I got turned on to blogshares via Jill Walker’s entry on the subject. Jill quotes Phil Ringnalda describing the system as a “surprisingly good model,” one that will ecourage people to buy shares in inexpensive, because unread, blogs and then link to them in order to get their value to go up. As a result, formerly unread blogs gain more incoming links and gain more readers.

But here’s a potential kink: if users recognize that shares in your blog can be bought for little or nothing, then they are likely to buy a large number of shares. For example, I had bought 1,000 shares in andedam.org, which made me one of only five investors. The value of the blog will only go up if many people provide incoming links, but if only five of us link to the blog because of our self-interest, the value is not likely to go up very much. So I sold 900 shares of andedam.org in the hopes of attracting additional investors, which will ideally provide more links and thus more readers. All of my blog’s shares are sold, and it currently only has four investors, and as far as I can tell, only one of them actually links to me.

Furthermore, the blogshares bot that calculates how many incoming links your blog seems to be faulty. It claims there is only one incoming link to my blog, when I know there are at least four. This will, perhaps, eventually be worked out.

It doesn’t look like Phil’s prediction is quite coming true, yet. This raises an interesting question. Will blogshares institute some kind of artificial limit on the number shares one can own in an individual stock? Perhaps a limit on the number of shares you can buy at once, as this thread suggests? Or will the system instead be a model in which success requires moderation and generosity through self-discipline? In other words, if you’re motivated by greed — you want the blogs in which you own shares to rise in value — you must not be too greedy — if you buy up all the shares in a given blog, that blog is unlikely to rise in value. A diversity of investors is best: you have to share the wealth to make wealth.

Chuck suggests that “the arbitrariness of Blogshares points toward the more damaging arbitrariness of the NYSE and other stock markets that are based on the investment of ‘real’ money,” but this could be one significant difference.