Reputational Annihilation: Keeping Your Word In Bitcoin

One of the most important parts of being involved in Bitcoin is maintaining a good reputational standing through good faith.

Reputation is a very intricate and complex aspect of every Bitcoiner’s daily life. It is a societal attribute that determines how individuals are able to voluntarily organize and what kind of relationships they will be allowed to enter. As a phenomenon, it is so little studied or examined inside our space. The Bitcoiner’s world is that of a complex social hierarchy where maintaining one’s reputation is of utmost importance, thus we must delve deeper into this topic. In this essay we look at how this little world of ours functions and what happens once you step on one of the many reputational landmines within the Bitcoiner’s social space.

Here we will also examine what are the differences between localized group-based reputation damages (burning bridges) and global reputational annihilation. Also we will peek into how we can dampen the effects of occasional reputational damage.

Reputation Purgatory

Reputation is what sets individuals apart and merit helps them distinguish each other based on their qualities for a claim to that earned reputation. Many Bitcoiners navigate a complex world with its own social order, to survive and to reach greater success. But what happens when an error occurs and you mess up big time?

The extreme end of reputational loss is annihilation. It is an unfortunate event when things take the wrong turn or when personal values or morals are violated; when the code of honor is not kept up to a required standard. These are situations often made out of hasty decisions, when people are not in control of themselves or because of environmental factors affecting their situation. What may lead to the burning of bridges are situations when others place life-changing choices before them.

Local reputational erosion is one form of such a reputational end-of-the-line, but not a complete reputational annihilation, because localized groups often do not translate over to the global reputation network of participants. Bitcoiners who organize on Twitter, for example, have their own social network that they depend on and where they abide by their own social hierarchy. If someone then violates the rules and norms of these networks in some way or is forced to violate any means of peaceful coexistence, they then either intentionally or unintentionally burn bridges such that their own reputation cannot remain intact.

The effect of this is rather limited: if a given group turns hostile towards someone because they observe this someone as reputationally null and void, that does not mean others will agree.

This might be easier to deal with because the effect is not global, although if it is unintended it can be just as damning for someone if they are completely rejected out of an important social circle.

The secondary, but more devastating, form of reputational loss is complete global reputational annihilation — a scenario when an individual completely loses credibility, trust and reputation at the same time. This is often permanent and it is not easy to revert in any case. This was the case of Trace Mayer who for a very long time was a prominent Bitcoin advocate and for his actions earned the respect of many bitcoiners — right up until the point that he shilled a shitcoin. The moment he did that his “career” was over, and shortly afterwards even his Twitter account had gone dark. Since Trace had built up a specific type of image of himself, a singular violation of the trust built among participants of the space resulted in such a dramatic drop from both the discourse and circles that he left without a trace.

One of the biggest violations one can commit is attacking Bitcoin itself. This was the case of long-time bitcoin advocate and now shitcoin advocate, Roger Ver. The so-called “Bitcoin Jesus” was a respected member back in the day when he was serious about advancing Bitcoin’s ethos and helping the ecosystem grow. Roger Ver’s fall from grace started with the Mt.Gox video in which he defended the exchange in regards to liquidity issues. In 2017, he then went on to take part in an attack on Bitcoin with SegWit2x, where he cooperated with other individuals in coordinating this enforced change on Bitcoin. But, thanks to the user-activated soft fork (UASF) movement, this never succeeded and he ended up siding with the newly created fork of bitcoin called Bitcoin Cash.

Brian Armstrong, CEO of Coinbase, is an example of a Bitcoiner sacrificing reputation for profit. The more shitcoins become available on Coinbase, the more negative effect it had on his own reputation. Although this is very limited to the inward space of Bitcoiners, his business strategy of engaging in the shitcoin casino certainly made him a large amount of money. This of course is not viewed positively by most Bitcoiners.

Beyond The Gates Of Redemption

So, if you are put into purgatory — what happens next?

When something extremely bad happens, and there are reputational repercussions to an action, it depends upon the severity of the action and what category of belief, ethics or morals you violated. (But of course it is not just limited to those.)

It is easier to gain back old friends than deeply invested cultists. But the first step should always be assessing your damage. Take note of what has happened and how you got that far and what are the avenues left for you. You also shouldn’t let desperation allow you to associate with those who would show you in even more of a negative light — that will just further entrench you in your current problem.

Humbleness at this point is the best option — getting reputationally rekt is already a humbling experience for many.

Violations that could be considered impossible to walk back from are those of physical violence, violence against nature, severe ethical violations, brotherly betrayal and deception.

If you have violated any of these, chances are that you are done for good.

Reputational loss can also occur if you lose a public debate, you do not uphold your word or switch sides. These types of events can also lead to total reputational annihilation, especially if you managed to entrench yourself in your views but later realize you were wrong. Coming back from it will be extremely difficult especially if there are those who feel betrayed by your actions. Your best method for peaceful reversal is if you appease those who are not upset.

Why are emotions important? Most of us would think that feelings make us weaker, but on the contrary, a human being without capacity for emotions would be unable to make decisions; Daniel Kahneman perfectly explains how the brain functions when the decision-making entity can no longer utilize the emotional center of the brain. The overall effect will be that you are unable to decide even on the smallest detail of a decision and you stop being able to function mentally.

Emotional intelligence has been a leading front on individual connection-forming, since human beings rely on their emotions to decide over whom to trust or with whom to form long-term contacts. Morals and ethics later help determine and streamline these standards for feelings to combat violations of pre-set or required norms.

Old friends are likely the easiest to make amends with but not without a cost to your status; proving that you have amended your ways can greatly help you.

But appeasing foes is nearly impossible. You either have to go through stages of humiliation or sacrifice your spiritual soul for it.

Reputational Enforcement

Bitcoiners in today’s world very efficiently utilize reputational mental maps of their social space. It is very similar to how the Lightning Network works.

You simply wouldn’t willingly open a channel to someone who could potentially pose a threat or mess with your node from the other side. Long-established Lightning channels are like reputational connections of good faith among Bitcoiners. Another similarity is how some people use Twitter followers: you follow those who you like or are interested in or those who you want to keep friendly relations with. This is quite functional on Twitter because interested individuals can follow back to confirm their current standing and one side of this unwritten state can always be broken (by one blocking the other individual and unblocking afterwards, thereby removing the follow).

On Lightning you can just force close channels that you think do not respect your friendly neighborly state, although this is a bit complex, since it is more symbolic in certain cases than the Twitter follower aspect. But sometimes it can be serious: if many users would close channels to one particular node it would certainly cascade down to the person or company running that node to have suffered such reputational damage in the environment. It certainly also depends on other factors like network effect of the particular node and how many users are still connecting to it.

The Bitcoin network also utilizes a similar system but it is not something we can clearly control since it is better automated, and over Electrum servers Bitcoiners will always prefer their own server over someone else’s.

Reputation As Part Of Decentralized Identifiers (DIDs)

Digital identity is a revolutionary new function which will be the next logical decentralizing step that we must take after Bitcoin. Of course, given the current state of technology, we must level up our privacy before it happens, since identity is an important tool to safeguard.

Reputation is a natural addition to this system, because users will be able to formulate connections within this system. If so, more users connecting to each other shows that this user can be trusted, giving a credible proof-of-reputation in this way. This may make it easier to conduct business and find more opportunities for entrepreneurs.

When we think of this system it shouldn’t be thought of as a carbon copy of a social credit score system but a more robust and private system that allows individuals to get by and access services and credit easier. Proving ownership over business, credit status, trustworthiness and other related attributes would become more flexible with this form of decentralized identifiers.

Such systems can go as far as helping you in times of need and even notify potential allies of state changes or if you are in need of help in a dangerous world.

As reputation networks keep developing, people will increasingly start to rely on them to enforce social contracts and standings. The best advice one can give is that, other than the individual — or that of a collection of voluntarily organized individuals — nothing more important exists; whether that has negative or positive drawbacks all depends on the individuals voluntarily organizing.

Bitcoiners always have their social compass aligned properly. The past few years have proven that Bitcoiners seek each other’s cooperation and they are quick to adapt to new situations. My personal faith in the individuals in the space still stands and I am convinced that every Bitcoiner is going to make it. There will likely be ups and downs but eventually the market will play out.

The road ahead is truly rocky and full of annoyances, but nothing will deter a determined Bitcoiner from leading the charge towards victory.

This is a guest post by Karo Zagorus. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.