Belavadi Prahalad

@prahaladbelavadi

Effect on Bias in Marketplaces and Designing Interactive Systems

TLDR: If you’re building a marketplace, give people options. Do not be biased. If you’re building a system that fits into a marketplace, ensure that users are biased to using your product.

Bitcoin is a marketplace for transactions. People broadcast transactions and miners pick them up and in exchange receive fees. The memopool is a marketplace where bitcoin transaction makers and bitcoin transaction recorders come together.

As is amazon where buyers and sellers of goods come together.

Bias is inherent in majority of the systems we observe today, however bias sometimes plays a constructive role and sometimes a destructive role.

Bitcoin, having no bias in processing transactions is what gives it power.

In cryptography, we use XOR functions for most operations over binary objects. When we look at the truth table, XOR has a 50–50 chance that the presumed digit could be either 0 or 1 where as in most other tables we observe that the output has a 75% chance of being 0 or 1.

This acts as a bias.

Most bitwise functions, for a given pattern of inputs exhibit a bias.
It is to my belief that, XOR is popular for its usage in cryptography for lack of bias.

Similarly, it is to my belief that bitcoin is successful because of its lack of bias in processing transactions and miner selection.

Early on, we did not have a problem with centralization, in fact centralization was very much necessary for judicious flow of resources. 
We did not have a problem with centralized institutions processing our transactions either.

There rose a problem where the centralized institutions displayed bias.
They were biased against the adult porn industry, Julian Assange and many other innocent people. It perpetrates from the tree that they are acting on behalf of the government who, at that point were biased.

With induction of bias into a system where there were no other options to serve our people, the world craved for a respite.

If a bank wouldn’t process your transaction, you could go to a different bank, but if all banks were biased, thanks to the government against processing your transactions, what would you do ?

The centralization of power wasn’t a problem as long was it wasn’t biased.
Induction of bias into large centralized entities that have no replacement is a grave problem.

Muneeb Ali’s Ted talk talks about how no one single entity should have that much power such that we are at the mercy of their goodwill alone.

Induction of bias into large centralized organizations that have no replacement will leave you cornered. You will have no other options.

That’s not the kind of world we want to live in. We want options.

In Bitcoin, given that no one knows who you are, the miners do not need to know who you are or rather even you yourself could try processing your transactions opens up avenues for plausible options.

Even if a large chunk of the miners refuse or are biased against you, that does not mean that you cannot mine your own transactions as long as you adhere to the rules of this game.

We are no longer at the mercy of centralized institutions that are susceptible to bias.

Bitcoin is just one example. 
Amazon is an other. 
If one person is biased against you, you should have other options.
If one seller is biased against selling to you, you have other options.
If a miner is biased against mining your transaction, you have other options.

If we tend to look at this construct as a game, it is similar to a horse being led by a carrot, except it is being fed a carrot at every interval.

The miner or the horse is key. 
They are the reason the system works the way it does.
The person riding the horse is the person broadcasting the transaction and the carrot is just more bitcoin.

If we look at this as a game, everybody gets a chance to be the horse and to ride the horse, in which case it is fair.

In marketplaces, induction of bias, I think is a critical mistake.

In marketplaces people need to have options, as someone that is set to build a marketplace, induction of bias into your system would deter people from using it.

As a marketplace, if people do not use your system, it is not a very good market and it is not a good thing.

Marketplaces should not be biased.

However, when someone is building a system that fits into a marketplace, there must be an induction of bias for it to succeed.

This induction of bias is necessary because your potential customers must be biased towards using your products and not someone else’s.

Induction of positive bias to your system that is well rooted within the human psyche would secure your business prospect.

The structure of your system needs to be such that people are biased to use your product, service over the others that are available.
People must be biased towards your system, for your system to succeed.

Early on, my thinking leaned towards incentivizing everything, but rather I now realize that incentive is just one part of causing this bias within your audience.

For all blockchain startups that are set out to build revolutionary products and services that grant people freedom to change the world, is your system positively biased or negatively biased ?

A common negative bias I hear is lack of intuitiveness (UI/UX) for adoption.
People that are set out to replace current existing versions with blockchain~ified versions, you have the current existing system as a competitor straight out of the bat. 
Despite all the decentralized freedom that you offer to people, is it really causing a bias for them to come use your product ?

Cheers!

— Prahalad Belavadi

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