relationships of dyadic p2p contracts constitutes the economic structure of the network. Once the value is produced, and if this attracts money (ie is ‘sold’ using traditional economic parlance), the money attracted is distributed by the ratio of subjective enumeration of each participant member, via the Subjective-Enumeration-Algorithm described above.

## the subjective-enumeration-algorithm

The actual algorithm for tracking subjective enumeration looks something like this:

(where V is the value of any person i, d is the “damping factor”, N the total number of people, M the set of people who evaluate person i, the value of Pj at time t)

Check out the math in this document, for both MTTP and SEA.

## current p2p foundation engagement

These two protocols/algorithms establish a pure p2p economics, social accountancy with no organisational boundary, no centralised or abstracted authority, and it works for small groups or an entire planet of co-creation. Inherent in this system is the subtlety to educate people to evaluate ‘correctly’ if we wish to engender a sustainable global situation.

Having engaged Tiberius Brastaviceanu of Sensorica, the solutions presented here undercut the level of complexity his community is dealing with. Tiberius is employing a characteristically engineering methodology to the problem of social accounting, attempting to specify all the factors to evaluate an objectively fair % distribution of ‘value exchange’. Who determines the right factors and their evaluations? If there is any ‘externalised’ or ‘authoritative group’, then it is not a pure p2p system and politics rears its ugly head, which is why Sensorica are still struggling with deriving their accounting system that everyone is happy with. Imagine this expanded to the global level. No, the accounting system must be a pure p2p system, as efficient — and perhaps more so — than our current p2p system that is purely based on the unidimensional currency that is money.

# p2p economics

The peer-2-peer structure drastically contrasts with standard centralised organisations, and consequently the fundamental practices and underlying methodology of participants. The only reason p2p practices has got as far as it has, arguably, is because of Berners-Lee’s pivotal gift of html and www. For all our talk, it is this new infrastructure that has been instrumental in our social evolution. However, it has been slowly brought into line with the traditional, centralised economic system.

Despite wonderful developments like wikipedia, firefox and linux, p2p requires a supporting economics of its own. Otherwise it will fall back into the attractor of capitalist-monetary-politics as did the so-called movements of the Renaissance, the scientific, industrial  and communist/cultural revolutions. Pundits of the p2p movement may see their best efforts collapse, ironically the same pundits who applaud its successes as measured against their incorporation within the traditional economic system, as business+ (down-scaling and crowd-sourcing) or capitalism 2.0 (micro-finance and alternative currencies). The opportunity for a true p2p economy may pass us by, as new protocols are associated with dubious historical break-outs like the Ponzi scheme and then made subsequently illegal. After all, the legal institution is based on the same methodology as the political, the same as the military and business. The more radical analysts know this hegemony or powerbase, but they decry powerlessly beyond the city walls or from safe enclaves within Universities.

# have we learned anything in terms of social organisation?

How have our social dynamics changed in the last few decades? Sadly, people still think of ‘joining’ discrete ‘groups’ to effect change. The internet did not grow that way. With a bit of hardware, some software and a little intention and boom, the internet was made one node larger with your addition. The internet grew, this was its strength. Its boundary was receptive to engagement. Most social movements still rely on joining discrete, bounded groups, and even those movements that are open-source or based on the commons become stagnant with the more established personages, a kind of informal ‘old boys’ network, making it progressively harder for new voices to be heard, apart from the voices of youth when they are backed up with new tech-savvy.

Occupy formed differently, growing at such a rate as it did. But it was far too much too soon. We simply do not have the skills to self-organise at scale. We must first learn to realise the social power between small groups, a handful, before we can even pretend to think we can organise ourselves at larger polities and ultimately at the global level. But such solutions are small-scale and without the security of money-flow, such experiments are limited to all but the tightest like-minded groups.

Money would make things easier — if it was a proper p2p system. Ecological economics proposes a pure p2p protocol. No centralisation, no organisation, no superstructure. It is a god-send, potentially. But we are talking about money here. The stuff we use every day. It is a chronic ‘mental delusion’ and powerfully backed up by all, civilised institutions. Its history goes back further than 3,000 years. To alter its basic DNA is conceptually tricky, but more importantly, it requires a level of engagement that borders on belief, or at least a mind that is familiar with being open. Eco^2 protocols are easy enough for children to use, and yet beyond adult comprehension.

# what are the problems that inhibit adoption?

First, the expert-trap. Those who have invested their life time and their personal identities on studying how economics works, may be reluctant to consider all their knowledge is based on the parameters of a specific game. Changing the rules of that game, creates an alternative economics. Their knowledge may have limited use. Few experts have the courage to admit this, and so alternatives are ‘below the radar’, not seen, dismissed.

Second, the success-trap. Those who have proven to be successful in the traditional money-game have little interest in playing another game, especially one which is based on giving rather than taking, collaboration rather than competition, openness rather than closedness. Why consider another game when they are winning the current one? So, alternatives are rejected.

Third, and more damning, the understanding-trap. Most adults want to understand something before they participate in it. However, because we are dealing with a paradigm shift, understanding does not come theoretically but experientially. That is, the methodology to learn about ecological economics is to give it a go, experiment, and see what the results are.

Nevertheless, a group did gather around eco^2 protocols and tried to ‘birth’ the new economic entity a year ago. We failed, so then I approached the front-line of business, advertising agencies, which came  very close but didn’t convert into money-flow. Finally I turned to writing a book, a fictional narrative about how the financial protocols may evolve over the next two decade; not being a writer I am far from confident it shall find a readership.

# from understanding to experimentation (or at least the math)

The problem of adoption is less to do with understanding, and more to do with methodology. Children, of course, are primed to try things out. They are familiar with the world of not-understanding, they thrive in the world of experimentation. Most normal people with a little coaxing will give things a go. Experts, or world-changers, are paradoxically the worst to give things a go because they are committed to certain theories and practices. Because they must contend with being outsiders to the system, they exhibit the same quality of exaggeration that expatriates do when in a foreign land.

I will continue to work out what the minimal set-up could be for the protocols to take off, which currently is taking shape as a hangout show. It would be useful to get serious engagement of ecosquared in order to get validation mathematically. This hasn’t happened so far though I have started to get more in-depth engagement with people like Willi Schroll and Michael Maranda which has a chance of verging into the mathematical domain, and I am looking forward to a conversation with Tiberius of the p2p Foundation network later this week (see slide-show at Sensorica for a good overview of what Tiberius is up to). Talking about things only enters into a word-game at which I am definitely ill-matched, and indeed contravenes the methodology of direct primary experience — but there is a chance of getting validation mathematically, especially with the Subjective-Enumeration-Algorithm. And as a fall back option, I have the book which will take years to percolate through the system if at all.

Michel lived in the wilderness for years with p2p. My journey has not been as long and I am no Michel, but if ever we find ecosquared protocols or those like them find wide-spread use, then hopefully the living edge of our culture shall be in the state of receptivity. If p2p fulfils its promise, each one of us is responsible for the receptivity of humanity, whether welcoming children into adulthood or listening to the unique insight of those approaching the ending of their lives. The real test is that we are equally receptive to the innocence of youth as to the wisdom of age, not to mention the abundance of the natural world and the nurturing care of motherhood, aspects which our current economics simply pays lip-service to. We need a more human economy, one based on person-to-person trust.