Reputation Systems and Trading Reputation on an Exchange

Online market exchanges, in general, are driven by reputation systems, allowing traders to decide on one another’s behavior and attributes with comments, ratings, and text messages.  These views then constitute sellers’ reputations that reveal their trustworthiness and competence.

Reputation as a mechanism to control market exchanges is currently undergoing a height of propagation. Although the human ability to share information about another’s deeds and misdeeds has historically propelled market exchange, modern information and communication technology (ICT) has reduced the costs of sharing information to a minimum.

Reputational Risks

It is important to understand the reputation of a firm. Reputation earns those firms their clients and customers. Firms with consistently positive reputations attract better clients. Reputation enables companies to sustain client or customer loyalty. 

Most companies, however, perform an insufficient practice of conducting their reputations in general and the risks to their reputations in particular. The tendency to converge energies on handling reputational threats is conspicuous. This is not considered risk management; rather it is crisis management—a reactive approach whose purpose is to limit the damage.

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Blockchain-based Reputation Systems 

Blockchain offers a lot of advantageous features. It may not require all of the transactions. In which case they are instead off-chain. Off-chain transactions do not incur network costs (blockchain costs). Moreover, the transactions does not affect the blockchain transaction queue or consensus delays.

In reputation systems, trust data is the main form of data. In such systems, there is a mechanism in place to keep track of participants’ reputations and credibility. There are also mechanisms for authentication and authorization. Some of the transaction mechanisms do not require blockchain. 

How does it work?

The important metadata must be visible to everyone. For instance, the reputation has to be stored on the blockchain, but the service data may be stored elsewhere. Should the solutions make use of smart contracts, the contracts would have to process the service data as well as its metadata. These data need to be stored in the smart contract storage, which is on the blockchain and is not ideal. Assuming that the data are large in size and, for a huge number of transactions, the blockchain size would be increasingly large and beyond control. Under these circumstances, it would make sense to store such data off-chain, yet, have it governed by the smart contracts to still maintain the decentralization of governance. The same principle can apply to other information that requires storage. Thereafter, such as the users of the system, the services, and their associated metadata.

Other Concerns

Yet another aspect of concern is computation – deciding on whether or not the reputation is to be computed on-chain while using smart contracts or delegated to some other entity. In the latter case, trust needs to be established with the entity handling such computation, so as to maintain the level of trust in the system.

When the computation of reputation is made on the smart contracts themselves, in that case, the chain resources might be occupied with frequent and preemptive computation. This, in turn, also generates traffic on the network. Taking the off-chain route, the transparency and immutability in features of the blockchain remain unharnessed, subtracting the chief benefits of the technology. Thus, it is a challenge to determine when the time is right for computing, how often, and where. Offering off-chain storage systems to aid the blockchain is also not simple. Thereafter, it incurs concerns of access, security, and performance.

Also Read: Blockchain Revolution In Investment Management

PayBitoPro Reputation Exchange Technology

Global digital asset exchange PayBitoPro offers Reputation exchange technology incorporating the following products or function modules:

• Reputation Online Register (ROR)
• Digital Reputation Identity (DRI)
• Reputation Exchange (REX)
• Reputation Trading (RET)
• Reply from the Stars (RFTS)
• Political Parties Funding (PPF)

The Underlying Technology

The technology built around reputation systems provide the following services:

• Firstly, to provide verifiable individual digital identity services (DRIs), build and enhance their online reputations, engage in truthful communication, and combat fake news.
• to trade, invest, and monetize individuals’ reputations (RET).
• Moreover, to offers an innovative electronic OTC Reputation Market (REX). Thereafter, on the basis of a Trading Platform, Celebrities, Politicians, and Political Parties’ reputations lists on a proprietary exchange and trades both retail and institutionally.
• to provide celebrities with an innovative, legal and transparent way to monetize their major asset, and their public reputation among the public and fans.
• to offer Politicians and Political Parties an innovative, legal, and transparent way to fund their campaigns and activities and a way to capitalize their reputation among the public and voters.
• Thereafter, to operate as global marketing, communication, and business platform for business networks and business communities.
• to combine the advantages of a business community with communication, information & research, service, and a trade area in one single platform.
• to partner with business networks and business communities offices around the world.

Finally

Reputation systems exchange devised by PayBitoPro aims to disrupt the space surrounding the reputations of public figures. This technology hasn’t caught on the market yet. However, it is capable of generating huge revenue. Thereafter, maintaining honest public relations between celebrities and their fan following. 

Reputation systems built on the blockchain have a lot to offer in the decentralized trading space. Moreover, it is a matter of time until the technology gains traction in the cryptocurrency sphere.