The Internet Currency

A long time ago people figured out that if you used coins for trading instead of chickens you could build up a complex economy. The coins usually consisted of something precious themselves. Not to long ago society moved towards a more abstract notion of currency and found it was easier to produce dollars out of paper.

Today the concept of money has become even more abstract and most of our efforts are recorded and rewarded as numbers on a balance sheet. Not to many of us carry or keep thousands of dollars on hand.

There is a new currency emerging. This currency is even more abstract than all those that have gone before it and in many ways is more volatile. However, it forms the basis of many open economic models.

In the internet economy popularity = money. If your website ranks high and you get plenty of traffic you can convert that into real dollars through ad revenue or sales of existing items. That model makes sense to most people. However, there are other instances where popularity turns into real dollars. Observe the number of individuals who have gained respect within a given community who then become high paid consultants. Greater reputation on the internet leads to more opportunities. Older companies might be purchased for their aged domain name and their Google Page Rank.

Incoming links are currently the hot item among SEOs. One way back links from high page rank sites can command high prices. What is interesting however is that if someone provides truly valuable information those links can also be obtained for free.

A new abstract, reputation based economy is emerging. Understanding the models behind it will surely lead to new and interesting opportunities for those that understand and embrace it.

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