Gift-Based Markets

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The Shift from Transactional to Gift-based Markets

"Greg" on three reasons why the evolution towards gift-based, instead of transactional, markets is inevitable:

"A shift in productive activity towards reciprocal or gift based markets is inevitable:

Expanded Freedom/Self-Direction:

"When discussing the "free market" we often overlook the restrictions built into the transactional model. Yet, a transactional market is by its nature a contractual market. Once a contractual relationship is entered into, both parties are obligated to follow through. This restricts the freedom of all parties and leads to inefficiency in the form of negotiation before the fact and potential litigation after the fact. This potential for conflict also creates the need for legal standards that restrict the scope of individual freedom further.

Gift markets avoid litigiousness by eliminating contractual obligations altogether. In a gift market, producers seeks potential reward rather than contracted compensation. Market participants sacrifice guaranteed compensation for the freedom to contribute however they wish and the ability to reach a much wider audience. Psychological research and empirical observation both evince the fact that once basic needs are met, the ability to pursue intrinsic goals is more motivating than additional (monetary) compensation. To the extent that this is true, productive effort will be drawn away from transactional activity and towards platforms based on reciprocal voluntary gifting.


The previous point implies that participation in gift economies is simple. Rules and laws are replaced with looser social conventions. Barriers to entry are eliminated. Meritocracy is facilitated because value can be provided without prior agreement on compensation, providing new entrants the opportunity to demonstrate value without accessing gatekeepers. Friction is reduced at the cost of increased uncertainty, however uncertainty is more easily coped with as reduced friction allows for increased experimentation and entrepreneurialism. This simplicity enables efficient redeployment of effort from the transactional market to the gift market.

Lack of Competition from Incumbent Currencies:

The transactional markets are wedded to traditional state-issued currencies. Efforts to innovate on the transactional model will be hamstrung by the need to convert people away from traditional currencies. On the other hand, gift markets are ripe for innovation because there are no incumbents. Social capital has to date gone largely unmeasured and the demand for a compatible accounting system is apparent. Innovation in this area will meet little push-back from traditional incumbent players as most will fail to recognize abundance based accounting systems as currency per se. This ability to innovate without resistance will continue to increase the appeal of these markets.

These three characteristics will increasingly attract new participants into informational gift economies and draw productive effort away from transactional markets. Barring some dramatic shift in the direction of technological progress, I agree with Alan that the world he describes is inevitable." (

More Information

  1. Asymmetric Accounting
  2. Gift Economy