The over-reaching objective of the alternate/social currencies movement is to create an alternate storage and exchange device to contain “Value”.
Bizarro Capitalism
Coupons regularly portray value in Bizarro World where “Save” really means “Spend Faster”. The vendor outlet artificially prints the Bizarro Currency which can only be redeemed in Bizarro World. No social value is created, rather, it is destroyed.
But, if my friends sell me the product, why should I pay a salesman?
Quit complaining, the new business plan is very simple:
Step 1: Convert financial currency into a social currency,
Step 2: Create Value in the social environment (denominated in the social currency).
Step 3: Convert surplus Value back into financial currency.
Example: Suppose Alphonso publishes his knowledge inventory to a social network as follows
Career mechanical engineer, aspiring photographer, outdoors lover, economics blogger, social media index top 20%, etc.
Based on this profile, Nikon USA gives Alphonso a coupon for $500 off of any purchase of $1000 dollars. In other words, this coupon has a tangible face value of 500 dollars. Obviously Nikon can’t discount all of their products by 50%, so they announce that only 10,000 of these coupons will be placed in circulation with some fairly distant expiration date.
The Value Game:
Suppose that Alphonso already owns a Canon so he lists the 500 dollar coupon on Craigslist for 250 dollars. From there, he meets another photography enthusiast in his local community and keeps the difference to buy some new camping gear.
Now, we are in familiar Groupon territory; a 500 dollar deal for 250 dollars.
The value of the coupon decreases as the expiration date nears but the value of the coupon increases as the scarcity increases. Nikon can regulate values and incentives by changing the rates at which they issue coupons. The Par value of the coupon reflects these external market forces.
People will reach into their social networks to play the value game
People will get their friends together to go on a Nikon spending spree, groups of people can buy and share community camera gear, they can donate the coupon to their kid’s high school photography class – all in exchange for Social Value.
Creating Social Value
This process of people working together around a leveraged asset (such as a 1000 dollar camera) creates social value. It quickly becomes in the best interest for Alphonso to strengthen the photography community because his increased status will enhance his knowledge inventory and increase the likelihood of receiving additional discounts from Nikon and many other brands.
Converting Back to Currency
Every time Nikon is mentioned in conversation, this is an advertising impression – it is done in a positive light of social value creation. This is exactly the task that an expensive ad agency would be hired to play Bizarro World. Nikon would be largely agnostic over where the ad budget is allocated as long as measurable sales result. Likewise, Alphonso and his friends strengthen their financial position in a market
The Future of Money
Eventually, an environment would emerge where coupons never actually need to be converted to cash. All coupons from all vendors can go into an exchange pool much like a Bond Market rated on a “social value score” and trading at a par value dependent on market forces. The difference is that Value would now be allocated according to social priority rather than Wall Street priority.
The total value of the exchange pool can become the basis of a new currency standard to fund new production of new social products and innovations.
