How digital currency is changing the world

Stan Stalnaker

IMAGINE someone came along and granted you three wishes, all concerning the structure of money. Most people would probably scratch their head, because we don’t often think about how money could be better: it’s one of the few constructs that society does not consider ripe for constant change, upgrade and evolution.

Money, for over 600 years, has been a centrally controlled social construct, and not something entrepreneurs have had much success at tinkering with – until now. The rise of digital currencies is opening new questions about how we structure value, and that means big new opportunities for entrepreneurs, businesses and society at large.

What is money?

Firstly, what is money? While the physical stuff is issued by banks on behalf of countries, the truth is that currency and money are representations of value shared between individuals or organisations – a collective mirage we all agree exists at some value. The ‘market’ determines the density and value of this mirage.

As a record, money is just information, and a tally of value shared or stored between economic actors. If action can be converted successfully to wealth, it becomes true that our activity is a function of money, and the more activity we do, the more money we should generate.

If so, why is there unemployment? By this thinking, one’s lack of activity would generate less money, and one’s greater amount of activity would result in more money, regardless of outside factors. Instead, we seem to have things the other way around – relying on the presence of money first to guide our willingness to do or not to do actions, therefore we have unemployment.

Digital currency

The emergence of digital currency is eroding this perceived shortage of money, because it gives people and organisations new ways to create, measure, exchange and store value. Instead of working for ‘money’ in the traditional sense, we can now work for ‘value’ in new ways – gathering reputational, virtual and other values along the way, which can be exchanged for other things of value. In the emerging world, anyone can create value and everyone can exchange work for that value.

Digital currency is a form of value that exists online, largely in gaming systems like Linden Lab, World of Warcraft, Facebook, Zynga and many others. Because the value and size of these digital gaming and exchange economies are growing fast, more and more people are evaluating the world of digital currency as a serious means of kick-starting activity outside of the Internet.

Yes, digital currencies are migrating to the real world, and the result is greater choice, more opportunity, and a sea change in how we perceive and use money as a whole.

Introducing Ven

This matters because society desperately needs new solutions for the problems we collectively face. Different groups have different priorities, and the new thinking around how we architect better exchange systems is creating fascinating results, and many questions.

Why can’t we have interest-free currencies that comply with Islamic law? Why can’t we create green currencies that help support the environment by investing reserves into carbon? Why can’t the Internet drive value exchange at low to zero cost – much the way links and connections currently drive communications? Who decides what we’re worth?

Hub Culture, a social network with a global community, began thinking about these questions five years ago, when we created the Ven, a digital currency for our community. Today, it is the first digital currency available in the financial markets, via Thomson Reuters.

By creating a single global currency a lot of lessons have been learned: that we can create value as communities for each other, that we can innovate on how this value is presented, and we can work together to improve the DNA of money itself – to make it greener, more socially consciousness, more able to match a particular set of values and priorities.

To do this successfully, a system must live within larger ecosystems, and find a way to add value to the system at large. At Hub Culture, we have created a stable, global currency that saves members on exchange rate volatility, a basis of value based on more than fiat currency, but also commodities and hard assets, and a mechanism to support the environment by linking Ven to carbon. These three wishes – stable, global and green – are the hallmarks of Ven.

New currency deluge

As other new currencies and systems emerge, they represent the values of their own particular networks. Avios is quickly becoming the currency of travel rewards, while American Express Rewards are the currency of executive perks. Bitcoins are a form of digital cash, and Facebook credits are a way to manage our social world online.

Soon, a deluge of new currencies and reward systems will give us a variety of ways to pay, and perceive value – from Google Wallet and Mastercard Paypass to Paypal and Flattr, payments will become linked to our social identity, and completely digital. As a society, this explosion in currency will give us more options, more convenience, and more ways to do what we want to do. That’s a wish everyone can benefit from – and it’s about to be granted by the ever growing, ever changing Internet.

Stan Stalnaker is the founding director of Hub Culture, a social network that operates the currency Ven.

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