Impacts of open-sourcing designs
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In the previous chapter we presented a few examples of autonomous organisations and outlined reasons why it would make sense for them to open-source the work they do.
Let’s take a brief look at what impact large scale open sourcing can have on the world around.
Impacts of Open Sourcing Designs
So what will this open sourcing designs mean and how will it work?
Shrinking Gross Domestic Product with Increasing Utility
Once Schrödinger Funds start producing open-sourced designs for products, the need for money is reduced. One can download a free design and self-produce or have it nearby produced at a fraction of cost what products used to cost.
The same thing has happened in software. Most people use open source without paying and its mostly companies with mission critical needs that opt to pay for support. Open source companies gain income also via training and in some instances by writing specialised customisation or supporting older versions.
Increasingly also people use cloud computing where most services are based on open source code but wrapped behind vendor specific interfaces . The payment on cloud mostly covers the hardware use (computing, storage) and profit with a minor slice for staff supporting the software used. This has greatly reduced costs and lowered barriers of entry for software-heavy (if there is such a word…) services and products.
In software the monetisation (what provider gets paid) is about 90% less than it is for closed source companies. Same will happen in digital designs and over time most if not all products and services will be digitalised.
Opening designs has many benefits:
The speed of improvement is greatly enhanced. Everyone can see how products are designed. Good ideas spread fast. Different product categories can loan best practices from each other.
Different user groups can get products that are tailored just to their needs. It’s possible to take a readymade design and self-change it or pay someone to make needed modifications. Products match better user needs and the same underlying design is reused (recycled) multiple times saving effort. New user groups like people with disabilities or just preferences get served as the cost for doing this is lowered.
Economics of scale lead to savings – i.e., even for customers who opt to pay for support, the total cost is much lower. As said in software the cost is about 1/10 of what commercial software vendors used to charge. That’s because most bugs get detected and reported by the community. They even get corrected often by the community before the development teams notices them.
There is more customer value generated but it has less monetary value. Gross Domestic Product is measured in terms of money and it dos not record this change. When more and more product designs are free, it seems GDP goes down even when people are “richer” than before.
When products no longer need to be bought with money, there still is role for money. Physical property like land, houses, roads, bridges, factories, airports do not easily lend themselves to digitalisation and will remain in the fiat currency universe.
Taxes
In Finland when two middle income people do a transaction between themselves, the society takes a 75% commission in the middle (you pay to their employer who pays VAT plus employee’s salary, and from the salary employer pays taxes and both employer and employee pay various insurance and other tax like charges). This is called the tax wedge. The worker is left with a quarter what the customer paid. (A different way to calculate the tax wedge is to consider only the salary part, excluding the VAT part. In that case the society’s rake in Finland is 54%, VAT in Finland is 24%).
Tax wedge means that for the transaction to make sense, the difference in productivity needs to be three times larger than doing it self. That’s why Finland is a self-service society where people wash their cars, do house renovations themselves and eating out is not a common habit.
With open source there is no charge and no taxes collected either. This reduction in taxes creates an organic motivation for public side to increase performance through automation, a topic for the next big sequence of posts.
The productivity difference can likewise be much lower. Rather then planning and designing something myself, it makes sense to spend time searching for ready-made designs that I can use for free. The cost is in the time to find it, this represents an opportunity costs - what worthwhile I could have done instead with that time. But people are notoriously bad at estimating opportunity costs.
Open-source designs make you (almost) invulnerable
Taxes may be on the firing line but governments of small and medium size countries must still love open-source designs.
Powerful technology and key raw material producers are increasingly using the essential assets as extortion tools and weapons in the ongoing trade skirmishes and global power struggle. For example by ordering their industries not to sell certain products or key raw materials to specific company or country in order to blackmail weaker parties to accept their will. In future (or perhaps already today) forcing companies produce software upgrades and physical products with eavesdropping capabilities or in more active phases render software un-operational.
Small countries and their citizens in particular run the risk of being collateral damage.
Contrast this to open designs that anyone can use, evaluate and fix flaws. This sets you free.
When designs and production are decentralised and done with local raw materials (more on this later), small countries and people therein can continue their lives and let the larger entities bruise each other as much as it pleases them. Turning pain into a distant spectator sport.
Thus, open sourcing tools of production and key software items is at the center of national defence policies in every small to midsize country for the foreseeable future.
Work Outlives Corporations
Inside large companies during seasonal backstabbing festivals large amounts of internal innovation activities and projects get shelved. Seldom can they continue outside. The dynamics of office politics works so that if a canned project suddenly makes it big outside, this looks bad for the manager who made the decision to shut it down but if it rots away in the cabinet, this proves that the decision was sound and just. Hence, managers are reluctant to let fired employees continue with projects that they shut down.
An additional benefit of open-sourced designs is that it empowers people to continue working on topics that they care about. Also when they continue their work with current employer.
Modular Branding
Traditional brands need to guard jealously their brand and hate sub-brands diluting the one and only true brand. When designs are open sourced, the design space changes – it is broader because derivate designs can well have derivate brand as long as the “look-and-feel” of the original brand is kept intact to a degree that it is recognisable. I.e. the design space is broader but still constrained as some common elements need to maintained.
Open-source design calls for modular brands. For example, how would you design a hotel or rental car brand with one global identity while allowing to tailor it to local traditions I.e., Italian variant with local colours and look while keeping enough of original to make it immediately recognisable. Best modular designs can have multiple levels so the people in Milano can take the Italian version and make it Milanese while retaining both Italian and original elements.
In history designers doing heraldic elements had same problem when city states joined through force or marriage: make a combined herald incorporated all of the parts. Those days are bygone (never were in Finland), so some different modern design language is needed to allow for modular global→regional→local→personal branding.
Protecting the Designs
And now we interrupt the flow of happy thoughts for the following important messages from the department of depressions.
Open-source assets (software, product designs) accept proposed changes from anyone. Not everyone has the best interest of the community in their mind. Malicious actors may try to make modifications into existing designs to undermine the usability or to cause harm. This for financial or political gain. Either paid by an adversary or sometimes because incentives are not well thought of (like someone introducing faults via proxy and later collecting bugs bounty rewards for discovering them)
For any open-source effort, it is important to protect the design and distribution processes.
A natural approach is that first the original designers become maintainers who approve all proposed changes. They have most vested interests in keeping the results in good shape. Later they can add more people as trusted maintainers creating a chain of trust.
Second defence is transparency. All proposals, identified problems and modifications are public as well online discussion about them. This openness allows anyone to analyse what is happening with a repository and to at least in retrospect detect if someone is consistently proposing vulnerable changes. They are likely to do so with other projects as well. This is a typical issue that automated categorisation algorithms can surface (i.e. these users have been revealed to be malicious, find me all other users who look like them based on any characteristics).
And if someone is not happy with direction or decisions to include some changes, they can always fork (copy) the current design and start maintaining or developing it into a new direction meeting their preferences and needs.
Even when all changes are good, the results can become corrected in the repository used for distribution. Maintainers have access to upgrade results and the account of some of them can be broken into allowing an external party makes the changes. To prevent it, the maintainers sign every change they have merged to the design with their private keys. The entire tree of changes from the origin can then be verified by anyone to ensure that every change or upgrade is valid. Naturally these keys used to sign could also be stolen, so they do not carry absolute verification, but at least perpetrators have to work for their money.
On software side the code can be built by multiple developers and the resulting binary compared. Every build process from same sources should produce identical result. If not, the reason is dug up and fixed. Once a build is ready, it is signed by developers to show that the tool chain was intact.
For physical designs simulations are essential to ensure structural integrity.
Even when every bit in development chain (accept change, distribute correctly) is intact, designs can have bugs, and these mistakes can have major impact. Thus, it is important to have permanent bugs bounty for finding flaws. Essentially rewarding people for successfully detecting weak spots.
This may sound a lot of work and it is. You may prefer to just trust that people are trustworthy or at least someone else has made sure there is nothing lurking inside.
Digital extreme sport of a kind for the selected few.
Bugs Bounties and Hack-In Labs
Errors creep in also because no one is perfect and even the best designs and software contain faults whether in products or in the documentation. To help find and fix these things it makes sense to offer recognition and reward for teams or individuals that reporting errors. This is especially important related to security vulnerabilities. These publicly offered reward programs are called “bugs bounties”.
Virus and malware software also contains bugs. Bugs Bounty programs can turn the tables around and compensate for finding security flaws in viruses or web sites used in control and command for malware. These errors can be used to access compromised machines and remove malware installed (i.e., reverting changes).
Or access to their servers could be used to study malware organisations. Who they are, how they work, who funds them or are they self-employed? Turning on their cameras on malware operations centres and observing evil henchmen/women in their natural habitat.
For corporates hack-in-labs is a concept where they allocate a set sum or small percentage of revenue to perform constant attacks and testing on their securotu practices.
Its role is to protect its funding partners by
Continuous physical testing – for example by trying to enter buildings as a service technician without proper authorisation etc.
Continuous attacks via digital channels (phishing etc.)
Gathering and sharing information on successfully penetration mechanisms.
Collecting information from members on security incidents by someone else and recommending actions to mitigate and prevent in future.
Publishing analysis reports of incidents to improve the general knowledge in related industries
Improving status of open-source software and open designs by continuous security testing.
Hack-in-labs can also produce general reports telling which governments or organisations in certain countries are most active in this type of activates and what areas they are most interested in and how their interest is currently evolving (i.e., what areas they see as important usually indication their greatest weaknesses).
In open-source domain, the hack in labs fund various hackathons and research activities trying to find security holes in the modules and tools that the partners use. It also tests continuously the state of the software communities by trying to commit vulnerable additions to packages to see if they get detected. It can produce and publish reports ranking the security reputation of different popular software ecosystems.
Staking
The beauty of email postings is that you always forget something when you push that all important “Publish” button. Last week it was one additional example for decentralised organisations. So here is it is.
The inexhaustible treasures variant of the Schrödinger Fund uses compound interest to fund operations. This is a slow starting way to get going.
Sometimes it’s little cousin can also make sense.
Staking is the term used in the web3 world to mean a system where you lock some of your funds into a smart contract and start earning a percentage-reward over time. The project where you stake your funds uses them in some form or fashion to earn and gives you a cut of the rewards.
In previous examples the funds were used to create something that requires larger investment (like designing a product and then open-sourcing it).
But the service being created could equally well be some real-world utility that is given to the staker directly.
So we and up in a very simple concept:
Stake a set amount to be invested by project
Get a real world service for free as long as you need
Stop staking and get your money back when you no longer need the service
Examples of DAOs using staking for real-world utility:
For aid organisations: stake a given amount and profits are used to purchase real time stream of satellite imaginary from the affected area. This helps plan the rescue and aid operation. When situation stabilises, get your funds back. Use same funds in the next target.
Stake and we build carbon free electricity generation (nuclear, solar, geothermal etc.). You get rewards from selling the CO2 reductions on emissions markets
Stake and get food for free (say organic eggs or vegetables once a week or somewhat pricey dry-age stakes regularly)
Stake for free electricity, gas, water
Stake for entertainment - lift tickets in skiing center, movie tickets, gym tickets, eat at chain restaurants.
Stake and we pay (part of) your surtaxes
etc.
The central point in this approach is creating the right portfolio of investments that really brings profits and managing the costs.
The scalability of this approach may come into question at some point. It is must easier to invest a hundred thousand profitably with enough interest than a billion. There aren’t that many very lucrative billion-euro opportunities that no one has spotted yet.
Scalability issue can be at least partially tackled with compound interest. As the rate of return diminishes as the investment size grows, using compounding keeps growing the capital. This means that in proportion to the original invested sum, returns may well brings in enough money to keep the wheels running.
Nothing prevents governments applying the same principles. Collect taxes for 1-2 generations, invest and the following generations are exempt from this kind of fun exercise.
That’s all for now. Before jumping into the next big domain on public organisations, a short post on how to estimate value of contributions when money no longer works (assuming wildly that you bought into the open-sourcing destroys money claim).
Next: TechRank