Grown up applications of the social network - not just your teenagers web page

Ultimately this system of social network nirvana I described can be used for extremely powerful non-social applications. An example would be to create a global trust network which would be the basis of a person to person credit system and cashless transactions and loans.

Yes folks, its a dirty secret that banking and credit systems exist purely because of the notion that people lack the information to trust each other with any reliability and therefore must rely on agents like banks and credit card companies to centralize trust. The "credit card tax" you pay of 50 cents plus several percent whenever you purchase something is a direct consequence of that. Now I know you are saying "but I always pay cash" or "but the merchant pays that" but the basic fact is all those merchant fees add up and to maintain the level of profit they need to stay in business merchants have to increase their prices. That's because they are not allowed to charge a different price for credit cards - a nice deal that those credit companies must have helped get pushed through state and federal laws.

Yes, there are small companies and person to person transactions where you can negotiate a low price for cash, but my experience is in most "developed" countries you don't - its not even an option in all those hundreds of billions of dollars of online trade.

So this credit knowledge makes credit card companies and banks the hub of all human economic activity - taking a several percent slice of the pie with it (not to mention the interest and fees they get). Companies like Visa transact tens of trillions of dollars of business each year with just a few thousand employees and cream off that percentage each time, just think about it...

But, if we decentralize trust information then we can enable anyone to figure out how much they trust anyone else and arrange person to person credit terms for transactions - either directly or by an efficient transaction by transaction contract with a third party who guarantees the payment based on the trust parameters. Using a third party is an indication that this can be the basis of person to person transaction without any cash changing hands between the two parties, but only by indirect connections. That is A wants to buy from C and they don't know each other but both know and trust a mutual connection B. A gets B promise to pay C and B vouches to pay A so they can do a deal. A will have to pay B and B will have to pay C. This system can expand to include with arbitrarily complex connections between two parties eg. A buys from Z via B, C, D, E, F, etc. It is something that is already being implemented by the Ripple Project, but the one thing we don't need is yet another network that all users have to join - their trustworthiness should be just another facet of their own social network so that Ripple and other systems an easily be implemented on top of existing technology - Ripple is an financially based social network application.

If you don't believe that such things are possible just ask yourself what money really is? If you haven't already studied economics then you may not have realized that even paper money is just an IOU from a bank and that transactions between people are just exchanges of IOUs. All those IOUs ultimately come from governments, so why is it only governments that get to issue IOUs? Why couldn't individual people do it? Well that's exactly what others are starting to realize - see "Money as IOUs in Social Trust Networks & A Proposal for a Decentralized Currency Network Protocol".

Given the current financial woes of this country caused by failures in current systems where entities (lenders and creditors) really screwed up their trust calculations, and a few individuals managed to make bad decisions that really diluted the trust worthiness of this country (hence the huge slide of the dollar) that end up effecting everyone. Hopefully anyone should see that there really is no need to centralize all these decisions an create huge points of failure and gives light to a system where unilateral decisions by government and its institutions will have much less impact on the financial lives of individuals, and the cost of payments and transactions between them will be far lower. This is exactly what is described in the paper "Payment as a Routing Problem".

And that is just one example of how a social networking system could be utilized, the real list is endless...