Sirwin
Sirwin

The beginning of the end of ratings agencies


tl;dr: It may take a while, but the days of the third party ratings agencies are numbered. An exploration of Erasure Bay.

A large percentage of the trust we place in the world is outsourced to others.

We outsource trust to media outlets and brands.

“If it’s on Fox/CNN, then it’s true.”

“If it has a Nike swoosh on it, then I trust the quality.”

In some respects, this is good and fine. That is the point of the brand.

Another place to which we outsource trust are ratings agencies.

This can range anywhere from Yelp to Zagat’s to Gartner and Forrester.

Then there are the notorious bond rating agencies like Moody’s and Standard & Poor’s.

The Problem with Ratings Agencies

If the clip above (and here) doesn’t drive home the point, I’ll reiterate it.

Money combined with a lack of transparency.

Ratings agencies, because they are centralized 3rd party institutions, are going to inevitably obfuscate the “proprietary” processes they use to determine the “trustworthiness” of a given bond or restaurant or hotel…you get the idea.

As a result, we are left with the unenviable choice of having to trust, without having the ability to verify that, in fact, the agencies ARE actually doing the work that we need them to do in order to fully trust.

It just leaves all of us vulnerable.

What we need is a way to ensure that the people giving us the information are trustworthy.

Exploring Erasure Bay

I’ve written about Erasure Bay before. I’ll probably write about it again because I find it so fascinating. Disclosure: I have an insignificant amount of NMR–the token that powers it.

And I am writing about it right now 

The reason is because I took the next step in the exploration of the future by actually putting out a request on Erasure Bay for some data.

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It wasn’t super simple, but that’s ok.

  • I had to set up an Authereum wallet and then log-in to the Erasure Bay app.
  • For some reason, it wasn’t working on Brave, so I had to do it through Chrome.
  • Then, I needed to go get some DAI (stablecoin that is 1:1 with $) for this wallet, which I sent from another wallet.
  • I also had to connect the Authereum wallet to my Twitter profile. This provides some measure of confidence to others that I have “skin in the game.”

It also blows away any hint of anonymity, but as long as you know that going in, it’s fine.

Then, I was able to put out my request which is listed on the site.

Sadly, as of yet, my request hasn’t been fulfilled probably because I super low-balled the offer just to see what would happen.

Or maybe no one cares. Doesn’t really matter.

What matters now is that I get it.

How Trust Gets Reinvented

Plenty of other requests have been fulfilled however.

  f7f883df4c107ba537b87c4f644898f012e7d87913f226c6af672868379d5292.png 5ace6635614b3a28dcc2be939bbc409e4bfdc3ccd944d63e43397f4a481cced3.png

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and here’s what they all share.

Each one of these requests now has three critical components.

  • a piece of data that one person has accepted as “true” by paying someone else for it
  • a person (or I guess it could be a bot) who has provably paid for a service
  • a person (or a bot) that has provably delivered trusted information

Plus, here’s a bonus one…the data (at least for some of the requests) is available to others as well…even if they didn’t pay for it. Check for yourself here.

And, here’s the best part….all of this is secured and verifiable on a blockchain.

So, when you make a request on Erasure Bay, you have total transparency and visibility into the entire history of data fulfillment that marketplace providers have delivered over time.

There’s no more “should I trust this person/agency?” anymore. There’s a provable, verifiable track record.

And the crypto-economic model makes it so that those who lie or provide bad information are economically punished by having their “skin in the game” stake destroyed.

I am not sure I am doing this justice right now, but maybe think of it this way.

Would the 2008 financial crisis have been the same if Moody had put their own cash or equity behind the “AAA+” ratings as a guarantee?

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www.publish0x.com/jer979
www.publish0x.com/jer979

Explorations of the emerging crypto-economic models and their potential implications

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