Why Digital Currency Makes Sense For A Global Economy

Why Digital Currency Makes Sense For A Global Economy

With an ever-increasing global market, do physical currencies tied to national governments actually hinder trade?

Allie Walker
  • 10 july 2012


The United States has the dollar, Mexico has the peso, and Great Britain has the pound. Within their individual borders, having a single currency provides a streamlined, unified system for appropriating value in an exchange. But when traveling outside national borders, currency can become confusing–what was ‘worth’ one amount in one country takes on new value in another; the physical bill or coin is literally worth nothing as it can’t be readily exchanged in the visiting country for goods, and its assigned value changes based on fluctuating exchange rates. What could buy a pack of gum in one country could buy a steak dinner in another.

With an international, globalized economy made increasingly possible by the growth of Internet-enabled commerce, do nationalized currencies even make sense as the basis for trade? Could there be a single, global, digital currency to unify the world economy? Instead of looking at the value of currency as a measure of supply and demand, could value be measured by social activity, trust, or reliability?

Several companies are exploring this very idea, proposing alternative systems of exchange that exist outside physical borders and redefine our traditional concepts of value. Instead of a valuing currency as a measure of supply and demand, these systems measure value based on a new set of metrics. Hub Culture, for example, is a company who proposes value as a measure of social interaction. Members of Hub Culture trade in Ven, a virtual currency earned by sharing knowledge with others. Stan Stalnaker, Hub Culture’s founder, thinks Ven is a more efficient way to think about value:

Hub Culture uses social connectivity to drive value exchange – which is a fancy of way of saying a trusted community can get more done together than other types of groups.  The community drives exchange, and helps to create and build opportunities in a connected fashion.  The Ven is merely a utility to reflect the values of the community – so a single, global, digital, green means of exchange reflects the values important to us. Value is value – its just another means of expressing it, perhaps more efficiently.  I think of currency as language — a code for promises between economic actors.

In essence, Hub Culture places a high value on community; those who actively lend their expertise to others in need positively contribute to the economy. Empire Avenue, similarly, creates a value proposition through social networking interaction. In Empire Avenue, people and brands become stocks. Share price is determined by online influence–by both activity and engagement levels on sites Facebook, YouTube and Twitter. But unlike Hub Culture, Empire Avenue plays out more like an interactive stock market; people ask for retweets or page views in exchange for ‘investing’ back in you. As Founder Duleepa Wijayawardhana explained to us:

On Empire Avenue you can invest virtual currency in any individual to buy shares in that individual’s social media value. Every individual returns a dividend daily to their shareholders based on the engagement they create. As you collect and own more shares in those producing engaging content, the richer you become and the more ability you yourself have to engage your networks in a similar manner. Empire Avenue is unique in the social media landscape as it assigns a real world economic system using virtual currency to social media and online engagement.

Whether you agree with the Empire Avenue model or not, the platform is intriguing because it seeks to link a person’s relative ‘value’ directly to their level of social reach and influence, which points to a potential future where individual worth on the open market is determined by an entirely new set of standards. As Stan Stalnaker believes:

It’s already happening – social value tied to reputation rankings and networks, the value of billions of like buttons, are all obscure forms of currency in themselves.  As they become more comprehensive and trade-able, they will become quantified related to other forms of value – from Ven to dollars to coconuts and cars.  Once you assign numerical value to something, it can theoretically be exchanged, which makes it a form of currency, whatever it is – whether trust, or reliability or money itself.

And once communities of interest start generating their own accepted currencies and forms of self-governance, there’s no longer a need for a central authority- unlike banks and credit card companies, there are fewer (if any) intermediary fees for exchanging money between two parties. Such is the case with two other digital currencies, MintChip and BitCoin, which also eschew a traditional money-flow path in favor of peer-to-peer exchange.

MintChip is a newly ‘minted’ digital currency developed by Canada and is designed to operate like cash, only better. Royal Canadian Mint CFO, Marc Brule, explains the benefits of using MintChip over physical currency in a recent interview with Wired:

Unlike most other payment products, MintChip operates with many of the characteristics of cash in the online world. Not requiring a proprietary network or any network at all to authenticate and process the transaction, it is a direct transfer of value from consumers to business or person-to-person. The value is stored in secure integrated chips and uses a secure protocol that allows the transfer of value from one chip to another. Like cash, it operates without the need for personal identification, is instantaneous and does not have any age or credit requirements for use.

People can exchange the MintChip currency instantly over any Internet connected device, and the transaction is private and secure. However, MintChip is directly tied to the Canadian Mint, so while transactions don’t pass through a bank and no fees are collected, it doesn’t necessarily translate into a global economy. What it does allow for, though, is third party development, which the Royal Canadian Mint is promoting through its MintChip Challenge, a competition that tasks software engineers with building innovative apps for the evolved currency.

And while exciting advancements may indeed come from government support, the fringe innovation of inspired by BitCoin, has been an interesting study in the rise and almost fall (thanks to hacking and counterfeiting efforts) of a parallel currency and economy that operates digitally, instantly and anonymously without middlemen or banks. Instead the system is regulated by the people who use it.

With BitCoin, trust becomes central to the idea of value exchange- users must trust each other to appropriately manage transactions as all sales are final. Once again, the idea of digital currency hinges on the community and a transparent exchange between two parties. Because many see so much promise in this model, there are new businesses being constructed around the currency such as banks like Flexcoin and exchanges like Ruxum to further its reach.

Whether or not the markets have found their universal means of exchange, it’s clear that digital currency has the power to break down borders; currency becomes global with no physical borders, and borders in terms of fees and middle men are trampled in favor of a system of reciprocity and openness.

psfk, mintchip and other digitally powered currencies, mintchip, intel, always on, always on intel, intel always on, intel content program, intel social media, social chorus, social content, social media, halogen, halogen media, halogen media group, chorus

Content and/or other value provided by our partner, Intel Pro PMI Network.

With support from our partner, Intel, we’re identifying innovators that are using technology to empower global citizens and change the world for the better. Intel is committed to improving our lives with fast, light, wireless (and stylish!) technology. Their goal is to develop tools that help us create amazing things. And we think that’s amazing. Follow the conversation on Twitter with #intelalwayson.


Turn Food Scraps Into Fertilizer In 24 Hours

Technology Today

Why Nest Doesn't Get The Holidays

PSFK founder reacts to the damaging effects of poor email marketing

Children Today

Robots Could Be Joining Dubai’s Police Force In 2017

The real-life RoboCops can salute, shake hands and collect traffic fines


Get PSFK's Related Report: Future of Retail 2017

See All
Travel Today

Parka Hides And Charges Portable Devices

Bolt is a jacket that lets people carry and charge their various electronics without the need for an outlet

USA Today

Twitter-Powered Metronome Measures The Tempo Of Austin

The installation is designed to swing faster as more tweet come in

Travel Today

Yelp's New 'Yelfie' Feature Lets Diners Take Selfies

The update is designed to encourage people to attach a selfie when they share their experiences

Design & Architecture Today

Build Your Own Savory Cheese Advent Calendar

A British food blogger has created a guide to building a different kind of holiday surprise


Future Of Retail 2017
Transformation Strategies For Customer-First Business

PSFK Op-Ed Yesterday

Communications Officer: What This Holiday Season Means For Millennial Shoppers

Dallas Lawrence of the Rubicon Project shares why holiday cheer is all about likes, views and retweets

PSFK Labs Yesterday

Retail Spotlight: Home Depot Reimagines How Employees Conduct Tasks

The home improvement retailer puts the customer first by initiating local fulfillment centers and simplifying freight-to-shelf inventory management

Fitness & Sport Today

Floating Gym Concept In Paris Is Powered By Your Workout

The proposed design from Carlo Ratti Associati lets passengers ride a stationary bike as they travel through Paris along the Seine River

Syndicated Today

What Does The Future Of Android Look Like In A World With The Pixel?

Google’s decision to make its own phone might have looked like a blow to the likes of Samsung but the reality is much more interesting

Retail Today

Customer Service Expert: Why Offline Retail Has Better Data Than Online Retail

Healey Cypher, Founder and CEO of Oak Labs, shares why we should be thinking about the physical store as an e-commerce site

Fashion Today

Alexander McQueen Designs A 3D-Printed Umbrella

3D-printed fashion arrives in time for the winter season

Work Today

Why Training Associates To Be Advocates Is Key To Retail Success

In our Future of Retail 2017 report, PSFK Labs discusses strategies to prioritize customer service, which begins with associate advocates


Future Of Work
Cultivating The Next Generation Of Leaders

Media & Publishing Today

Netflix Creates Binge Candle To Celebrate A New Season Of Gilmore Girls

The streaming service developed a special layered candle that creates candle with episode-specific smells

Advertising Today

Interactive Film Tells A Story About Living With Cancer

A moving song written by a father of a cancer patient comes alive in a 3D environment

Automotive Today

Audi And LEGO Exhibit Autonomous Vehicle Installation

The installation at Design Miami explores the 25th hour, which represents bonus productive work or play time

No search results found.