Social Currency: Swarmth and The Coinage Fallacy

A new twitter application, Bet Your Followers, treads some pretty strange ground. The premise is that you can gamble against the game or with another Twitterer, using followers as if they were poker chips. However, since followers aren’t purchased using cash, the notion is that you are gambling away “social currency”.

I squarely agree with Ben Parr on this one:

[via Would You Gamble With Your Twitter Followers? by Ben Parr]

So let’s talk about this social experiment, before it potentially disappears. Let’s address the key question they pose:

“If a mass of Twitter followers constitutes social currency, can it be gambled and exchanged like real currency?”

The question is built on the assumption that Twitter followers = social currency. And while for some people it does, for many others, this is not the case. Many Twitter users could care less if they have 10 or 10,000 followers, while others really only care about the ones that engage them. Spam followers only add clutter to the real value of Twitter. We believe a better measure of social currency is the retweet, the @reply, and the quality of the conversation generated.

I call social reputation “swarmth” because it is an unfiltered result of swarm logic: we are only as hot as our network of friends and foes thinks we are. But almost all the imaginable ways that seek to translate swarmth into money have an immediate and negative impact on swarmth.

But for now, let’s pretend that Twitter followers = social currency. Can they be exchanged like real currency? Our answer is that, while you could exchange them, the value of the followers dramatically changes. Thus, it cannot act like a currency.

You follow people for a reason – usually because you know them, know of them, or just think they’re interesting. If you suddenly follow someone else, there’s no guarantee that what they have to say is of any interest at all. Your engagement with them is going to drop, you will retweet them less, and you may even unfollow them because they don’t talk about what you care about. See how “social currency” has become significantly devalued in this exchange?

We appreciate the curiosity of the Bet Your Followers team, but heavily disagree with any assertion that Twitter followers are social currency. People are not currency, and even alluding to such treads into dangerous waters.

This is a classic metaphor goof, like ‘knowledge management’. The allure of a metaphor like this leads to errors like Bet Your Followers. It starts with the metaphorical insight, “Knowledge is a key asset for our business, similar to other assets. We should think about how to manage this asset.” And then the stupidity starts, because people push the metaphor into lalaland. They believe the metaphor is solid, not just a poetic allusion, and they set about programs as if knowledge really is a tangible asset, like money or inventory. And these programs invariably fail, because knowledge is not really a tangible asset, it is an emergent property of our minds and our human relationships. It can’t be pulled from human heads and stockpiled in document repositories, for example.

Social currency lends itself to the same ‘what if’ stupidity as knowledge management. “What is social currency is really like economic or market currencies? How could we exchange social currency? What would this currency be based on?”

With market economies, people have created many sorts of currencies. Commodities, like grain, formed the first currencies, and then money was invented as a standardized medium of exchange that could be converted into any sort of goods, service, or property.

Meanwhile, we also have non-market economies, like gift economies and everyday social interactions, where reputation and influence have meaning. However, these non-market economies and market economies interact in indirect ways. A highly regarded artist — loved by the critics, winner of the Nobel prize — may find small rewards in a world that doesn’t reward Czech poets well. But others can find their reputation in a social setting does translate into real hard cash.

However, attempting to sell your Twitter followers, or gamble them for the sake of getting more, is an obvious goof. Followers — to the extent that a generalization works in this context — are acquired for reasons related to the perceived value of a Twitterer’s stream. Perhaps @stoweboyd is funny, or finds and forwards interesting links, or he is caught up in interesting discussions with other smart Twitterers. As awareness of this spreads, new people opt to follow him.

As in a gift economy, @stoweboyd may be able to rally his followers to take actions — retweeting something, or signing a petition, or showing up for a cocktail party for a charitable cause, for example — based on positive regard, respect, and the gift of gab. This has a value, of a suitably nebulous and unquantifiable sort. But it is not fungible, per se: it can’t be minted into coins and used to buy lunch.

I call social reputation “swarmth” because it is an unfiltered result of swarm logic: we are only as hot as our network of friends and foes thinks we are. But almost all the imaginable ways that seek to translate swarmth into money have an immediate and negative impact on swarmth.

For example, using your social standing to hawk products is at best neutral, like Tiger Woods appearing in a golf club ad, or Scarlett Johanssen selling perfume, and possibly negative, like fading actors or sports figures pushing payday loans or get rich quick pyramid schemes.

The Coinage Fallacy is simply the hope that reputation — swarmth — can be converted into money, like the alchemists’ dreams of turning base metals into gold. The metaphor of currency is so seductive that people fall into this trap again and again. But it’s fool’s gold, an illusion, or a pointless game, like Bet Your Followers.

This is the mismatch between the market economy, a system based on scarcity and ownership, and the gift economy, which based on abundance and shared purpose. Treating people as chips in a betting game is silly, since they can’t really be traded. If I lose five followers to you, you don’t own them: they can drop you the next day and refollow me. They are independent actors, not coins.

So experiments like Bet Your Followers will fail, and we will learn little from them.