The Coming i-Commerce Revolution
Tags: I Commerce, Marketplaces, Blockchain, Bitcoin

I was rewatching a movie last night that really got me thinking. I’ll sum it up in a few paragraphs and see if my readers can see where I’m coming from.

The movie is Glengarry, Glen Ross. Anyone in sales knows the film. It contains the most famous ten minutes of Alec Baldwin’s career — a monologue that pretty much justifies his entire existence. Good film. If you haven’t seen it, watch it. It’s a classic.

The film’s plot centers around a robbery of a real estate investment office in Chicago. Some salesmen broke into the office, ransacked the place, stole some random stuff to throw the cops off the trail of what they were really trying to sell — a stack of pink three-by-five note cards. Their value? Fifteen grand. Why?

The precious note cards were leads. Simple names and addresses of people who had expressed interest in the land these people were selling. Leads are incredibly precious to salesmen because they cost quite a bit of money to produce. You have to put out surveys, put ads in magazines, online, on billboards — all to generate interest in some product or service. In this case, the leads were valued at about fifteen dollars apiece, and there were a thousand of them.

Precious bits of information, sitting in a stack of pink note cards on a desk in a sales manager’s office. Bits of information so valuable that a salesman was willing to risk unemployment and prison to get them.

This got me thinking about information as a commodity. We’ve been buying and selling information for as long as information has existed, but there’s something fundamental about information that makes it different from other, more tangible, commodities: information can be copied. This introduces a very big wrinkle that makes selling information more complex than selling a couch.

Let’s go back to the example from the movie. The information worth selling is a lead. It’s John Smith at 111 Jones Ln who filled out a form in a magazine saying that he might be interested in buying some land. Simple enough, right? Now the salesman in that office can go to that address and have a better-than-average chance of making a sale.

But what if two salesmen have copies of that note card? Then their chances of making a sale are cut in half. You see where I’m going with this. Information has value that is severely degraded as more and more people are in possession of it. To safeguard the information and preserve its value, the office manager in Glengarry, Glen Ross kept the information on note cards and locked it in an office. Certainly one solution to the problem, but definitely not a good one.

Take this same example and put it in the age of email. Now it’s about a thousand times easier to copy the content. Put it in an email and send it to fifty people and charge them fifteen grand apiece. And then flee the country with the cash because you’re just so clever.

In the beginning of the information revolution, the commoditization of information was prevented for this reason: it’s very difficult to be certain that the information you’re buying isn’t also being sold to sundry other buyers — and when the number of buyers goes up, the real value of the information goes down. But there really was no way of determining how many parties were in possession of the valuable information, and so there was no way to assess that information’s real value.

The problem I’m describing is called the double-spend problem and it was identified in the early nineties by an economist whose name escapes me. The problem was solved in a 2009 paper by pseudonymous programmer and mathematician Satoshi Nakamoto. His paper introduced an entirely new way of tracking information that created the first cryptocurrency, Bitcoin, and has introduced to the world the concept of the digital asset: a commodity that exists completely in cyberspace, that can be transferred from one party to the other with total confidence that no copies have been made. Simply put, if I have a bitcoin, I can send that bitcoin to anyone I want, and the recipient knows for sure he’s getting my bitcoin, and that I no longer have it.

Solving that problem represents a fundamental change in the way we can send information in cyberspace. For the first time, we have assets the move purely on the internet without third-party authentication of the transfer. So the blockchain would seem to be a starting point for people who want to sell information as a commodity — but it’s not the end point. Just as in the case of the leads in Glengarry, Glen Ross, solving the double-spend problem is the beginning of the solution, but not the end. For example, how does the guy who wants to buy the leads know that the leads are legitimate, but without revealing the content of the leads to a third-party verifier?

To sum up a very long explanation, that problem gets solved with what we call a zero-knowledge proof, and it works by breaking up the information into chunks that multiple other parties can verify piecemeal. If authentication is unanimous among the verifiers, the information is deemed valid by the system and the buyer can move with relative confidence that the information being solid is valuable.

This very new form of commerce I am describing is called i-Commerce, and I believe we’re at the beginning of a new era in which the dissemination of valuable information in a marketplace will become systematized in ways that were never possible in a pre-blockchain world. Imagine having a piece of information that you KNEW was valuable, but absolutely required that you remained anonymous in selling that information. Before the blockchain and zero-knowledge proofs, that would be impossible. But these marketplaces are coming, and when they do, they represent an enormous new economy that can be taken advantage of in thousands of ways.

Imagine a marketplace for secret information, for example. Wikileaks’ founder Julian Assange has paid an incredibly hefty price for the incriminating emails he’s verified and publicized about the activities of powerful people everywhere. He’s been marooned in the Ecuadorian embassy in London for the better part of a decade, a fugitive from multiple governments. What if he had been able to publish his information anonymously, with a network of verified authenticators attesting to its authenticity?

What about famous Ponzi schemer Bernard Madoff? It’s known that some in his inner circle were unwilling to blow the whistle on him because doing so would be career suicide. If they had been able to use such an i-Commerce marketplace, they might have been able to blow the whistle on the most destructive financial scam of all time.

And finally, what about valuable things like sales leads? Today, the sales and marketing world has really unreliable ways of determining the value of a list of leads. What if an i-Commerce marketplace could anonymously and reliably verify that the leads being offered were authentic, and had not yet been sold to any buyers? The benefits would include objective valuation of such information with accuracy never before attained.

It’s a brave new world in the way humanity can disseminate and value information of all kinds. We’re only just now starting to visualize the possibilities.