Summary of Problematic Property Junto

Digital goods are either information goods or virtual goods. The former are considered public goods in so far that they are non rival and non excludable. The latter typically are club goods or private goods.

Information goods are valuable for the information they contain e.g., a book.

Virtual goods are valuable for the function they perform e.g., a software package.

Both can be pirated and are pirated.

This is because, while the production of such a good requires, at the least, significant labor, the reproduction of that good requires neither labor nor capital.

Yet, these goods are clearly beneficial for society. Information goods are the backbone of an intellectually-enriched and productive society. How do we make information goods worthwhile to produce?

Various mechanisms exist at multiple levels in the abstraction hierarchy.

Social institutions, or social systems designed to regulate other social systems, include IP Law. IP Law grants artificial monopolies. Not only does it fail to prevent piracy, but it introduces multiple dynamics that actually undermine the goals of well-functioning information economy.

DRM also exists as a solution. It is costly, it fails often, and, while it is meant to protect the producer & distributor, its lack of effectiveness is clear when we observe that the producer must continually succeed in ensuring DRM success, while the opponent - a consumer trying to break the DRM - need only do so once in order to permanently decouple the good from its digital safe and circulate it freely. I.e., the cost of success for the producer is higher than it is for their DRM-breaking opponents and the cost of failure is higher as well.

DRM exists at the technological level. IP Law exists at the social institution level. What other protection mechanisms are there? How do producers make their copies better than other copies? They can try to prevent copies. They can ensure that the copies are "shallow" copies and less valuable, etc.

This second approach is interesting. What does it mean to distinguish between a copy and a shallow copy. This analogy is taken from software. When a composite data structure is shallow-copied, the values of the data structure are copied but the referenced data structures are not (only the references themselves are copied).

This introduces the notion of a context. If, for example, the referenced data structures had a policy wherein a reference is only valid if it comes from the original object (perhaps through pre-authorized referrers), then the references of the shallow copy would become meaningless. I.e., you can copy the data but you can't copy its context, and the usefulness of the data is not intrinsic, rather it emerges from the existence of the data within a context.

This is exactly why blockchain-based tokens work. The data in a public, permissionless chain is copy-able. Its context is not. The data is not useful on its own. It is useful in the context of the network. Perhaps we could just copy the network...This is not so easy, because the network also exists within a context - a social context - which acknowledges one network as valid and another as invalid... Such is the power of network effects.

A context is implemented with a history. We cannot behave as if conflicting versions of the same history are true. We need a system of record. A system of record merely provides a canonical history of state changes for some stateful system. The system of record provides a context for future state changes. We provide a context to the system of record, imbuing the data contained in these records with a semantics. 

→ = "provides context for" 

Social system → system of record → data

A copy of the system of record might hold the same data, but it is just a shallow copy.

A context about a digital good includes its history; its origin. The very act of copying and distributing changes the context of that instance of the good.

This doesn't always matter. Copying the contents of a book as opposed to purchasing a copy doesn't do much for me if I only care about the current contents.

One common pattern for making it valuable to purchase as opposed to copy, though, is by making the context more valuable.

Perhaps the book is an e-book with regular updates. It is easier to merely subscribe to these updates via making a purchase rather than attempting to make a copy of these updates every time. The benefit of the purchase is the benefit of decreased transaction & opportunity costs in the future.

Basically, incentivizing payment for information goods (public goods) is typically done by transforming them to virtual goods (private or club goods) by providing some other benefit to the purchaser besides simply access to the content. One must take care to ensure that these additional benefits are actually valuable to a person whose interest is in the information alone and its value. It is also worth noting that information goods are highly durable. It is unlikely a copy will become corrupt or decay,  and it is easy to create back-ups of data. Therefore, the benefits must be continuous. This doesn't stop someone from distributing their copy to others for free. But if the incentives to purchase are powerful, others may opt in as well even though the free copy is available. This type of pattern typically exists at the social level and rewards a purchase with a club good that's cheap for the producer to create. The club good is excludable (only those who purchase can access) but non-rivalrous (more users does not decrease the ability of other club members to use it). This is necessary in order to scale; if the reward for purchase were a rivalrous good then more purchases would eventually destroy the incentives for further purchases.

Another pattern is to create a good that facilitates value creation for consumers (i.e., a higher-order good) and then control their access. This is common in web 2 and is the basis for SaaS products. The information produced by the good is not the only valuable deliverable; it is the capability of further information. Often, this information is personalized, and therefore not equally valuable to all potential users of the higher order good. 

A platform such as a social networking application combines these two patterns.

Another significant pattern we observe is the coupling of the information good with the medium in which it is stored. Physical book publishing, especially before the ubiquity of the web, does this. To copy the information requires a copying of the medium, which is meant to be so difficult or costly that it is simply not rational to make unauthorized copies. This is what DRM seems to do, except it has one large difference: DRM-protected content may be harder to copy since it requires some sort of circumvention, but it need only happen once. Subsequent copies are easy. With physical books, this is not the case; copies don't become easier to make as you make more of them.

The question becomes: how do we encourage the production and collaborative production of digital goods without sacrificing crucial, valuable goals?

Those other goals are:

Keeping credit portable (open source is better than proprietary in this sense; my contributions to a project are more visible and easily verifiable. I can carry my credit and subsequent reputation with me even when I move on).

Refraining from encouraging sub-optimal behavior such as rent-seeking, gridlock, free-riding

Make knowledge sharing and creation a positive sum game (make piracy productive for the creator)

Make digital goods first class citizens

This is the purpose of Pictosis. The web 3 is said to be the "stateful web". Yet, NFTs and other tokenized representations fall short of enabling a truly stateful, digital economy. As use cases for native digital goods are discovered and further sought after, new NFT standards and new blockchain networks continually emerge. Yet, there are many instances where such digital goods are unrecognizable from each other. If I wanted to create a store front on the web 3, wherein i sell various digital goods, it would be entirely necessary to support a variety of different standards, chains, and the nuances therein. Contrast this with a physical shop in which the capability and properties of the physical good do not prevent it from sitting on a shelf; any physical good - so long as is beneath size limit - can be placed on display for buyers. I can easily buy a product off the shelf and bring it to my own shop, or ship it by mail, or use it to as a component to a larger product I'm building.

Digital goods aren't as flexible. We have space and we have transportation, yet we unnecessarily constrain the types of objects that can occupy that space.

Web 3 might be closer to statefulness in that we have these publicly accessible databases we can all access, but it is still stateless: it is stateless on the application level (dApps).

It's time to rethink interfaces. Dapps are interfaces to supposed digital goods. Without the dapp, the digital good is useless. The web 3 should be nothing more than shelf space filled with sophisticated digital goods. Filling the web 3 with dapps is allocating a portion of shelf space to one type of product without the ability to switch it out for a different product in the future.

We need better digital products. We therefore need better digital production infrastructure. Blockchain and decentralized, accessible databases (the stateful web) is one ingredient.

Pictosis offers a solution here. We are building the digital production infrastructure and we are shipping it with a suite of new digital products.

Web 1, powered by hyperlinks & tcp/ip, was decentralized, but it was stateless in that "state" was merely an abstraction derived from transient communications. Web 2 was stateless, but it provided a more convincing illusion of statefulness through increased centralization and rudimentary identity protocols. Web 3 is decentralized and truly stateful in that the state is durable. With durable state, we have the opportunity to create durable goods because we can create truly digital accounting systems; systems of records. We have the opportunity to therefore use this foundation of a stateful web to enable economic activity with feedback processes. But durable state is just the shelf space. We need an infrastructure for production systems so that we can fill those shelves with valuable objects. We need digitally native supply chains, and these are the web 3 equivalent of "hyperlinks".

What is a supply chain for native digital goods? Something goes into the production of creative deliverables. Not pure labor, nor capital necessarily. But the output of one creative endeavor is indeed the input of further endeavors. Just like traditional production, each step in the production process produces an output, which serves as the input for a subsequent production process until the final product - a consumer good - is sold. Upstream production processes don't succeed, and fade from existence, if downstream production halts. This is because production flows downstream, but revenue/value flows upstream ultimately because the consumer good is valued by some market participants.

The supply chain is, then: Attribution Value Chain (AVC).

The foundational layer of Pictosis is the AVC protocol. It enables digital goods to live anywhere, on any server, secured by any blockchain.

The AVC is the system of record for all digital production.

In essence, it is a graph, where any path in the graph is a particular digital production chain, identifying the canonical instance of a digital good. This canonical instance is discrete from the perspective of the chain, but internally is highly dynamic. It has the ability to detect its own usage and context as well as copies of itself and the state of those copies. Any modifications are merely derivatives, and are realized in the AVC network as a descendant of the canonical copy. Not only are derivative goods descendants, but so are related goods borne out of some interaction with the canonical good. 

Of course, higher order systems emerge from digital goods. Production processes increase in sophistication, communities form, new ideas are generated. This is all captured by the canonical good. Each node in the AVC network is therefore not just data + metadata. It is programmable and evolvable. Policies can be added. Policies flow downstream to all derivative works, enabling one to implement institutions, governance, and economic rules.. This is clear if we observe that any node in the AVC has multiple paths, and each node in this path may form peer relationships with other goods. These relationships are always directed, as some good is always either an input to the creation of some other good or a "final" good (it is consumed directly). The consumption process is the use of the good; the reading or sharing of a book for example. A canonical copy can detect this usage, and signals about the usage of a good propagate upstream. Once again, this is analogous to traditional production processes and supply chains.

                                                                             ← ← ← ←Signals ←

Digital Good 1 → Digital Good 2 (derivative work) → Digital Good 3 (information good)→ Policies → → → →

A digital good is similar to an NFT in that it implicitly provides provenance; its existence is has a token-like property in that tokens are fundamentally representations of value. Said another way, tokens are implicitly claims of the owner about the object that the token represents. The token is simply data, but the social context imbues such a token with a semantics of the above form. An implicit claim that a token makes is one of origin and authenticity. This is borne of a system of record we all adopt. We tend to avoid adopting a system of record if it is not reliable. This is why distributed ledgers make good systems of record.

But a digital good is more than an NFT in that it is not merely a static representation about the rights of an owner and the asset. It is a dynamic representation of the digital good's current state across the web, its copies, its policies, its relationships, and its impact. As such, it is the canonical system of record for the metaverse. It contains everything a client needs to interact with said good or the systems in which it is a part. It also ensures that such an interaction is compliant with the digital policies and claims embedded within the good. The dynamic nature of the representation is a result of the signals flowing through the AVC network, hitting each node as signals propagate upstream. A node's policies can make use of these signals by reacting accordingly. This enables the creation of decentralized, dynamic stateful systems. It also enables the construction of various economic systems, realized in the AVC network as subgraphs that are compliant with policies (rules and semantics) defined by each node for all of its descendants. We call these nodes - or digital goods - Non-Fungible Systems (NFS)

Pictosis builds upon this protocol with the creation of the Pictosis platform. Again, a platform is merely a new subgraph within the network. Pictosis platform utilizes NFS's to define a set of top level policies for all content created within the network. It also defines a semantics over the signals, by using the various signals as input to an impact calculation process. Once the impact for a particular content or good is calculated, it is used to allocate a particular portion of PICTO tokens to that good. The good may be complex, with many different contributors or various user-types. It is the responsibility of the creator and contributors to define policies within the good that distributes the awarded PICTO accordingly as revenue.

Pictosis platform will launch with a few different services or applications. The most significant one at this time is the first Web 3 Publishing House. This publishing house will enable new models of authorship, distribution, and attribution.

At this time, the publishing house is set to publish:

1. All translations (> 10 right now) of Token Economy by Shermin Voshmgir

2. Economics and Math of DeFi & Token Engineering by Lisa JY Tan (the first textbook on DeFi)

3. The Hitchhiker's Guide to Token Engineering (a p2p-authored book by the Token Engineering community, coordinated by Sebnem and created in conjunction with Commons Stack & the Token Engineering Commons)

We are also in discussions with other projects and researchers to enable the publication of:

Multi-media, semi-structured content such as "smart ebooks" and digital courses

Music, albums, etc

Videos

Academic Research & entire journals

Summary of Problematic Property Junto

Digital goods are either information goods or virtual goods. The former are considered public goods in so far that they are non rival and non excludable. The latter typically are club goods or private goods.

Information goods are valuable for the information they contain e.g., a book.

Virtual goods are valuable for the function they perform e.g., a software package.

Both can be pirated and are pirated.

This is because, while the production of such a good requires, at the least, significant labor, the reproduction of that good requires neither labor nor capital.

Yet, these goods are clearly beneficial for society. Information goods are the backbone of an intellectually-enriched and productive society. How do we make information goods worthwhile to produce?

Various mechanisms exist at multiple levels in the abstraction hierarchy.

Social institutions, or social systems designed to regulate other social systems, include IP Law. IP Law grants artificial monopolies. Not only does it fail to prevent piracy, but it introduces multiple dynamics that actually undermine the goals of well-functioning information economy.

DRM also exists as a solution. It is costly, it fails often, and, while it is meant to protect the producer & distributor, its lack of effectiveness is clear when we observe that the producer must continually succeed in ensuring DRM success, while the opponent - a consumer trying to break the DRM - need only do so once in order to permanently decouple the good from its digital safe and circulate it freely. I.e., the cost of success for the producer is higher than it is for their DRM-breaking opponents and the cost of failure is higher as well.

DRM exists at the technological level. IP Law exists at the social institution level. What other protection mechanisms are there? How do producers make their copies better than other copies? They can try to prevent copies. They can ensure that the copies are "shallow" copies and less valuable, etc.

This second approach is interesting. What does it mean to distinguish between a copy and a shallow copy. This analogy is taken from software. When a composite data structure is shallow-copied, the values of the data structure are copied but the referenced data structures are not (only the references themselves are copied).

This introduces the notion of a context. If, for example, the referenced data structures had a policy wherein a reference is only valid if it comes from the original object (perhaps through pre-authorized referrers), then the references of the shallow copy would become meaningless. I.e., you can copy the data but you can't copy its context, and the usefulness of the data is not intrinsic, rather it emerges from the existence of the data within a context.

This is exactly why blockchain-based tokens work. The data in a public, permissionless chain is copy-able. Its context is not. The data is not useful on its own. It is useful in the context of the network. Perhaps we could just copy the network...This is not so easy, because the network also exists within a context - a social context - which acknowledges one network as valid and another as invalid... Such is the power of network effects.

A context is implemented with a history. We cannot behave as if conflicting versions of the same history are true. We need a system of record. A system of record merely provides a canonical history of state changes for some stateful system. The system of record provides a context for future state changes. We provide a context to the system of record, imbuing the data contained in these records with a semantics. 

→ = "provides context for" 

Social system → system of record → data

A copy of the system of record might hold the same data, but it is just a shallow copy.

A context about a digital good includes its history; its origin. The very act of copying and distributing changes the context of that instance of the good.

This doesn't always matter. Copying the contents of a book as opposed to purchasing a copy doesn't do much for me if I only care about the current contents.

One common pattern for making it valuable to purchase as opposed to copy, though, is by making the context more valuable.

Perhaps the book is an e-book with regular updates. It is easier to merely subscribe to these updates via making a purchase rather than attempting to make a copy of these updates every time. The benefit of the purchase is the benefit of decreased transaction & opportunity costs in the future.

Basically, incentivizing payment for information goods (public goods) is typically done by transforming them to virtual goods (private or club goods) by providing some other benefit to the purchaser besides simply access to the content. One must take care to ensure that these additional benefits are actually valuable to a person whose interest is in the information alone and its value. It is also worth noting that information goods are highly durable. It is unlikely a copy will become corrupt or decay,  and it is easy to create back-ups of data. Therefore, the benefits must be continuous. This doesn't stop someone from distributing their copy to others for free. But if the incentives to purchase are powerful, others may opt in as well even though the free copy is available. This type of pattern typically exists at the social level and rewards a purchase with a club good that's cheap for the producer to create. The club good is excludable (only those who purchase can access) but non-rivalrous (more users does not decrease the ability of other club members to use it). This is necessary in order to scale; if the reward for purchase were a rivalrous good then more purchases would eventually destroy the incentives for further purchases.

Another pattern is to create a good that facilitates value creation for consumers (i.e., a higher-order good) and then control their access. This is common in web 2 and is the basis for SaaS products. The information produced by the good is not the only valuable deliverable; it is the capability of further information. Often, this information is personalized, and therefore not equally valuable to all potential users of the higher order good. 

A platform such as a social networking application combines these two patterns.

Another significant pattern we observe is the coupling of the information good with the medium in which it is stored. Physical book publishing, especially before the ubiquity of the web, does this. To copy the information requires a copying of the medium, which is meant to be so difficult or costly that it is simply not rational to make unauthorized copies. This is what DRM seems to do, except it has one large difference: DRM-protected content may be harder to copy since it requires some sort of circumvention, but it need only happen once. Subsequent copies are easy. With physical books, this is not the case; copies don't become easier to make as you make more of them.

The question becomes: how do we encourage the production and collaborative production of digital goods without sacrificing crucial, valuable goals?

Those other goals are:

Keeping credit portable (open source is better than proprietary in this sense; my contributions to a project are more visible and easily verifiable. I can carry my credit and subsequent reputation with me even when I move on).

Refraining from encouraging sub-optimal behavior such as rent-seeking, gridlock, free-riding

Make knowledge sharing and creation a positive sum game (make piracy productive for the creator)

Make digital goods first class citizens

This is the purpose of Pictosis. The web 3 is said to be the "stateful web". Yet, NFTs and other tokenized representations fall short of enabling a truly stateful, digital economy. As use cases for native digital goods are discovered and further sought after, new NFT standards and new blockchain networks continually emerge. Yet, there are many instances where such digital goods are unrecognizable from each other. If I wanted to create a store front on the web 3, wherein i sell various digital goods, it would be entirely necessary to support a variety of different standards, chains, and the nuances therein. Contrast this with a physical shop in which the capability and properties of the physical good do not prevent it from sitting on a shelf; any physical good - so long as is beneath size limit - can be placed on display for buyers. I can easily buy a product off the shelf and bring it to my own shop, or ship it by mail, or use it to as a component to a larger product I'm building.

Digital goods aren't as flexible. We have space and we have transportation, yet we unnecessarily constrain the types of objects that can occupy that space.

Web 3 might be closer to statefulness in that we have these publicly accessible databases we can all access, but it is still stateless: it is stateless on the application level (dApps).

It's time to rethink interfaces. Dapps are interfaces to supposed digital goods. Without the dapp, the digital good is useless. The web 3 should be nothing more than shelf space filled with sophisticated digital goods. Filling the web 3 with dapps is allocating a portion of shelf space to one type of product without the ability to switch it out for a different product in the future.

We need better digital products. We therefore need better digital production infrastructure. Blockchain and decentralized, accessible databases (the stateful web) is one ingredient.

Pictosis offers a solution here. We are building the digital production infrastructure and we are shipping it with a suite of new digital products.

Web 1, powered by hyperlinks & tcp/ip, was decentralized, but it was stateless in that "state" was merely an abstraction derived from transient communications. Web 2 was stateless, but it provided a more convincing illusion of statefulness through increased centralization and rudimentary identity protocols. Web 3 is decentralized and truly stateful in that the state is durable. With durable state, we have the opportunity to create durable goods because we can create truly digital accounting systems; systems of records. We have the opportunity to therefore use this foundation of a stateful web to enable economic activity with feedback processes. But durable state is just the shelf space. We need an infrastructure for production systems so that we can fill those shelves with valuable objects. We need digitally native supply chains, and these are the web 3 equivalent of "hyperlinks".

What is a supply chain for native digital goods? Something goes into the production of creative deliverables. Not pure labor, nor capital necessarily. But the output of one creative endeavor is indeed the input of further endeavors. Just like traditional production, each step in the production process produces an output, which serves as the input for a subsequent production process until the final product - a consumer good - is sold. Upstream production processes don't succeed, and fade from existence, if downstream production halts. This is because production flows downstream, but revenue/value flows upstream ultimately because the consumer good is valued by some market participants.

The supply chain is, then: Attribution Value Chain (AVC).

The foundational layer of Pictosis is the AVC protocol. It enables digital goods to live anywhere, on any server, secured by any blockchain.

The AVC is the system of record for all digital production.

In essence, it is a graph, where any path in the graph is a particular digital production chain, identifying the canonical instance of a digital good. This canonical instance is discrete from the perspective of the chain, but internally is highly dynamic. It has the ability to detect its own usage and context as well as copies of itself and the state of those copies. Any modifications are merely derivatives, and are realized in the AVC network as a descendant of the canonical copy. Not only are derivative goods descendants, but so are related goods borne out of some interaction with the canonical good. 

Of course, higher order systems emerge from digital goods. Production processes increase in sophistication, communities form, new ideas are generated. This is all captured by the canonical good. Each node in the AVC network is therefore not just data + metadata. It is programmable and evolvable. Policies can be added. Policies flow downstream to all derivative works, enabling one to implement institutions, governance, and economic rules.. This is clear if we observe that any node in the AVC has multiple paths, and each node in this path may form peer relationships with other goods. These relationships are always directed, as some good is always either an input to the creation of some other good or a "final" good (it is consumed directly). The consumption process is the use of the good; the reading or sharing of a book for example. A canonical copy can detect this usage, and signals about the usage of a good propagate upstream. Once again, this is analogous to traditional production processes and supply chains.

                                                                             ← ← ← ←Signals ←

Digital Good 1 → Digital Good 2 (derivative work) → Digital Good 3 (information good)→ Policies → → → →

A digital good is similar to an NFT in that it implicitly provides provenance; its existence is has a token-like property in that tokens are fundamentally representations of value. Said another way, tokens are implicitly claims of the owner about the object that the token represents. The token is simply data, but the social context imbues such a token with a semantics of the above form. An implicit claim that a token makes is one of origin and authenticity. This is borne of a system of record we all adopt. We tend to avoid adopting a system of record if it is not reliable. This is why distributed ledgers make good systems of record.

But a digital good is more than an NFT in that it is not merely a static representation about the rights of an owner and the asset. It is a dynamic representation of the digital good's current state across the web, its copies, its policies, its relationships, and its impact. As such, it is the canonical system of record for the metaverse. It contains everything a client needs to interact with said good or the systems in which it is a part. It also ensures that such an interaction is compliant with the digital policies and claims embedded within the good. The dynamic nature of the representation is a result of the signals flowing through the AVC network, hitting each node as signals propagate upstream. A node's policies can make use of these signals by reacting accordingly. This enables the creation of decentralized, dynamic stateful systems. It also enables the construction of various economic systems, realized in the AVC network as subgraphs that are compliant with policies (rules and semantics) defined by each node for all of its descendants. We call these nodes - or digital goods - Non-Fungible Systems (NFS)

Pictosis builds upon this protocol with the creation of the Pictosis platform. Again, a platform is merely a new subgraph within the network. Pictosis platform utilizes NFS's to define a set of top level policies for all content created within the network. It also defines a semantics over the signals, by using the various signals as input to an impact calculation process. Once the impact for a particular content or good is calculated, it is used to allocate a particular portion of PICTO tokens to that good. The good may be complex, with many different contributors or various user-types. It is the responsibility of the creator and contributors to define policies within the good that distributes the awarded PICTO accordingly as revenue.

Pictosis platform will launch with a few different services or applications. The most significant one at this time is the first Web 3 Publishing House. This publishing house will enable new models of authorship, distribution, and attribution.

At this time, the publishing house is set to publish:

1. All translations (> 10 right now) of Token Economy by Shermin Voshmgir

2. Economics and Math of DeFi & Token Engineering by Lisa JY Tan (the first textbook on DeFi)

3. The Hitchhiker's Guide to Token Engineering (a p2p-authored book by the Token Engineering community, coordinated by Sebnem and created in conjunction with Commons Stack & the Token Engineering Commons)

We are also in discussions with other projects and researchers to enable the publication of:

Multi-media, semi-structured content such as "smart ebooks" and digital courses

Music, albums, etc

Videos

Academic Research & entire journals