“From each according to his ability, to each according to his needs” – Karl Marx
Here we have torrents. Jokingly, they say, it is essentially communism. You download anything you need and pass over to everyone who needs that too, as long as you can.
Why would it work like that at all? Because it costs a lot less to keep your PC on through the night, then the cost of the ability to download any movie from the web in 15 minutes for free. You know the person on that end receives a lot more than you give away.
There are three main factors to that: information duplication is free ratio he-receives/you-give is very large electricity cost is usually very low
So the question goes like this: what would be the ratio needed for you to help people?
Let’s begin with simple example. You would definitely give away $20 for your friend birthday present that costs (exactly) $20, so for your relatives the ratio should be around 1:1.
(* actually, there is a question about how much would you give for your friend to receive 10$? Would you give 11$? Or 20$? Money transfers never existed before the cost of money transferring was at least below 10%)
Another extreme example: what if the cost was exactly zero and you could decide to make some random person very rich, what sum would you give? Let’s say it’s 1 : 1’000’000 and your dollar makes someone a millionaire.
Would you give the dollar? Would you give 10 dollars?
Back to torrents: the value in the system is that tomorrow you would be the one who needs the file downloaded, and you know you can always claim the ratio back to you, but you never know how many dollars would another person give.
Notice that is different from lottery in the way that we don’t need 1’000’000 people to give a dollar, it takes only you. Would it take a million, you could not play next round as a receiver, you’d need to wait a few hundred thousand rounds. That is what is called positive-sum game in mathematics.
Let’s try to calculate for torrents. The ratio would be the cost of buying the movie from Google Movies to the electricity cost. You can calculate for your conditions, but as for Moscow, it goes like this:
Electricity costs around 6 RUB per kW-hour in daytime and 2 RUB per kW-hour at night. Median computer eats around 0.5 kW-hour per hour (that is 0.5 kW undeniably). And if we say it takes an hour to upload a movie, we can calculate the cost is around 1–3 RUB.
Usually, you can buy a movie online for 100–300 RUB. That makes a ratio of 100 : 1.
(* In dollars, 1 RUB is around 1.5 cents, and movies are usually more expensive in dollars, but electricity is more expensive as well, so let’s stick to 100 : 1 ratio.)
Again, what that says? You would readily give away your precious 1 dollar, if you know someone receives 100 dollars. There is more to that than mere altruism, you not always pay, you are the receiver yourself in the next rounds. So you pay to keep the system up and running. In terms of game theory, when you don’t pay back, you don’t win anything above the movie you’ve received.
The matrix of the sum would be: | Contr | Coop | | __99$ | 198$ | Cooperate | ___0$ | _99$ | Counteract
And don’t forget we are not playing one round, we approach the game every time we open torrent client. Yes, it is anonymous, but if you counteract once, the next time there would be less actors in the system, willing to give away their precious dollars for your wealth.
All in all, the ratio to the unlimited generosity is the 100 : 1 ratio.
But it is ratio that matters? Let’s try to push it, both sides of the ratio.
Would the electricity costs be much higher, you won’t pay 50 RUB for someone’s movie. 100 : 50 ratio.
Or another way, would the return be 1x instead of 100x. You would not pay 1 RUB for someone to receive 1% of the movie. Tomorrow you would like to download the movie yourself. You don’t want to upload 100 movies until it is possible.
That said, it is essential this is positive-sum game, and also that it is very cheap game.
(* there is also another effect, that got many companies rich. You already pay for electricity, so another dollar in the bill doesn’t make a difference. AWS uses that a lot: you have already tied up the card and is ready to pay. And these are not micropayments.)
Back to communism: can you imagine a situation in the future where all the goods (al least the most valuable) would adhere to these rules? That is any human interaction gives 100x of utility.
You say: most of our goods are in the real world and matter doesn’t come out of nowhere. Yes, but the production costs are getting lower and lower. Every dollar I invest into the company by buying their products, turns into more value for them because they now can afford/achieve more.
Also, would it be cheaper (=would I have more dollars), I would easily give a lot more for most things. We already pay ten times as much for a potatoes that are washed than for ones that are just the same, but dirty. And it is cheaper for manufacturer to wash them, than it is for me.
But 100x? That means every carrot I buy makes 100 carrots on the manufacturer side? Really?
Sounds a lot, but it is true even for money. Every dollar I put into bank is more valuable to them than 1 dollar. They even want to pay me for my money!
So as for 2018, money to money exchange ratio would be around 11 : 10, or even 101: 100.
But as for goods, that ratio is more. And for digital goods, it can easily go up to 5 : 1 in the stores.
Now where to find the areas where the ratio is the most and how can we cut the costs even more? Ethereum exploded because is takes transport fees connecting the cryptoinvestors that want to pay small amounts of money to ICO startups, who receive a lot from that money (but, they share it back to the investors).
Looks like it takes two things to boost up the ratio: cooperation and free duplication. Small payments and transportation fees are the ways to make use of that ratio. And more on these are coming in the next post!