Money, by its very nature, is controversial. It goes hand in hand with power, and for centuries has been integral to the operative status of the nation-state system. It can be used to control and to guide, to redeem and to oppress: like any tool in the hands of humans. At its essence, money is a ledger, a system used by society to keep score of who and what and when and where. Money is our way of recording distributed memory.
The evolution of money is therefore very important, and as technology affects this part of the human experience as it has so many others, the principles and standards by which we blend technology and money together will have far-reaching consequences.
Hub Culture is a social network that has been exploring the convergence of technology and money for more than a decade. This very international community grew from a book of the same name, published in 2002. As a community its hallmarks are similar to others – collections of people with individual interests finding common ground in philosophy and experience. The community came before the currency and remains the anchor and the glue for the existence of Ven, its raison d’etre. The Hub Culture community, global in geography but singular in concept, discovered that the constraints of physical money – fiat currency – has distinct limitations for internationally minded people in meeting local needs, and from this constraint Ven was born. Today, the currency represents an innovative step forward in finance that combines technological excellence with community values: environmental respect, community responsibility, and self-sovereignty with distributed, selective privacy.
As the first widely used digital currency and now an Internet Reserve Currency, Ven’s history is one of constant evolution. It first appeared in July 2007 as an application on Facebook. It had no real exchange rate and was traded as a type of digital karma between members. No one knew what it was worth, which made trade arbitrary and unwieldy. This lack of clear value did not last long, however. An exchange rate of 10 to 1 was created, linking Ven to the US Dollar. With a set value, Ven were first used inside Hub Culture stores – Hub Pavilions – worldwide, and could be traded among members on a global basis for free.
To mitigate exchange rate risks, the currency was diversified in 2009 to enable exchange with a basket of currencies, making it highly stable. The decision was also taken to back issuance of Ven 100% with assets, in accordance with the algorithmic index that formulated the Ven. Soon this basket of assets included commodities like gold and silver, and later, carbon, making Ven the first environmentally linked currency in the world.
With its stable, diversified backing and conservative structure, Ven suddenly showed promise as a global currency. But it was the introduction of carbon to the underlying basket of assets that gave Ven a “social DNA,” embedding environmental support in every transaction as a derivative benefit. The more Ven circulating in the world, the more carbon purchased for asset reserves, and the more trees and habitats protected.
Today over 25,000 acres of Amazon rainforest have been put under protection, and Ven is developing funding protection programs in places as diverse as Costa Rica, Alaska and eastern Africa. There are multiple community benefits from this protection work – new wildlife corridors, natural preservation, fuel switching from charcoal to clean energy, and an increased quality of life for citizens of a very stressed planet.
Ven is rapidly scaling into the global financial system, becoming the first digital currency used for commodity trades, the first traded in regulated foreign exchange markets, and the first to enter bond markets and national bourses. It is the most stable currency in the world, roughly 50% less volatile than traditional fiat currencies. With no leverage and no interest, it fulfills some important aspects of Islamic finance. These attributes make Ven a yawn for speculators and cowboys, but a boon for producers and common people.
Ven is issued and regulated by Hub Culture and the Ven Central Reserve Board, a group of financial experts from within the community tasked with protecting the integrity of Ven. Ven and Hub Culture are protected in a legal Trust with the sole task of protecting the technological assets and intellectual property that governs the community. “Digital” means that the currency does not have physical representation and its distribution, flow and exchange are recorded on the Internet. The Ven Central Authority oversees policies governing Ven.
This is a markedly different strategy than the hundreds of decentralized cryptocurrencies that place their faith in a fixed supply of their currencies and reject central authorities to manage them. While decentralized currencies have their merit, the human role in managing Ven is designed to allow flexibility to deal with changing circumstances.
Governing rules regarding Ven provide simple fixed conditions: a social contract with users to assure a strict correspondence between Ven in circulation and asset reserves, and built-in support for the environment, to promote stability, reliability and security. Together these attributes support the Four Core Attributes of Ven: stability, globality, security and support for nature.
In order to make Ven more accessible, Hub Culture authorizes independent entities known as “Authorities” to manage the liquidity of Ven. Organizations may acquire this status for various purposes. For example, a bank would typically operate accounts on behalf of their customers. A currency exchange would be doing real-time currency trading. An NGO might issue relief aid or microfinance support. A corporation might convert assets to Ven to hedge their balance sheet or to meet carbon obligations. An investment fund might use authority status to hold and control large amount of Ven for a stable long-term investment solution.
Regular users and merchants who have only one account and do not use large volumes of Ven do not need Authority status. Authority status comes with a legal responsibility to make sure that all Ven activities are legal and ethical. Through those principles Hub Culture ensures Ven availability to anyone through any means while remaining a legal, stable, 100% backed asset acknowledged and respected worldwide.
Ven is held in the Glacier, an offline “cold” cryptovault. When purchased, Ven “melts” from the Glacier into circulation, and the corresponding purchase value in fiat currency is held in reserves allocated to the underlying basis components of Ven. Ven is a currency backed by a collection of other currencies, commodities and carbon credits. Technically this means for every Ven in a member account there are corresponding frozen assets held in reserve. This ensures the stability of Ven prices but also means that all Ven must be accounted for and backed in the Central Ven Reserve.
Ven is distributed through Authorities. If you access an Authority to buy Ven for $100, this amount is broken down and invested into dollars, euros, pounds, yen, yuan and many other currencies, commodities and carbon credits. When you sell Ven the underlying assets are released. This process is called Reserve Balancing. The process is managed through a series of sophisticated hedging algorithms that balance the underlying reserves and issuance in real time with live financial markets data, updating as frequently as several times per second.
Ven Pricing API
Ven pricing is updated in real-time and slightly fluctuates depending on underlying performance. Hub Culture makes Ven prices publicly available to anyone through an API, however this free public API is updated only once per hour. As an Authority, entities have access to high-frequency pricing which offers real-time pricing with precision of more than 0.1 second, to ensure that Authorities have a very accurate pricing before during and after purchase or sale. VEN purchase/sales orders can also be distributed through FIX protocol, which is popular among financial institutions worldwide.
Ven Authentication and HubID
As Ven moves into the financial markets and becomes more usable for purchases and transactions, the need to authenticate identity to avoid money laundering and other fraud risks becomes paramount. Since Ven issuance and exchange comes from a central point, and since it grew from the social network, an intrinsic layer of identity already exists with transactions.
However, the data sets generated by a centralized digital ledger imply unique challenges of their own because Ven users and Hub Culture certainly do not want transactional and personal data routinely made available to third parties. Uniquely among all social networks and most advertising-oriented social media, Hub Culture does not scrape, aggregate or sell member data to monetize it. In fact, not a single piece of user data has ever been sold to a third party – Hub Culture explicitly grants users unique ownership of their data within Hub Culture, their transaction data, and the Ven in their account. This can be done in theory with the data in the archives and in practice by passing ownership of decisions regarding the use of data to each member directly.
Such a system could not be practical or sustainable unless digital currency accounts are linked to profiles and costs are covered in other novel ways. For example, Hub Culture pioneered the concept of individual payments for content generated inside the network, through news and video posted by members – an opportunity made possible by individual data ownership. There are also “collaboration hubs” linked to private Ven accounts and even knowledge brokerage and retail opportunities – all of which feature margins.
In 2013, Hub Culture and M.I.T. Media Lab partnered with ID3 to take this idea to a radical next step: ensuring digital “self-sovereignty” with user data through the creation of HubID, a secure vault wrapped in elliptical curve cryptography and the Open Mustard Seed open source technology platform. Through this innovative blend of technologies, online users not only have a “Personal Data Store” (PDS) to put their personal data in perpetuity, they receive a unique piece of online real estate through a private “virtual machine” dedicated to hosting just their data. While Hub Culture currently covers the cost of that privilege, the growth of Ven redemption and usage will eventually overtake the costs of this service, enabling members to decide how and when data in their vault is used.
Data in the vault is segmented into a series of tabs, each of which are designated a unique hex color on the Web. These tabs combine to form the HubID, a digital badge that manifests these verified components with the member’s profile image. Together, these elements form a unique Aura, which can be accessed by others who desire to authenticate a user transaction with Ven. The final result is a digital identity and transaction capability owned by the individual and uniquely verified. At the core of this technology is voice biometric technology developed with Validsoft, a leading mobile security firm, to provide near-perfect uniqueness in digital identity for highly secure access and transaction approvals.
Together, HubID and Ven seek to provide a completely intelligent, self-sovereign Web experience. The technology works with all other systems, granting a unique API for identity to each user, which can be adapted and used only with the member’s approval. At their discretion, users often pay for, or receive payment for, access privileges in Ven.
This technology is the basis for Voin, an intelligent data coin now in development by Hub Culture. Voin is the world’s first intelligent coin, and can slip into a pocket, hang from a chain around the neck, or rest on a lapel. With fingerprint and voice biometric technology it is highly secure, but also easy to use: the owner simply speaks a value into Voin and matches a voiceprint for access to make a transaction. As both a transaction wallet and an ID, Voin represents a completely new approach to money and the application of closed loop device payments.
At Hub Culture, the belief is that an increasingly connected world should provide greater data transparency and equality. It should also be more secure, with individual privacy and personal data control included as an indelible human right. The general drift of businesses in the Internet age has been toward winner-take-all scenarios and the total, one-way vacuum suck of data aggregation. This is having dramatic (negative) consequences in a sector as important as ubiquitous value exchange because information and value are merging at the same time that chokepoints in the system are narrowing. If individuals are not given control and ownership of this data now, they risk losing it forever.
Technological innovations are giving the world a rich opportunity to rethink the values around the economy without having to compromise on the practical, hard-nosed financial realities of commerce. A properly managed nonfiat digital currency has some inherent advantages over a state-based currency: it can function at one degree of separation from the state, and without the baggage of obligations that states must shoulder, such as the need to provide defense, fund social services and build and repair public works. While limitations around taxation and use of force mean that digital currencies will never fully replace fiat currencies, their advantages do not absolve them from adhering to some form of social contract with their users.
The nature of money is to reflect and strengthen the values of the community in which it operates. If a currency does not do this, it fails in the most important test of its moral existence, and over time can never reach full potential. Digital currencies like Ven provide great technological efficiencies, ease of use, stability and more, but Ven’s most important attribute is its philosophy that humans should play a defining role in monetary policy and that including externalities in the DNA of currency can radically improve the welfare of the communities that use it. After all, isn’t that what money is for?
Stan Stalnaker is Founding Director, Hub Culture and Ven Currency and Communications Chair for the Digital Asset Transfer Authority, the industry’s self-regulatory organization. A leading commentator on the social impact of globalization, emergence of digital asset classes, P2P economies and of course digital currency, he is putting his undergraduate economics and international development degrees to more use than he or his professors ever thought possible.