The Qualitative Leap of On-Chain Reputation

The Qualitative Leap of On-Chain Reputation

• Note: this was inspired by a question I answered on a blockchain governance course: how is onchain reputation different from traditional reputation. I put down my thought below and intend to improve the post over time
• Version: v1.0

More Open and Persistent Access

Once reputation is on-chain, it becomes more openly accessible and persistently stored. This allows a person’s reputation to be easily found and understood by more people. This transparency not only helps spread good deeds widely but also significantly increases the social cost of bad behavior.

Amplifying Rewards and Punishments

When more people can access a person’s reputation, the benefits of doing good become more significant, while the costs of doing bad increase. In the past, credit information between banks and individuals was known to only a few, and bad records were rarely made public. However, with on-chain reputation, information can be accessed by the whole society, turning single-game trust relationships into repeated societal interactions, greatly encouraging honesty and punishing dishonesty.

Decentralized Reputation System

Traditional reputation systems are controlled by a few institutions, such as governments or credit rating agencies. If these institutions make mistakes or give malicious ratings, it can cause significant harm to those being evaluated. However, on-chain reputation systems allow everyone to easily sign and publish their evaluations of others, promoting a decentralized reputation system. This makes the entire reputation system more like a social graph rather than a centralized structure.

Fairer Reputation System

With decentralization, everyone can decide how they want to be evaluated, making the reputation system fairer. Individuals have more control to better showcase their integrity and actions, which is crucial for building a transparent and fair social system.

Reducing Public Shaming

In the on-chain reputation system, each evaluation is recorded and traceable, effectively reducing public shaming. On current online platforms, angry voices often dominate discussions, and these voices do not represent the majority. Additionally, the reputation of the evaluators themselves is unknown. However, in an on-chain system, people can evaluate not only an entity (e.g., a restaurant) but also the evaluators themselves. This “review of reviews” mechanism helps filter out low-quality or irrelevant evaluations, making the overall reputation system more reliable and useful.

Forming Reputation Networks

On-chain reputation systems can also form representative reputation networks. For example, if I trust Person A, and Person A trusts Person B, I will somewhat trust Person B’s evaluations. Similarly, if I trust my immediate connections, the people they trust are more likely to be trusted by me as well. When the reputation system can be easily discovered, read, and connected, it can form this kind of reputation network, which traditional systems cannot achieve.

Mitigating Retaliation Risks

There is a concern that permanent on-chain evaluations might lead to retaliation. To address this, zero-knowledge proof methods can be used to aggregate evaluations within a group or organization. This way, the overall evaluation of an entity is visible, but the specific evaluators remain hidden, increasing the system’s safety and reducing retaliation risks.

In summary, the on-chain reputation system brings a qualitative leap in reputation management. Through openness, persistence, decentralization, fairness, and reducing public shaming, it significantly improves trust relationships at both personal and societal levels.