What is an open value network?

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Open Value Network has the acronym OVN.

Open Value Network (OVN) refers to a new organizational framework designed to support commons-based peer production. This organization is by nature and from birth transnational.

It is the network that is open, in the sense of permisisonless or unrestricted access to participation (to processes).

OVNs rely on technology (digital infrastructures) to support their operations. They strive for no (or very few) formal mechanisms of power or central control over their infrastructure, although it is evident that they exhibit informal power structures. Examples are Bitcoin, Ethereum, Sensorica, etc.


From a social perspective: an OVN is a complex form of social organization. Through interaction, values and rules, as well as norms of reciprocity and trustworthiness, are constantly emerging and being (or not) sustained.

From an economic perspective: an OVN is a group of agents that collaborate openly and transparently to produce and disseminate valuables -see value, while expecting some types of benefits in relation with everyone’s contribution -see NRP-CAS.


An OVN is also understood as a complex dynamical system, a living system, with an emergent structure (not imposed or predefined). We are looking at autopoiesis or self-organizing systems. There are initial conditions for such systems to exist and basic requirements for such systems to succeed in their mission (as agents), which are characterized as a Critical Path. This stands in contrast with the traditional firm, as a form of organization, which comes with an organizational blueprint and a specific path of development from a statup to a mature company.


Social networks, which can be open or closed, are organizational entities that have as a purpose to create new and nurture existing social relations. They generate fun, learning, a sense of belonging, understanding and support, security, ... OVNs have as a main purpose to generate valuables. Building on this distinction, the social web (also called web2.0) becomes the faber web or web3. Faber web was coined by Tibi in this TEDx talk.


See more on OVN history.



Value and network

Value: See pages: Value and What is value?

Network: Means a set of interconnected autonomous agents who maintain a set of relations, dictated by their respective roles, and act according to a set of shared rules and methodologies. Agents are called affiliates in the OVN model.

The term network refers to the various structures within the OVN. It conveys the notion of free association. It also suggests a departure from hierarchies, to more dynamic structures, which might also contain contextual and ephemeral hierarchies, but not permanent instituted power relations. It also suggests a more horizontal governance, where choices or decision making does not rely on specific nodes (positions or roles / occupied by agents), but is more inclusive and context dependent, based on the relation between nodes (roles that are dynamically occupied by agents) and the process at stake.

It is the network that is open.

See technical definition of a network from WolframMatworld.

Characteristics

  • Openness: barrier to entry for participation, access to resources
  • Transparency access given to the public to information, processes
  • Reliability: defines the reliability of the network components and the connectivity between them. Mean time between failures (MTBF) is commonly used to measure reliability.
  • Resilience: includes the protection of the network components and the data/information they contain and/or the data transmitted between them.
  • Scalability: defines how well the network can adapt to new growth, including new affiliates, applications, and network components.
  • Topology: describes the physical layout and the logical way data and information moves between functional components.
  • Adaptability: describes how well the network responds to changes in the environment
  • Vitality: degree of activity, degree of involvement of participants
  • Sustainability: describes how well resources are managed

Environment for socioeconomic activity

Provides value sovereignty to the agents that operate within it. In other words, autonomous agents or affiliates collectively decide in context how to link participation (or contributions) with distribution of benefits.

Is open (in terms of access to participation), permissionless.

Is transparent (in terms of access to information), allowing anyone, even non-participants to access information in real time, about almost all processes. Ex. The Bitcoin ledger and the Sensorica NRP-CAS.

Is empowering (maximizes individual initiative, allows forking, avoiding consensus or other heavy group decision-making process - see also red flag).

Is stigmergic, i.e. coordination among agents (affiliates) is mediated by the environment through digital pheromones.

New economic model

OVN is an approach to commons-based peer production. It allows agents (individuals and organizations) to

  • co-create and aggregate valuables through lateral and large scale coordination, cooperation and collaboration
  • to steward of shared wealth and assets
  • to account for various inputs and outcomes in a common ledger system
  • distribute benefits fairly within and beyond the network, based on participation (or contributions or other considerations)


The OVN model relies on p2p principles of co-production, self-organization, and stewardship of commons.

  • peer production - the collaborative production of surplus value by means of common and contributed assets;
  • peer governance - direction and accountability by the community of producers themselves, not by market allocation or corporate hierarchy;
  • peer property - the use-value of property is accessible on a collective trust basis through new modes of ownership which are not exclusive, while recognizing individual authorship or title where appropriate.

Am OVN allows individuals to engage in economic activities by pulling together various assets that they may possess, bypassing money for the most part. Data from Sensorica shows that the financial barrier to produce a hardware prototype through a collaborative venture can be reduced to 10% when compared to a traditional startup. In that sense, the OVN model is breaking away from the traditional transactional economy, which is over-dependent on financial assets: without money it is very hard to engage in economic processes, i.e. it is hard to launch a company, put a product on the market, without financial capital.

Production

Is a participatory process, where almost everything is crowdsourced. Feeds on collective/social intelligence, relies on crowdthinking processes, uses much less planning, uses stigmergy.

Uses infrastructure for collaboration / co-production with transactional capabilities for various assets, under various property regimes, in order to unblock economic processes of design and production. Reduces transaction costs.

Relies on a system of values (motivation) and incentives.

Dissemination

The term dissemination has replaced distribution during 2021, with the Greens for Good] venture, to distinguish between market-based or transactional distribution of (scarce, rivalrous) commodities and dissemination of digital assets (abundant, non-rivalrous) such as open source designs.

Organizational model

An OVN is a generic organizational model that can be implemented in different forms, adapted to specific contexts. It allows low-barrier access to innovation and co-creation processes, oriented towards economies of scope, as opposed to economies of scale.

An OVN is built on a value system, as perceived by humans, composed of sources, processes of creation, production, reproduction processes, transformation, transmutation, exchange mechanisms,... all that embodied as a decentralized form of organization.

Some value systems are in most part abstractions. A cult or a sect is built on a value system. Apart from tangible benefits for being part of a tight group, a large part of the value system is purely immaterial, subjective and even illusory. The same can be said for a corporation or a cooperative, there are tangible benefits flowing through them as well as intangible benefits, real and imaginary. The benefits or the negative effects people get from engaging in different endeavors, either properly understood or not (in the case of deception), can be very real and tangible.
What comes first, value or structure? I.e. what comes first, a role system or a value system? Is a value system determining the role system or vice versa? We believe that value comes first, the value system should inform the role system. The structure of any organization depends on the nature of the flows through it. See also here, the same ideas are expressed, if modified do it everywhere


From an agent perspective

  • Equipotentiality: The assumption that all agents have the potential to satisfy requirements to contribute constructively to processes, thus, no one is excluded apriori.
  • Anti-credentialism: The emphasis is put on what an agent can do, not on credentials, although credentials are considered in access to processes. If a process or a resource is not rivalrous and not sensitive (in terms of safety and security) barriers to access are very low, anyone can engage in the process or use the resource.
  • Self-selection: Allow agents to chose their roles instead of being appointed to positions.
  • Peer validation: Rely on peers rather than on authority to establish truth, quality, adequacy, etc.
  • Holoptism: Provide unrestricted access to information to all agents


Other definitions

From Wikipedia. See our Diigo annotated version of this Wikipedia page.

See metamaps.cc definition short and metamaps.cc definition long

Applications

Application scenario in high tech

Imagine a mechanical engineer. We’ll call him Joe. Joe has a very good product-idea but he has very little money. Let’s also assume that in order to market Joe’s product-idea it would require the input from other individuals with complementary skills, like chemistry, electronics, sales and marketing, administration, etc.. In the traditional world, Joe would have a few options to bring his idea to market.

The first and most obvious option is based on an individualistic approach. Because Joe doesn’t have enough money, he must find the funds necessary to buy some tools, to rent a space, and to hire employees. If financiers are involved early on, they will rightfully ask for a larger share in the venture, in proportion to the greater risk they take (greater uncertainty).

A second option, where Joe would start by creating a partnership. He must find other individuals with complementary skills and convince them to join the venture. Remember, we are supposing that Joe doesn’t have enough money to hire other employees. Once the group is formed, Joe and his partners create a company, and they decide to each take a % of the company -equity. Within this secure environment (the company and its legal/contractual mechanisms) the partners share risk, they work together to grow the potential of their venture, enough to reach the threshold of confidence at which financiers would become interested to invest at lower risk. At that stage, the co-founders must agree to give a portion of their shares to the investors (to dilute), who will rightfully ask for a share in the venture in exchange of the risk they are willing to undertake. If investors get involved at a later stage, the percentage given to them might be smaller than in the first case.

How is that going to affect Joe’s bottom line? In fact, Joe can end up in almost the same place. But his friends/partners are now co-owners instead of being just employed by Joe, which is probably better, because they have a stake into the business and can be more motivated.

Imagine now that Joe can find not only a few partners, but thousands of them. In this case, the venture initiated by Joe might not even need financing at all, if all these partners bring with them no only skills and know how, but also different materials like tools and instruments, access to physical work spaces, and even a bit of cash. Finding thousands of partners in an effective amount of time was impossible 20 years ago, because we were limited to our social network within a small geographical area. Today, the Internet allows this possibility, if the idea is great and if Joe has the proper social skills.

In the second scenario, cooperation and sharing is involved. The OVN extends the second scenario to the point where there might not be a need to rely on financiers. It allows Joe to bring his idea to market entirely through sharing and collaboration. We already have examples to point to. GNU/Linux, the open source operating system, was entirely produced through cooperation by thousands of individuals, distributed throughout the planet. Wikipedia is another example of massive collaboration and co-production. We call that peer-production. The problem with these examples is that no revenue is generated. There are no direct tangible returns from this type of participation. These are called gift economies. An OVN goes beyond the gift economy. It actually contains a gift economy, but it allows those who participate in the production process to be rewarded in a tangible way. In other words, OVNs allow individuals to get involved and to initiate economic processes through sharing and collaboration, relying less on financial assets. Time, skills, tools, physical spaces, social capital, and other tangible or intangible assets can be used as currencies within the value network.

Moreover, the OVN is supported by an infrastructure that reduces transaction costs among peers.


NOTE: Sensorica has moved past this narrative where the market has a lesser role. For example, the Greens for Good venture produces food processing equipment not as commodities, but as open source, DIY artifacts, i.e. designed for easy local manufacturing, by anyone, for any purpose. These artifacts are not sold as products on the open market. In other words, the distribution is not through market transactions, rather through a process of dissemination.

Definition through quotations

"... blockchain technology and distributed ledger technology in general can facilitate the establishment and management of open value networks and value networks in general." [1]


"It is thanks to a platform on the internet that individual workers, motivated by the values of the peer to peer (P2P) or participative economy are involved in creating together innova-tions on distributed projects. In the context of participatory economics, this network illustrates new forms of cooperation, ways of managing collaborations based on the model of P2P, based on a partnership of shared values system." [2]


OVNs are open, they are also called permissionless, i.e. access to participation is unrestricted, which means that anyone can become part of them without the need to go through a hiring process or to sign an employment contract.. The term network refers to a set relations between autonomous agents, which define their respective roles, including duties or responsibilities and rewards. Agents are called affiliates in the OVN model.


These organizations attract attention and resources to sustain themselves through gamification, i.e a set of incentives that are formally and directly linked to contributions and performance.

"Our thesis is that in order to reward all the participants in p2p [peer to peer] economic activity, and thus to incentivize contributions and make participation sustainable for everyone, we need to do contribution accounting: record everyone's contribution, evaluate these contributions, and calculate every participant's fair share. This method for redistribution of benefits must be established at the beginning of the economic process, in a transparent way. It constitutes a contract among participants, and it allows them to estimate their rewards in relation with their efforts. We call this the contribution accounting system."[3]


The OVN model has been applied to open source scientific hardware development [4].

"Open value networks, or OVNs, are voluntary, consensus-driven systems for measuring and valuing the in kind/ energy and financial contributions even the smallest ones (to make them visible) of each of its participants. Such systems are a growing trend among digital communities, according to a 2016 P2P Value study, which found that 86 percent of the 300 digital communities it studied use open value accounting systems.19 An “open value network” – a term first introduced by Verna Allee – describes “the connections between companies and the channels through which intangibles move between them.” An open value network is more distributed than conventional value chains, and not necessarily hierarchical."[5]

"The organizational model of Sensorica has been identified as an ‘Open Value Network’ (OVN). An OVN has been developed as a generic organizational and business model apt to enhance and support CBPP. It is highly adaptive, fully de-centralized and governed through distributed decision-making processes and resource allocation. Inspired by the practices exemplified by free and open-source projects, it supports open participation, with low barriers of entry and is designed to empower permissionless individual action through open knowl-edge and transparent processes." [6]

"An OVN is a generic organizational and business model, apt to enhance and support commons-based peer production. It can take various forms and can be adapted according to each context (Siddiqui & Brastaviceanu, 2013). OVNs allow individuals and organizations to create common value in an open environment, while keeping account of the different contributions in a common ledger system. All assets are commonly held by the network and the co-created value is distributed equitably within and beyond the network."[7]

References


Rationale

The possibility of stable, sustainable global-scale open networks is no more questionable, they exist in almost all spheres of human activity. If we listen carefully to Ronald Coase, we can also understand why they are possible. In essence, the Internet reduces transaction costs among individuals. We join other people into an arrangement, we join organizations, if we have more to gain than operating independently.

The type of arrangement depends on the type or the area of activity. Thus we can form private and public institutions, co-ops and non profit organizations. We live in cities, build nation states and form international alliances. Today we can also organize as global, transnational open networks. There is a blueprint for every type of organization, which prescribes a set of relations or roles, policies, methods and procedures, as well as capturing and redistribution mechanisms for valuables. People decide to restrict their individual autonomy by entering in relation with others according to an organizational blueprint, that is to join an organization, to increase their collective capacity beyond the sum of their individual capacities and, in doing so, to benefit from their collective output. If they don't gain in capacity and benefits, they will likely operate alone until a new form of organization that provides greater advantages emerges, if possible.

The Internet with the recent p2p technologies (blockchain and others) that the open culture has built on top of it make open networks a new possible arrangement, where the costs benefits ratio for a new type of global scale collaboration is favorable. Open networks do exist and some of them are highly innovative and very efficient in production and distribution, or dissemination, of their outputs. How can we understand this fact?

The open source movement has democratized 3D printing and drones and has created blockchain, which are some of the most disruptive technologies in the past two decades. Also, despite the negative press on Bitcoin and its energy consumption, it only represents a small fraction of the energy consumption of the banking system. It is also the most secure exchange network that humanity has ever produced.

Yochay Benkler identifies two reasons for understanding why open networks can outcompete traditional organizations. The first one is related to what economists call information opportunity cost. In essence, it says that open networks perform better in complex situations where a lot of information needs to be processed in order to seize opportunities and produce good responses to events. The second reason refers to what economists call the resource allocation problem. Open networks do better in matching skills to tasks and allocating resources to the right activity.


In ancient times, the tribe's socioeconomic structure was effective when the in-group was less than ~150 people, and one could remember reputation, debts and favors for each member of the tribe. Since then, religions, nation-states, and corporations have all taken our ability to collaborate on synergistic goals to new levels of achievement. Today, Michel Bauwens speaks about peak hierarchy: horizontality is starting to trump verticality, it is becoming more competitive to be distributed, than to be (de)centralized. If we go back to Ronald Coase, hierarchies have higher costs due to excessive overhead for bureaucracy (an army of paper pushing middle men), a lack of transparency, coherence, speed & efficiency. Open networks seem to be poised for domination.

All these transformations are not the desire of a group of individuals. There is no ideology underlying this movement. It just happens because the conditions are right, because a new potential exists and because people all over the world respond to it, intuitively understanding the benefits that it offers. But disruptive changes are usually met with resistance. Sooner or later those who benefit from the status quo come to understand the threat that the change poses to their situation and they start to oppose it. A conflict takes shape between them and those who already benefit from the new potential. The church opposed the enlightenment by denigrating the scientific method and by banning the printing press, trying to stop the spread of new ideas. Monarchs opposed the shift to parliamentary democracy and free market economy fueled by the industrial revolution. Today, states go after cryptocurrency which symbolizes the movement of decentralization. In all these cases a technology was at the heart of the movement: the printing press for spreading nondogmatic ideas, the steam engine for spreading new modes of production, the Internet for facilitating new ways of organizing. It is easier to crash an organized movement based on ideas. History shows that it is almost impossible to stop a diffused transformation based on a new potential.

Fundamentally speaking the new potential comes from disruptions in three key areas:

  • Communication: The Internet makes possible many-to-many communication at global scale, in a p2p way (i.e. non-intermediated).
  • Coordination: The Internet makes possible stigmergic coordination, allowing huge numbers of individuals to swarm into action like never before.
  • Collaboration: The Internet allows many minds to think together, many arms to swing together. In other words, it gives rise to social intelligence, makes possible massive crowdsourcing and facilitates the deployment of complex activities based on stigmergy.

In sum, we are witnessing the emergence of a peer-to-peer society, which has its own load of good and bad. On the good side of things, it strikes a balance between the individual and communities. It transfers power to the individual, allowing open access to participation in all socioeconomic processes, within the boundaries of community, or network, self-imposed rules.

At the economic level, individuals in a p2p society have the ability to coordinate their efforts, transact among themselves, co-create and distribute their creations, while bypassing hierarchical intermediary institutions, thus escaping the established power structure, which is designed to perpetuate economic dependence. We are witnessing the emergence of a new mode of production, commons-based peer production, the formation of a p2p economy.

The powerful urge to escape bondage is putting pressure on the multitude to adopt a new culture, one that is compatible with the new modes of production and dissemination of valuables, the open culture. This new culture is built on a new set of values such as sharing, openness and transparency. Sharing means new forms of property, commons and nondominium that are applied to open source technologies and blockchain networks. Openness means access to processes, permissionless. Transparency means unhindered access to information about pretty much everything related to the process.

Visualization of OVNs

Diagram representing on of Sensorica OVN's project, "Mosquito Scientific Instrument System":

Value network.png



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External links

Open Ampie's document