The recent and very sudden infiltration of digital currencies into world markets has become a matter of exponential interest among those with a will to actually take part in the formation and circulation of a real alternative to central bank issued, government controlled fiat currency.
Since digital currencies such as Bitcoin came into existence a few years ago, they maintained a very steady but loyal following, and were relatively unknown among the mainstream, however this year, especially in the aftermath of the Cyprus banking crisis which demonstrated that banks and governments have gained the powers to use depositors funds to extricate them from insolvency, and regimes such as that of Argentina whereby the government has implemented no less than 30 initiatives over the last two years aimed at tying the populace to an increasingly unstable, inflationary national tender.
Nowadays, as these factors become increasingly the bête noire of the informed public, digital currency is becoming an asset of choice, made by the people, for the people, and now, as of this week, regulated by the people.
In this week’s Forex Magnates Executive Interview, Hub Culture’s Global Strategic Head Stan Stalnaker details his perspective on the next developments that he views as important matters to consider in the world of digital currency, focusing on Ven.
With over 20 million exchanged since 2007, Ven has evolved into a stable financial asset, a hedge currency linked to a diversified basket of underlying assets that include currencies, commodities and carbon futures.
Ven exchanges instantly in a P2P format and has been the first currency used at device, individual, corporate and insitutional levels.
In order to introduce yourself, please outline your professional career and background prior to joining Hub Culture, as well as how you arrived at Hub Culture.
I am an American citizen who studied Economics in Washington DC before beginning my career with Time Warner as the Marketing Director at Fortune Magazine in Asia in the 1990s. In 2002 I published the book Hub Culture, which looked at the social side of globalization, and we started the network as a means of connecting global urban influencers. That same year I moved to work across the Fortune Group based in Europe. In 2007 I left Time Warner to focus on building Hub Culture full time – as a collaboration network with a collection of spaces for our members. In the summer of 2007 we launched Ven to help our community exchange value more efficiently.
What attracted you to join Hub Culture, and what did you wish to achieve during the initial stages of your tenure leading the company’s global strategy? How did you go about implementing these goals and what has the overall result been?
It was irresistible. Over time Hub Culture has come to symbolize a modern and considered approach to the world, with a community of globally minded people intent on improving the world. Our initial strategy focused on the development of Hubs as places for our members to gather and work, and recently we have been working hard to bring Ven to new heights as a truly beneficial digital reserve currency for the Internet.
Please elaborate on the uptake of Hub Culture’s membership, given that it solely supports Ven. What is the demographic of the user base and its requirement for such a service?
The user base is very globalized and has grown into a community of all interests. Members are able to trade Ven to others, but they also opt in to Ven whenever engaging with the community.
Currently we are averaging over 1 Million Ven a month in exchanges between users. Increasingly, members are buying Ven to use for collaboration projects, membership asset pools and more, which provide new extensions to Ven liquidity. Such members individually range from private bankers to singularity theorists to ordinary folks interested in collaboration.
Digital currencies have become considerably more popular recently, especially in countries where there is uncertainty over the financial structure as pinpointed by the Cyprus banking crisis in which Bitcoin values reached 256.6 USD to 1 BTC, and in nations with strict capital controls such as Argentina where there is tremendous inflation and previously widely used USD is now banned. Do you think such countries will be the first to move away from government-issued fiat currency into widespread digital?
I don’t think you’ll see any country give up its national currency in favour of Bitcoin or Ven, but I do think we are approaching the period where central banks will begin to hold them as part of an asset portfolio. In the case of Ven we have already held discussions with monetary authorities on three continents about the potential of using Ven. Ven for Foreign Direct Investment is already happening on a limited basis, and for commodity and carbon credit trades. It’s only a matter of time. Meanwhile, the bigger question is whether nations themselves will begin to launch their own digital currencies.
There is currently approximately $990 million worth of Bitcoins in existence. If the governments wanted to put a stop to digital currency, they could do so. Do you think that it is likely that governments could do this very easily and relatively cheaply, by buying all the BTC they can and use super computers to mine at a ferocious rate, thus damning it beyond revival? Under these circumstances, when 80% of all BTC becomes the property of governing authorities, that would signal the end as it would be come too expensive and impractical to mine further ones for private individuals.
I’ve heard the theory that a smart government could just quietly buy up all the Bitcoin and choke off the economy by sitting on it, killing circulation velocity. I suppose this is possible, and have heard rumors of China already attempting to employ such a strategy. This is one of many issues that come from handing monetary policy over to an immutable algorithm. As a demand based currency, Bitcoin’s role is likely to grow and expand, but it doesn’t mean it’s the only digital asset of consequence. Others are arriving.
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In terms of mining, this is already becoming an expensive, and in some cases, a fruitless exercise. What is the future for mining, and do you think it is possible to conduct ASIC and GPU mining with a dedicated rig and still maintain sufficient production? For example, if a miner invests in a rig, pays for the astronomical power required to run it, and generates 130 terrahash/second over an entire week and the number of BTC produced only equals $3, how can this be turned around?
Well, they could get about 28 Ven with their $3. Bitcoin will eventually evolve into a transaction currency backed by demand. Once exchange rates stabilize and it’s considered a finite good, the focus will move to Bitcoin derivatives.
In terms of the future of Ven, the currency currently doesn’t have an exchange network for users to trade Ven back into fiat, will that ever happen?
The Ven economy is already quite large, with over US$100 Million in available assets that can be acquired with Ven – ranging from property rentals to retail goods to fund pools. We have been very conservative to make sure Ven does not cross the line in terms of regulatory guidance, and that closed loop will remain until the right partnerships enable full Ven liquidity. That said, Secondaries are now emerging that allow users to trade Ven back into Fiat on a unilateral basis, and we see that happening fast as we build partnerships with regulated groups that can do this. It’s coming.
Until Ven becomes exchangeable, it most resembles a distributed, high-end proprietary currency, similar to a local arcade where games can only be played by purchasing tokens first. As such, should it really be discussed on the same level as Bitcoin, Litecoin, and Ripple?
It should, and here’s why: Ven was the original virtual currency to move into the real economy, the first to be priced in the financial markets, the first to be used for commodity and carbon credit trades. It is the first to find adoption and use among Fortune 500 companies, and through its carbon linked reserve paves the way for a completely new approach to saving the environment not based on penalties.
It is the only real asset-backed virtual currency, and this makes Ven a serious option for mainstream financial institutions today. Ven’s clean, green, transparent nature requires a slow approach based on building trust, avoiding scandal and abuse, and building strong multi-lateral relationships to ensure it stands the test of time. Full liquidity for Ven is emerging, but its more important to do things right than to do them fast.
A recent development of great interest is the formation of DATA, the self-regulatory organization for digital currency. Can you provide a full insight into how this will operate, and whether it will represent a ‘power to the people’ means of regulation, further strengthening the virtual currency community and therefore removing it further from the clutches of governmental authorities, and what the ethos of DATA is.
DATA is a big development for the virtual currency industry and will set precedents that last a generation. The ethos is about financial inclusion, and helping everyone prepare for the 2.5 billion people about to enter the global financial system through mobile. Beyond that, machine led payments in the cloud present a huge opportunity for value creation in our society.
These two trends require virtual currency to be scaled and successful, and require an organization with the understanding and vision needed to help virtual currency reach its true potential. DATA has the potential to be a 21st century SRO dedicated to 21st century solutions – the first of its kind. Myself and the other founders are committed to making sure DATA follows principles in line with the open spirit of the Internet, while being respectful to rule of law on a global basis.
Thailand recently attempted to completely outlaw Bitcoin. Do you think this is easily circumvented by use of proxy servers, and eventually outright bans will give way to acceptance once fiat currency depletes in banks and local industry is not able to benefit from Bitcoin spending, and governments realize that instead of spending inordinate amounts of money trying to ban it at the expense of the economy, it is better to embrace it and gain economic benefits plus taxation, or do you think that this will continue as governments are concerned about losing control of their citizens financial affairs?
I do think outlawing digital assets is a futile exercise, and will only hurt the places that try to do so by pushing activity and innovation outside their purview of influence. This is why both the US and Europe have signaled they wish to help shape the arrival of these technologies through cooperation rather than to push them into digital ghettos.
Understandably, no country wants to lose control of its monetary policy or sovereign ability to issue tender, but these technologies do not threaten that. Ven in particular supports fiat currency by acting as a bridge between the old and the new (remember its backed by many currencies with a 100% asset reserve.) Products like Bitcoin may be fundamentally different, but eventually their proper role will become apparent, relative to the rest of the financial ecosystem.
What is Hub Culture’s USP? How does it operate, what is its cost model and what added value does it provide to digital currency market participants?
First and foremost, Hub Culture’s mission is to enhance collective consciousness by providing a safe space for our members to elevate themselves – through connections, collaboration and exchange. Ven is a core tool in that regard, and its social justice DNA is a part of that enhanced mission. As a business, Hub Culture maintains itself via margins on goods and services sold in our stores – just like any economy. As Ven develops, we see many ways to both serve society and build a viable business through the Hub Culture ecosystem.
The Ven is a real example of a social good: by maintaining its integrity and growing it, Hub Culture provides a wonderful asset to all – a currency that is inherently efficient, green, global, stable, and poised to usher in a new era for digital exchange and financial inclusion.
Is this really the end for fiat currency in a lot of parts of the world, following draconian government measures, bank bail-ins and failed economies all over the world?
No, of course not. Think of digital currencies like an emerging asset class. In the 90s we had emerging markets, followed by exotics and ETFs in the ‘00s. The virtual world is now large enough to spawn its own asset class – and that’s a great thing for wealth creation at all levels of society, especially those with current access to the least.
What lies ahead for Hub Culture during the rest of the year, and what is the company’s main goal for the long term?
We’re working hard on new Ven pools and asset products, new pop-up location Hubs for our members, and working to bring Ven closer to the financial market mainstream with new products and services. Limited Ven exchange, with KYC/AML approved partners, is right around the corner!