The Reputation Economy and Multi-Dimensional Wealth
A graduate of IIM Ahmedabad, Siddharth Sthalekar (pictured) was the head of South Asia’s largest trading floor until 2011. He then spent four years in the Gandhi Ashram in India where he explored new paradigms for economics.
He is based out of Singapore where he has founded Sacred Capital.
Together with team-mates around the world, they are building a reputation based economy to unleash multi-dimensional wealth. Their reputation interchange enables scaling of new forms of capital: social, cultural and intellectual.
Over the past 8 years, Siddharth has spoken at hundreds of public forums - from weekly features on television channels, to academic institutions like MIT, platforms for ideas like TEDx and more. His story has also been featured in publications like Forbes Asia, GQ and more.
The concept of social contract is an implicit agreement among the members of the society to cooperate for social benefits. At its core, it is the relationship between individuals and institutions. We have seen that the discussions on social contracts are most active in times of broad economic, social and political upheaval. This is certainly our current context. We are rethinking the rights and obligations of citizens to overcome the negative impacts of technology and globalisation.
Beginning in 2011, Sid spent a few years in an Ashram (community) that was founded by Gandhi in Gujarat, India, where he experienced alternate stories he had not been previously exposed to, which particularly related to distributed economics, distributed cultures and their operations. Almost immediately he knew there was something powerful in store because this thinking went further than making money more efficient: it broadened the definition of wealth itself. This allows us to look at wealth not just as monetary capital, but reputation capital. Sid calls this multi-dimensional wealth.
In around 2015, he came across distributed ledger technology which is aligned with this thinking. Sid’s company, Sacred Capital, is now building economic infrastructure to make multi-dimensional wealth possible.
Think of it as an economic system for human potential. As considered by the mana economy in New Zealand (he whenua rangatira) which considers inclusive prosperity and wellbeing, it's important to note reputation currencies exist in different ways around the world.
Consider the relationship between potential energy and kinetic energy: reputation currencies and monetary currencies interplay with each other in the same way. Reputation currencies can be thought of as potential energy and monetary currencies can be thought of as kinetic energy: when designing an economic system both aspects are needed.
Sacred Capital is building a distributed reputation fabric that underpins this new economy. It is a wealth system that functions contextually. It is an agent or people-centric protocol that facilitates new dimensions for engagement in applications, communities and institutions.
With agent-centric tech, you can actually show up in a new community and you can choose to take your contextual reputation with you. This could be really important for smart cities and, and new ecosystems, as this allows us to create new organising principles for cities for communities.
So instead of businesses or apps being the primary drivers, you start creating neighbourhoods. This means each member or citizen of these neighbourhoods can access technological tools, but can also articular a very specific culture for the neighborhood which accelerates engagements within it. So neighbourhoods, communities and ecosystems articulate specific culture within themselves, as opposed to the institution or the government articulating it for them.
Why is reputation a powerful currency for cities?
Siddharth says there are four tenets to the reputation economy:
Rule no. 1: reputation is endogenous. Whereas money is exogenous. By endogenous it means it's inextricably linked with identity. So if a person is punctual, they can’t give ‘punctuality’ away. It is linked to their identity. Whereas if you have three bitcoins, you can actually trade it away to someone for other coins or other other money. So rule number one is reputation is endogenous.
Rule no. 2: reputation is contextual. If you're a good dentist, it makes sense for you to recommend a good brand of toothpaste. You can't go around recommending which film people should watch over the weekend because that would make no sense (unless you're also a film buff). But money is not contextual. So if you have $100, you can buy food, a table, a chair or a house, it's not contextual.
Rule no. 3: reputation is relative. For example, reputation for punctuality is not absolute. It is always contextual. Maybe someone is early in the context of Karachi, punctual in the context of Auckland, but late in the context of Singapore. Whereas with money, it's quite absolute.
Rule no. 4: reputation is non zero-sum. So it can't be spent, but it can be staked. You spend money, but a dentist doesn't spend their reputation when they're recommending a brand of toothpaste.
According to Siddharth, reputation as a reward system is very powerful. If we have an ideation circle, you could visualise the system where people are being rewarded with reputation scores. And there's no limit to the number of good ideas that can be rewarded because reputation isn't coming from this pot of gold in the centre of the circle. But with money, reward is limited by what you have. Reputation as a reward system can therefore start to solve some of these massive, systemic problems that we have to deal with over decades: problems like climate change, pandemics, and monetary shocks.
These can't be solved with the same competitive patterns that we have grown up with. But we keep trying to solve these problems within that same frame of mind, which is why we aren't doing a good job of solving them. When we use reputation currencies to start rewarding people and start building reputation economies, you start finally solving this problem of genuine collaboration.
I don't think we've been able to figure out collaborating at a global level yet. Radical change requires radical patience.
- Siddharth Sthalekar
What tech enables the reputation economy at scale?
Sacred Capital uses a decentralised platform and protocol known as Holochain - an agent-centric platform or protocol. Agent-centricity is really critical because unlike blockchains, it isn't focused on consensus, but instead allows each community to define information and validation contextually. And Sacred Capital has built or designed a reputation interchange on Holochain, which basically allows the porting of reputation data from one community to another. And so it's really important that this porting occurs in an agent-centric way.
To hear Siddharth talk about the Reputation Economy and the work he is doing with Sacred Capital, listen to Episode 5 of Moonshot:City
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