The Intersection Between Pseudonymous Economy and Web3

How different would the world be if we had the freedom to create different identities for different purposes? What if we tell you that the time is now to make it happen — create different identities for different roles?

There has been a lot of fuss around the pseudonymous economy and how it can benefit the business world. Last year, Balaji Srinivasan, an angel investor and entrepreneur, briefed us about the importance and need for a pseudonymous economy. He quoted, “it’s key to creating a better society in our modern age.” In general, the pseudonymous economy is one where your coworkers, partners, counter parties, and competitors don’t know your name,location, gender, ethnicity, nationality, height, and accent.

Crypto and digital avatars are the key enablers of the pseudonymous economy. With public key cryptography, users are able to separate their financial and social activities from their real names. It will be exciting to see how emerging technologies like blockchain and Web3 can further enhance the pseudonymous economy.

Pseudonymous Economy: Definition

Here is a small excerpt from Srinivasan’s presentation, where he outlined the importance of pseudonymous economy:

“The pseudonymous economy is the foundation for muscular classical liberalism that is capable of standing up in today’s information environment. Rather than make naive appeals to people to look past gender or race, or to not cancel or to not discriminate online, instead, we make it impossible to do that by taking away that information entirely with realistic avatars and fully functional pseudonyms.” 

Features of Pseudonymity

Before we discuss the main features of pseudonymity, we should know what it is not —it’s not anonymity. In a pseudonym, you may find a reputation and metadata followed throughout different interactions. But keep in mind that the anonyms are not persistent at all. Here is why the world needs a pseudonymous economy:

Pseudonymity Is Essential to Decentralization

As we mentioned earlier, a pseudonymous economy provides you with a new pseudo-identity. You can choose your own identity instead of using the one that has been given to you. The best part? No one can use it against you.

Pseudonymity Is a Continuum

You may find varying degrees of pseudonymity in the pseudonymous economy, and they're very important. Why? It’s because even if you narrow a pseudonym down to a thousand people, it would still allow someone to operate freely.

Pseudonymity Is Where Society Is Headed

We are using pseudonymity widely — from our economy getting increasingly remote to crypto, hiring practices,and more. We have implemented many of these concepts since the basic idea of pseudonymity is pervasive both offline (nicknames or changed names) and online (usernames).

One of the most important reasons we need a pseudonymous economy is that it provides freedom of speech. What does that mean? It means that the pseudonymous economy defends us against disruptions to our social networks, which is crucial these days when we have an endless number of online mobs. Try to understand it this way: What’s your bank account balance? Your stored wealth! Similarly, your real name is your stored reputation. Pseudonymity works like insurance against unjustified debit to that reputation.

The Concept of Pseudonymity Has Been Around For Ever

People have been exercising pseudonymity for some time. Here are some examples:

●    Benjamin Franklin used the pen name Mrs. Silence Do good when The New England Courant denied publishing his book.

●    John leCarré used the name David John Moore Corn well to publish his novel Call for the Dead since he couldn’t use his real name as an author while he was an MI-5 agent.

●     JK Rowling wrote The Cuckoo's Calling under the pseudonym Robert Galbraith to publish a new work, so she could avoid creating any hype and setting expectations.

●    Satoshi Nakamoto, the person who developed Bitcoin, is the name used by the presumed pseudonymous person or persons. It’s not a real name. They also authored the Bitcoin white paper and created and deployed Bitcoin's original reference implementation.

Is There Any Relationship Between Pseudonymous Economy and Web3?

Before we dive deep into how these two are related, let’s quickly refresh what Web3 is. Web 3.0 is a highly decentralized version of the World Wide Web, driven by machine learning (ML) and artificial intelligence (AI). It also uses blockchain technology, resulting in more efficient and seamless real-world human communication.

●    Web 3.0 puts the users in power since it gives them control over their data and content.

●    Users can sell or trade their data without worrying about losing ownership or risking their privacy. The best part? Users don’t need to rely on intermediaries for any of these.

●    Using Web 3.0, you can log into a website anonymously, i.e., without getting your online identity tracked.

Read more about Web3 and its evolution: AI and Web3: How Are They Related? 

How Web3 Empowers the Pseudonymous Economy?

1.  The Rise of Avatars and Advanced Filters

If you are under the impression that pseudonymity equates to anonymity, then you aren't quite right. There is a thin line between these two. The pseudonymous economy isn’t about having the freedom to create a temporary or disposable account with fake details that can’t be traced. What would you do when you are required to show your face during live selling, vlogging, or an online show?

Web3 has a solution for it — real-time filters. For instance, you can use DJs of DeFi as pseudonymous identities to personify decentralized technologies for live events. It’s quite similar to masked DJs like Marshmello or Alan Walker,who are known more through their music than their actual identity. DJs of DeFi help technology entrepreneurs discuss ideas and passion without having to carry the burden of bias.

●    These days,we even have apps that can change people's faces in videos.

●    Douyu,China's equivalent of the Twitch app, has a filter that can turn you into a teenager or adolescent.

 “Zoom is 2021. But by 2030, you may not use your real face, voice, language, or accent online,” Srinivasan said in his presentation.

In his presentation, Srinivasan demonstrated a VR and AI avatar that can not only cover your face but can also change your voice. How does it work? The avatar will swap the speaker’s face with a different realistic face, speaking in sync with the speaker in a different voice and accent. Existing video conferencing apps like Zoom have filters, but the apps in the future will be more advanced.They will harness emerging tech like AI, backed by Web3, to replace faces,voices, and accents, bringing complete pseudonymity.

2.  The Personification of Digital Assets

What do you think your real name signifies? What information does it carry? Someone’s real name helps their family, friends, colleagues, acquaintances, and others to identify them. How so? They do it by matching their name to other data, such as photos, social media profile details, etc. But there can be numerous people with the same name since real names are not unique.

On the other hand, a pseudonym can be unique, and you can use it to transfer your wealth and reputation. For instance:

●    Online shoppers, sellers, and payment accounts in e-commerce allow you to move funds from one user to another to build trust or reputation via the rating systems.

●    You can use pseudonyms to personify business ideas. This is what the DJs of the DeFi project are designed to do.

The DJs of the DeFi team now have their own CDzExchange platform that helps them with cross-chain derivatives exchange.Such exchange platforms are powered by avatars and focus on the merit of the creator’s innovations instead of the personalities of the founders. But why do they even need such a platform? It’s because they need the freedom to talk about their products in a more interesting and engaging way, even if it’s through video conferencing apps like Zoom.

●    The use of avatars provides you with an engaging way to discuss your business ideas.

●    Not only this, but it also acts as a way to address Zoom fatigue, especially immediately after the COVID-19 pandemic when we still have the majority of business meetings through teleconferencing.

●    Additionally, entrepreneurs can present their ideas with a clean slate by presenting business pitches through avatars. They are free from any kind of association with other products or business models.

3.  Defending Against Social Supply Chain Disruptions

If you have the ability to create different identities, you can control their reputation when dealing with particular people or situations. That’s the power of pseudonymity and digital avatars. You can also control the exposure to negative social interactions. But keep in mind that it’s not:

●    A way to escape accountability.

●    Designed to tolerate the failures of fly-by-night entrepreneurs in the digital economy.

●    An appreciation for run-of-the-mill businesses that can help you churn out new business models.

Pseudonymity brings a lot of features to the table, such as privacy and freedom of speech.Not to mention that it also protects you from negative press and social media mob attacks. It benefits digital entrepreneurs and ordinary people — whose lives can be impacted by social media or online activities — to a greater extent.In short, pseudonymity is an ideal way to achieve long-lasting engagements with other businesses, investors, and consumers.

How Can Pseudonymity Help Business Leaders and Society?

Let’s circle back to our old example of pseudonymity, Satoshi Nakamoto: the person who developed Bitcoin. It’s the name used by the presumed pseudonymous person or persons. Satoshi Nakamoto is not a real name and a great example of how pseudonymity works. It provided privacy and security for bitcoin’s creator or creators. The “Satoshi” identity helped its creators avoid skepticism over the platform’s initial backers and focus on the technology and its applications instead.

The same happens in our society — discrimination, prejudices, and biases continue to exist. But with the help of digital avatars, investors, stakeholders, and consumers can find new and effective ways to examine business ideas, models, or products without being subjective.

This is how Srinivasan explained this concept in his conference presentation:

“Rather than make naive appeals to people to look past gender or race, or to not cancel or to not discriminate online, instead we make it impossible to do that by taking away that information entirely with realistic avatars and fully functional pseudonyms.”

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