Banking on one another: Can the crowd save itself from the banks?
January 26th, 2012 by Ville Miettinen
First they lend too much, cause a financial meltdown and need bailing out. Now they don’t lend enough (unless share-options and fat bonuses count as lending). As any former Wall St inhabitant, election-year politician or self-respecting Hollywood celebrity will tell you: banks are pure evil.
Personally, I quite like the banking system as a whole. Swiping a little plastic card in exchange for a pile of food is my favorite magic trick. Still, there’s no doubt the current system could be improved. And, you guessed it, crowdsourcing may be able to help, by offering an alternative way for people to borrow and lend money.
Models for (spare) change
A variety of crowd-based alternatives now provide ways for people to lend money to each other for profit, sidestepping the banks. As banks continue to clamp down on lending, these companies are seeing enormous growth.
The exchange begins with borrowers proposing an amount they want to borrow. Then, much like crowdfunding, lenders contribute to the loan until it reaches its goal and the borrower gets their money. Some companies like RateSetter automatically link lenders and borrowers by the rates they want. Others like Funding Circle, which specializes in funding for small businesses, allow lenders greater control.
Despite their growth, peer-to-peer (P2P) lending only accounts for around $270 million of lending in the US. Such a measly amount is nowhere near sufficient to meet demand caused by banks’ current unwillingness to lend.
The reasons for the small numbers (when did 270 million become a small number?) are numerous. There’s understandable reluctance from customers to manage their own lending. Crowdbanking (or maybe “distributed lending” anyone?) must also overcome unfriendly regulation, vested interests and an entrenched banking system that we still depend on even if it does go a little crazy now and then.
Law of the lever(age)
Ultimately, traditional banking has a key advantage over distributed lending: leverage. Because of its P2P model, the distributed lenders only lend as much money as their members put in. Corporations and banks can leverage capital to effectively create money out of thin air. Of course, this may be a good thing: the absence of leverage means P2P lenders can’t inflate themselves into oblivion and cause economic meltdowns.
So, are we on the cusp of a banking revolution, or is it just a flash in the pan? Assuming the hurdles mentioned above can be overcome, the question, I think, will come down to convenience and reliability. If P2P lending and borrowing is more economic than using a bank, and becomes as easy as bidding on eBay, why wouldn’t it catch on? With Google and Facebook already tinkering about with transaction services and even their own currencies, the stage is set for the shift in thinking that may enable this change. And we know that big things can happen when people tap the power of the crowd.
Of course, if it all collapses, we can always fall back on a system of barter. Which will be good for plumbers and carpenters, but not so good for us at Microtask (you try bartering microtasks in exchange for a cheeseburger at 1am).
Food52: a recipe for crowdsourcing success?
January 23rd, 2012 by Ville Miettinen
Take the following ingredients:
. Two award-winning cookery writers.
. One eager food-loving crowd.
. A sprinkling of game mechanics.
Mix them all together and what do get? Answer: Food52. Founded in 2009 by New York Times journalists Amanda Hesser and Merrill Stubbs, the site is described as a “social hub for people who love to cook”. As well as debating burning culinary questions (just how do you make a vegan omelet?), Food52 runs regular crowdsourced recipe contests. Members of the community submit their finest gourmet creations, which are tested and voted for by the crowd. Winning recipes are awarded prizes and eventually published.
Aside from the crowdsourcing element, what struck me most about Food52 is how good the site looks. Food-wise Amanda and Merrill may be “all about simplicity”, but there’s nothing homemade about their presentation. Winning crowdsourced recipes are accompanied by mouth-watering professional photos (warning: this is not a site for dieters). No doubt this acts as a participation incentive: “enter our contest and we’ll make your Grandma’s cookies look like something out of a glossy magazine”.
Food52: the secret’s in the (crowd)source
As they explain in this video, when it comes to crowdsourcing, Amanda and Merrill are practical, rather than idealistic: “it’s a great way to get lots of content but it’s completely useless unless you can curate and filter it”. This is a fair point, but I think too much top-down control can also disengage users. If every cupcake recipe is rigorously monitored and filtered, the Food52 community may (understandably) start to feel the site doesn’t “belong” to them.
Food52 clearly has big ambitions. This year the company began a (no doubt very lucrative) partnership with US health food giant Whole Foods. They have also just launched a Holiday Cookbook iPad app. It’s still early days but, for now, Food52 seems to have cornered the market in “cooking social”.
Confidence tricks: can crowdsourcing keep our feet on the ground?
January 18th, 2012 by Ville Miettinen
Charles Darwin once wrote that “ignorance more frequently begets confidence than does knowledge.”
Despite how far society has progressed since this was written, it seems as relevant now as it ever was. Whether it’s refusing to stop and ask for directions because we’re sure we know the right way (only to find ourselves lost in the wilderness), or setting the treadmill too fast and ending up in a spluttering heap on the gym floor, most of us can relate to its sentiment.
But misplaced confidence can go beyond slapstick, with devastating consequences. The Deepwater Horizon oil spill and the continued resistance to tackling climate change are arguably two such examples.
Don’t worry, I know what I’m doing
But what makes us overconfident in our judgments? And what keeps those with valuable knowledge in the background? Research from social psychologists Justin Kruger and David Dunning may explain why we get it wrong so often.
Their experiments revealed that people generally overestimate their ability in areas they understand poorly, and underestimate their ability where their understanding is good. This is known as the Dunning-Kruger Effect, and is one of many cognitive biases that affect us all.
Only the lonely
In a world where we’re told to think big and believe in ourselves, can we avoid becoming victims of our own accidental arrogance? The Dunning-Kruger Effect has one important limit: it only applies to individuals (except me, of course). This is where the crowd may offer a way to keep our feet on the ground.
Here at Microtask we’ve seen that by having multiple members of the crowd complete the same task we can achieve far better accuracy than by relying on individual judgment. But the potential of the crowd may take us much further.
Research into collective reasoning focuses on the concept of the wise crowd, a group which mixes experts and amateurs. In a wise crowd, laypeople are free to ask difficult questions and offer unorthodox solutions that experts may not consider. In turn, the experts are required to explain their observations and conclusions, and to be transparent in their reasoning.
United we stand
The power of the wise crowd depends on its diversity. By replacing the traditional team of experts, each with their own specialist area (like the one that produced the Deepwater Horizon risk assessment), with a wise crowd, it may be possible to sidestep the Dunning-Kruger Effect. Members of the crowd are encouraged to think for themselves and to be skeptical of bold claims. The crowd prioritizes clarity and results rather than blind confidence.
The crowd’s potential for new, better forms of reasoning raises exciting possibilities for the future, but how far could it go? Could crowd power show us the way to a more rational form of society? The Arab Spring has shown the power of the crowd to overthrow dictatorial regimes but so far most attempts at using crowdsourcing to design better alternatives have met with limited success (Iceland’s constitution being one of a few exceptions).
Despite such setbacks, as we learn to use crowdsourcing more effectively, I am certain that it will solve all the world’s problems caused by overconfidence. Absolutely, 100% certain.
Better shred than read: DARPA uses competitive crowdsourcing to revive destroyed documents
January 12th, 2012 by Ville Miettinen
As if things weren’t already hard enough for them, crooked bankers , deposed dictators and international super villains have one more thing to worry about. Having spent their last hours of freedom shredding incriminating evidence into neat strips, they might have thought they could get away with their misdeeds. It turns out however that those shredded documents might not be as unreadable as they thought.
Our old friends at DARPA (or the Defense Advanced Research Projects Agency if you have the time) decided that there might be something worth reading on those strips. They wanted to create software that could identify scanned strips and piece them together as quickly as possible.
Money to learn
DARPA’s annual budget is $3.2 billion. They could have hired a crack team of programmers without making a scratch on that figure. But even the best programmers in the world are only going to come up with one solution at a time. Knowing that crowdsourcing would provide a variety of possible solutions, DARPA decided to establish a crowdsourced competition.
With a first prize of $50,000 (much cheaper than hiring programmers) the “Shredder Challenge” had five challenges of increasing difficulty. In a clever bit of gamification, each document consisted of a puzzle that could only be solved when the document had been stitched back together. Entrants won the prize by being the first to submit all the correct puzzle answers.
“All your shreds are belong to U.S.” was the meme themed team that got their entries in ahead of everyone else and a full two days before the deadline. The team of only three San Francisco based programmers had just 35 days to complete the task. They spent 600 man-hours spent building the algorithms which made suggestions of shreds that might fit together.
Suspicious finds
DARPA claims they came up with the Shredder Challenge for soldiers to use in the battlefield (presumably for when they find that bunker full of shredded MapQuest directions to the W.M.Ds) and also uncover potential vulnerabilities in U.S. Government document disposal practices. Conspiracy theorists will surely claim it’s only a matter of time before the software is turned on us ordinary decent folk with nothing to hide (except maybe some irregular tax returns).
Should we throw out our shredders then? Well there is no news of a slump in shredder sales. The thing is, even if the software was cheap and freely available someone still has to get hold of the paper shreds, laboriously scan them all, then reassemble them after the software has worked its magic. You would have to have something pretty important in those shreds (pirate treasure maps?) for someone to go to all that trouble.
DARPA’s intentions seem pretty straight forward. In fact for a government agency tasked with “preventing and creating strategic surprise” they are very open about many of their projects. It’s difficult to make use of crowdsourcing without the crowd having some idea of what you are doing, which is great for the rest of us because every now and then we find out about a tantalizing DARPA project.
As we have seen before in this blog DARPA has certainly caught the crowdsourcing bug, and is well positioned to experiment with different crowdsourcing models. This is great for the industry as a whole. With DARPA blazing a crowdsourced trail, other organizations that were unsure about how to use crowdsourcing may find a DARPA method that suits their needs.
The Great War Archive: could crowd conscription help?
January 9th, 2012 by Ville Miettinen
At this time of year, it often seems like people in the media industry are still too full/hungover from Christmas and New Year’s over-indulgence to do any real work. Filling the newspapers are either stories remembering the year just ended, or nostalgic human-interest stories.
Seeing as we have already reflected on 2011, we decided it was a good time to talk about something that few, if anyone, will ever be able to remember again: the First World War (one of the last surviving veterans, Englishman Claude Choules, died recently, aged 110). So yes, this is our nostalgic post.
Of course, thanks to the wonders of the written word, thousands of first-hand accounts of the war will outlive those who wrote them. Yet, as we approach the centenary of the outbreak of fighting, many of these records themselves are at risk of being lost. Those that do survive are often either gathering dust in private homes around Europe, or too delicate to allow the general public to freely access them.
One Europe, working together
With this in mind (and to show that European collaboration is not limited to arguing over government debt), Europeana – Europe’s digital archive, library and museum – aims to make over 400,000 key documents and images from World War I freely available online (with help from libraries and partners across Europe). This will give people everywhere unprecedented access to first-hand information from both sides of the conflict.
Such a project is close to the heart of the people (and moles) here at Microtask. Many of the documents will be selected from archives from the partner libraries, but the public can also contribute to the project by submitting scanned copies of their letters, diaries, photos and other memorabilia from the war (only German-related material is being collected currently).
Looking through the material gathered from the public so far (here by the University of Oxford and here by the German National Library), makes you feel like you have stumbled across photos buried in your grandfather’s basement.
This feeling is partly because the material is so personal and authentic. But it is also partly because much of the text in the letters and diaries has not been transcribed into digital text, so can only be read in its original handwritten form. Although this adds to the feeling of nostalgia, it also means that such text is not searchable. This is fine when you are rummaging through a shoebox of letters, but it becomes a bit of an issue when you’re talking about 400,000 documents (presumably many of these will be fully digitized, but based on the archives available so far, I’m guessing a great deal will not).
By the people, for the people
The issue is, I assume, one of cost. Accurately digitizing massive collections of records takes a huge amount of time and money if you have to pay people to do it. As we all know only too well, in the Europe of 2012 neither of these commodities is in abundant supply.
What I would like to see is greater reliance on the public for this huge task. As Digitalkoot has shown, when it comes to preserving the past, there are thousands of people out there willing to help for free. All they need to get going is a call to action and a clever platform to facilitate their contributions (and maybe a little help from some self-sacrificial moles).
In the near future, as governments cut spending and crowdsourcing continues to develop, we expect to see much more crowd participation in these sorts of projects. In fact, we expect to be running some of them.
