The function of a Bank is to match most worthy money surplus with most worthy money deficit. In the old days, the banker was the person to know if you wanted to be successful in town because they did the matching. But with the emergence of the credit score, the “banker” became digitized. The spread of the credit score is responsible for great wealth creation because many more entrepreneurs could borrow money in the present to increasing human productivity in the future.
The Credit Score
The credit score is statistical in nature; it isolates about 30 or so indicators of your financial activity and puts them on a bell curve. These include how much debt you have, how much your assets are worth, your income, etc. These ratings are run through the FICO Equation and out pops your credit score. Anyone can predict the likelihood that you may default on your financial obligation.
All of the data that feed FICO are collected from public records, your employer, and the people who you borrow money from because these same organizations have a vested interest in a system of correct credit scores.
We are competing with ourselves.
It is interesting that people do not compete directly with each other for our credit score because it is not a ranking system, it is a “normal distribution”. However, with no credit, people are invisible and the system shuts them out. With bad credit, the system also shuts them out. People are also willing to give up some freedom and privacy, but they accept these terms because the credit score provides tremendous leverage to finance a business, automobile, or a home.
The Knowledge Matchmaker
The Value Game specifically transforms financial currency into social currencies where value increases by human interactions in communities. Then, the social currency is transformed back into a financial currency or stored in a yet to be determined social currency. The efficiency of the Social Value Creation Process can be vastly improved with a Social Credit Score. The objective, like the financial credit score, would be to match most worthy knowledge surplus to most worthy knowledge deficit.
The Social Credit Score
There are two forces that need to be combined to produce a credit score; the reporting of social activity and the independent variables that constitute social activity. We already see some elements where search engines report your social activity and we have seen a few unsuccessful attempts to use Twitter as a proxy for social productivity. Neither are functional but the nascent social credit score system will eventually improve. But why wait if we already know what needs to be done?
Something else needs to happen.
Not unlike the FICO score, the Social Credit Score is a knowledge inventory for social, creative, and intellectual assets that a community of people collectively hold. The format of the knowledge inventory must be assembled to a bell curve.
Next, a new type of search engine must be developed that can process the knowledge inventory and statistically match most worthy surplus of knowledge asset with most worthy deficit of knowledge asset given a set of business objectives. Then and only then can holistic transactions take place which can redefine human economics in social currencies, i.e., where knowledge really is an asset.