For lay-people to know about and be comfortable using it, yes, I think it has to be a part of a large service.

There are ways to share secrets with a small number of friends online, but even among technical people, very few people do it. I can see that it's possible to create a service around, say, PGP encrypted messages, and I can even see abstracting out the technical details of it. (That is, not forcing the users to think about keys, instead saying "Tell us who you want to be allowed to know the secret" and making and distributing public-private keys on the fly.) But I think even that level of conceptual overhead is more than lay-people are willing to deal with.

You said: "I think it has to be a part of a large _service_."

My question was about the size of the _network_.

In any event, following your line of thought, do you think it's possible to have a many _small_, separate networks that were somehow part of a large service?

Regardless of your answer, does our solution have to be a "service"?

What if it is a "product" that creates small networks as overlays on a larger, existing network such as the one all your friends are connected to: the internet?

You said: "I can see that it's possible to create a service around, say, PGP..."

What if you could see that it's possible to create a service (or product, or both) around, say, a scheme that involved only a single shared password and a single shared encryption key? That is, each friend has to remember only two strings for each network to which she belongs, sort of like, say, a username and password.

What if you could see that such a scheme might not require logging on and logging out as frequently as a web-based service such as Facebook?

Would that change your thoughts at all?

You said, when referring to a PKI scheme like PGP: "But I think that [the] level of conceptual overhead is more than lay-people are willing to deal with."

I once thought the same thing about Amazon's S3 service. When I saw the Dropbox product, my thoughts changed.

Without reaching Facebook-caliber critical mass, what would such a service offer people to join? Just in case you wanted to tell them something? I mean, if you just want a small system for telling your friends things, use a mailing list.