Special Network Effects of Ayra Network Credentials
The Special Network Effects of Ayra Network Credentials
Numerous business books have been written about how network effects are the primary growth driver for the massive digital platforms that dominate the Internet today. As Eric Chan notes in The Cold Start Problem (his book devoted entirely to jumpstarting network effects):
Just look at the companies that have made it into the “Billion Users Club”. Apple has 1.6B iOS devices, while Google has 3B. Facebook has 2.85B users across their social network and messaging apps. Microsoft has over 1.5B devices running Windows, and another 1B running office. In the Chinese technology ecosystem, the companies behind WeChat, TikTok, and AliPay all enjoy ecosystems numbering a billion users each. These are the tiny number of technology products that have reached incredible scale, and perhaps unsurprisingly, all of them leverage a network effect.
What makes Ayra Network Credentials special is that they have multiple cross-reinforcing network effects as explained in this section.
#1: The Trust Network Effect
Network effects are typically achieved either at the device level (e.g., the more telephones on a telephone network, the more valuable the phone to each user) or the member level (e.g., the more members on a social network, the more valuable the network to each member).
But because Ayra Network Credentials are designed to work together as a family, they achieve network effects at the credential level. In other words, the more Ayra Network Credentials on the Ayra Trust Network, the more valuable the Ayra Trust Network becomes for every member. For example:
The more Org ID and Community ID credentials issued, the more business and community VRCs can be issued.
The more business and community VRCs issued, the more First Person credentials can be issued.
The more First Person credentials issued, the more personal VRCs can be issued.
The more personal VRCs issued, the more it drives demand for Org ID and Community ID credentials.
And so the flywheel turns.
This is the trust network effect. Achieving the trust network effect was the fundamental reason the Ayra Trust Network was established as a “trust network of trust networks” that can interconnect any number of digital trust ecosystems just like the Internet can interconnect any number of local area networks.
#2: The “Zero-to-Hero” Network Effect
Back in 1900, the only way to achieve the network effect with the original device that started it all—the telephone—was for every new user to buy, install, and learn how to use a completely new gadget. In AT&T’s annual report in 1900, company president Theodore Vail put it this way:
A telephone without a connection at the other end of the line is not even a toy or a scientific instrument. It is one of the most useless things in the world. Its value depends on the connection with the other telephone and increases with the number of connections.
No wonder it took many decades for telephones to become ubiquitous. Today, with the Internet and the Web, joining a new network can be almost frictionless. For example, in a brilliant design move, webmail pioneer Hotmail automatically added a footer to every Hotmail message with a link offering the recipient a free Hotmail account. One click and a new user could sign up and start sending their own Hotmail in minutes—becoming yet another carrier of the Hotmail “virus”.
Many social networks have followed the same playbook—in fact so many that eventually it led to a backlash against “invitation spam”.
So far, digital credentials have not been able to tap into this dynamic. One reason is that they require digital wallets to work. Unfortunately, interoperable digital wallets—wallets that use open standard credential formats and exchange protocols that make it easy for developers to build new applications—are still in short supply.
With the Ayra Trust Network, Ayra Network Credentials, and the Ayra Conformance Test Suite, we can change that. This is how an existing user can invite a new user “zero to hero”:
A First Person credential holder generates an Ayra QR code to invite a new First Person relationship as illustrated in figure 4.
If the person scanning the QR code does not yet have an Ayra-compatible digital wallet, the QR code can direct the user to a Ayra Association microsite where they can download one.
Once installation is finished, the user’s new Ayra-compatible digital wallet will automatically connect to the microsite, which will then privately connect them to the party that generated the original QR code.
Now the two parties can complete the First Person connection dance and issue mutual personal VRCs.
And now the cycle can repeat. Because each new person in the Ayra Trust Network adds to the overall network effect.
#3: The First Person Network Effect
First Person credentials were so-named because they represent relationships that people form directly, one-on-one. While some of these relationships are with businesses and communities, far more are with other individuals.
Because these real-world person-to-person relationships can go from “zero-to-hero” so quickly, the First Person QR code is the Ayra equivalent of the Hotmail invitation link. Add to this the reputational incentive to forming new First Person relationships because each one (up to a limit) helps you increase the strength of your First Person credential.
This is the “First Person network effect”. It is a same-side network effect because it gives individuals the power to create and control their own personal relationship graphs and to use them with apps and services as they see fit—unconstrained by third-party business models or terms of service.
But it is also a cross-side network effect because the more First Person credentials, the more incentives businesses have to form First Person relationships with their customers. So the Ayra Trust Network can grow from both sides of the two-sided market in the left half of figure 2.
#4: The Trusted Channel Network Effect
The final network effect harkens back to the telephone as the origin of the very term “network effect”. To repeat AT&T president Theodore Vail’s quote, as a breakthrough new communications device, the value of the telephone “depends on the connection with the other telephone and increases with the number of connections”.
This is true of any breakthrough new communications channel, from the fax machine to social networks. So how do Ayra Network Credentials represent a new type of channel?
The secret is in the cryptographically verifiable identifiers (pairwise peer DIDs) exchanged in every VRC. These can serve as the endpoints for a secure, private communications channel between the two parties. This new trusted channel is extraordinarily powerful:
It can provide bidirectional authentication and encryption equal or better to HTTPS web connections without either party needing X.509 certificates.
It is fully private to the two parties, so the channel can be used for confidential messaging and data exchange that meets regulatory requirements in industries such as financial services and healthcare.
It uses cryptographically verifiable identifiers (e.g., DIDs) pre-exchanged between the parties, so they are essentially unphishable.
It can last as long as either party wants to keep the relationship, since the pairwise peer DIDs have no dependency on any external registry or service provider.
It can be used for automated workflows between digital agents of any kind, including personal and business AI agents.
Trusted channels are in fact such an important new dimension of Internet communications that they will be the subject of a separate white paper forthcoming from the Ayra Association.
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