The internet has been abuzz recently with the talk of Bitcoin, of its rapid rises and falls, and its association with nefarious websites, but it is also drawing attention to the general concept of the digital-only, global currency, and the question of its validity outside of the world of gaming. For many people, currency is already arbitrary and symbolic beyond the point of paper representing gold in a safe, but dealings with money are fluctuating balances of an account viewed digitally, where you rarely, if ever, deal with the physical manifestation. The idea of a purely digital currency, that only exists as transactions between individuals, is not new, and there were a series of failed attempts during the hight of the dot com boom in the 90s, but now they seem to be once again gaining relevance. An interesting one that emerged a few years ago (preceding Bitcoin) is the Ven, the currency created to be used at Hub Culture, a digital/physical global social network. As opposed to Bitcoin, Ven is not anonymous, is generated centrally (though exchanged p2p), and has valued based on other currencies, commodities, and uniquely, carbon.
Today Ven is the only digital currency to be priced from a basket of currencies, commodities and carbon futures. These components give the Ven advantages of other currencies: the basket encourages price stability on a forward basis, and the link to commodities grounds value in hard assets. The introduction of carbon to the basket is helping us think about how money can serve better social purposes – in this case to support and stimulate demand for carbon credits and social impact development, driving offsets for every transaction used with Ven. This is how the idea of ‘green money’ developed with Ven – because its carbon linkages are able to play a role in this area. I really like the idea that Ven is green, social and efficient, with a mission to improve the lives of its users and the communities that use it.
It is intriguing to hear Stan Stalnaker, the founder of Hub Culture, describe the origins of Ven, and what he feels this and other alternative forms of payment mean for the future of currency.
On 4 July, 2007, the social collaboration network I founded, Hub Culture, released the first application for Ven, a new type of digital currency. It was a watershed moment for us, and a confusing one, because the Ven had no value or exchange rate—it simply existed and could be issued and traded at will to friends. Ven was a new type of money—as basic as picking up pebbles and assigning arbitrary values for favors or to say thanks. Everyone laughed, and we soon learned that for a currency to have relevance, it must be measured against other things. Currency needs an assigned value to be understood, a language to speak.
So in 2008 we assigned Ven a value language—10 VEN = 1 USD—and began to sell it for redemption between members and in Pavilions (retail places developed to accept the currency). The fundamental advance in Ven was that it was global, digital, and could be exchanged to anyone, at little incremental cost. Later we made Ven more stable by pricing it from a basket of currencies, which meant the price moved less than a single national fiat currency. To make it more grounded, we added commodities linking it to hard assets. Then we added carbon futures, creating a carbon component to the value. The language was now efficient, stable and green, and today demand for Ven is growing rapidly.
By and large, digital currencies are changing what money can be, and widening the vistas for how our global society determines and trades value. The size of these economies is small but growing fast—with over 6.2 million Bitcoins in an economy worth almost $50 million USD. In Hub Culture, we have 5 million Ven circulating with a GDP equal to over $500,000 USD growing at 10x annually. Ven plays inside the more closed rules of the current system, but even Bitcoin, with its ‘radical’ open nature, is subject to the value quandary: to be traded, it must be assigned a value. And if it can be assigned a value, it can be interchanged with anything else of assigned value. The Internet is enabling exchange of all types of value, and helps us to measure and publish these values. Taken to its theoretical and logical conclusion, the Internet and all content on the Internet—whether actual or representative (such as the price of a physical good or service)—will eventually be assigned a value. Once these values are assigned, essentially everything will become money, and currency itself will cease to exist.
This is already happening in early ways with the Facebook Like and Google’s +1 buttons—micro-micro values based on attention and favorability that will someday convert in value to other measures. How many Likes is a Facebook Credit worth? How many Credits make a Ven? How many Ven make a lasagna at the Olive Garden? How much do you have to Like the Olive Garden to get a lasagna? We’ll know soon.
You already see the hints of this type of brand loyalty being rewarded, through coupons and sample products, and with the power of word of mouth advertising and customers as advocates, it is not surprising that this would be the trend. In fact, cash has already been trending towards the realm of the crytocurrency, where in a would of credit and debit cards, cash only operations are increasingly being relegated to illicit activities. Honestly, at this point, a pocket of hundreds probably comes across as sketchy as a digital wallet of Bitcoins, and as more legitimate uses for digital currencies arise, the pocket of cash will raise more and more eyebrows.