Currency discussion

[Ysh]

If these can be its own thread, I can maybe posting something more like an OP for helping this. Didn't realize it can be a topic of interest.

I think it is a bad idea for any player to accept some currency that is intrinsically worthless (e.g. not silver or gold minted from) and its production is not controlled by yourself. The ''Crown'' currency is such an example of this one. Note that I do not try to make this reflect badly on the faction running this market, I think they try to do a good service for the people. But it requires a very high amount of faith that this faction will play fair with the coins, and I don't give out such trust to others easily.

Imagine if the faction is actively corruption. They mint some currency and buy and sell in it. Others do the same. Now this faction will mint more coins and buy products from the others for basically free (the real value of the currency is that of the metal it's minted as). This is undetectable and allows them to scam sellers using their currency out of their goods.

A second scenario. This is less corrupt, but still a huge advantage for the minting faction at the cost of the trusting factions. The minting faction looks to play fair, but intentionally buys items at better prices (they easily do this, they can make more money if they run out) and intentionally sell items at worse prices. Now, they manage to convert their worthless currency into items and avoid converting their items back into worthless currency. All while they look to be doing good fair business. This is at the cost of suffering of the other players accepting the currency, since this effectively turns into the corruption in scenario 1, just with some unknowing middle man. This is also basically impossible to detect/prove as foul play.

The long and short of this one is that the minting faction has massive benefits from controlling the money supply as the cost of the people trusting this money. I do not advise any player to trust these currencies. I would advise any community market to do dealings in intrinsically valuable currencies. I would advise players to never hold onto currency they are not minting themselves for a long period of time as they cannot be a reliable store of value.

[Burinn]

Would anyone be willing to give me money if I were their in-game GF? I offer reasonable rates. Crowns only

[wolf1000wolf]

I would advise players to never hold onto currency they are not minting themselves for a long period of time as they cannot be a reliable store of value.

This is how I normally operate.

One problem with having currency that are intrinsically valuable though (silver/gold) is that you cannot use that currency for trades that are worth less than the value of the coin. Thus, if you want to buy/sell blueberries/leather/wax etc, its quite infeasible to do it in silv/gold currency.

[Jalpha]

Bulk trading is an option in that case but I'm not sure how functional it is. Trade stalls seem kindof clunky to me.

It's immoral to be able to print limitless amounts of money essentially for free.

[Burinn]

I would advise players to never hold onto currency they are not minting themselves for a long period of time as they cannot be a reliable store of value.

This is how I normally operate.

One problem with having currency that are intrinsically valuable though (silver/gold) is that you cannot use that currency for trades that are worth less than the value of the coin. Thus, if you want to buy/sell blueberries/leather/wax etc, its quite infeasible to do it in silv/gold currency.

I don't think it would be too unreasonable to suggest bartering in that case no?


Hypothetically, assuming trade is occurring, the value of gold will diminish as more is put into circulation/mined.

[Ysh]

I would advise players to never hold onto currency they are not minting themselves for a long period of time as they cannot be a reliable store of value.

This is how I normally operate.

One problem with having currency that are intrinsically valuable though (silver/gold) is that you cannot use that currency for trades that are worth less than the value of the coin. Thus, if you want to buy/sell blueberries/leather/wax etc, its quite infeasible to do it in silv/gold currency.

In these cases it is hard, I agree. The alternative is for an intrinsically worthless currency be backed by gold or similar, but this is also leaving some holes for abuse as soon as the minting faction refuses to exchange or mints more than their reserves (hard to verify).

Perhaps barter is a good solution? Or using some items as baseline (e.g. like cavebulb in previous worlds). Or maybe bronze/iron coins have enough intrinsic value for this one.

[Potjeh]

But base metals aren't worthless, especially at curio-grade quality. So I don't see a problem with using tin coins for small stuff like blueberries. All you really need is a reasonable exchange rate between precious and base metal coins.

Anyway, even with overvalued coins the damage is limited. People will quickly notice they have more coins than goods and simply stop selling until they cash runs low, or sell at massively increased prices because now they'll value goods more than coins. When inflation devalues coins enough, they'll be viable for turning into abacuses. Really, the only way to lose really big is to keep a lot of your wealth in cash, which is never a good idea.

[VDZ]

It seems wrong to me that any faction use currency made from iron and tin. If you can't see why then I am very concerned.

I think it is a bad idea for any player to accept some currency that is intrinsically worthless (e.g. not silver or gold minted from)

Material doesn't matter. Coins are inevitably worth less than the material they're made from, because else why would you mint coins from them instead of just selling the materials directly? It also keeps the value of the coins independent from the value of the materials, and allows any arbitrary value to be the minimum unit of currency (rather than a minimum of 1 gold pebble/silver nugget).

The ''Crown'' currency is such an example of this one. Note that I do not try to make this reflect badly on the faction running this market, I think they try to do a good service for the people. But it requires a very high amount of faith that this faction will play fair with the coins, and I don't give out such trust to others easily.

The economy is not that simple. The true value of the Sevillian Crown is directly dependent on the amount of trust people have in the currency. As long as Dis keeps selling things at the market for Crowns, and accept Crowns as payment in their trades, the Crown is valuable. A Crown is, at the very least, worth the value of the goods you can purchase from Dis for it. This is also what should keep Dis playing fair; every Crown in circulation is an IOU from Dis to the person who has the coins. Whenever they spend Crowns elsewhere, that means they're obliged to give away stuff of equal value for no compensation at some point in the future. (There will always remain a number of coins in circulation, however, and that is rightfully practically profit for the minter of the currency.) The moment Dis refuses to accept Crowns as payment, the value of the Sevillian Crown will crash, as will their reputation as traders. This is not to their advantage.

In fact, the lack of universal adoption of the Crown is already lowering the value of the currency. For example, if it had been universally accepted, I would be selling all of my Salt and Gold for Crowns without a second thought. But as it's not universally accepted as payment, I have to keep some high-value items in my home for non-Crown trading; if these had been up for sale for Crowns, it would be more interesting to buy Crowns.

Imagine if the faction is actively corruption. They mint some currency and buy and sell in it. Others do the same. Now this faction will mint more coins and buy products from the others for basically free (the real value of the currency is that of the metal it's minted as). This is undetectable and allows them to scam sellers using their currency out of their goods.

As I have mentioned before, every Crown is an IOU to the person who receives it. These coins can later be exchanged for goods. Unless Dis refuses to accept the Crowns as payment (which will cause a market crash), the trade is not free, but rather they're paying indirectly.

A second scenario. This is less corrupt, but still a huge advantage for the minting faction at the cost of the trusting factions. The minting faction looks to play fair, but intentionally buys items at better prices (they easily do this, they can make more money if they run out) and intentionally sell items at worse prices. Now, they manage to convert their worthless currency into items and avoid converting their items back into worthless currency. All while they look to be doing good fair business. This is at the cost of suffering of the other players accepting the currency, since this effectively turns into the corruption in scenario 1, just with some unknowing middle man. This is also basically impossible to detect/prove as foul play.

This would flood the market with coins, which would cause massive inflation, which in turn would cause people to lose trust in the currency, which leads to the currency losing value. I assume at least Dis has a decent idea of what they're doing and wouldn't screw up like this.

The long and short of this one is that the minting faction has massive benefits from controlling the money supply as the cost of the people trusting this money. I do not advise any player to trust these currencies. I would advise any community market to do dealings in intrinsically valuable currencies. I would advise players to never hold onto currency they are not minting themselves for a long period of time as they cannot be a reliable store of value.

I feel high-value items are a far less reliable store of value. Items shift in value as supply and demand fluctuate. Salt is really valuable, but after the Bonfire update suddenly demand for it decreased as Salt became less necessary until the stealth fix this last update. Gold and silk are really valuable now, but what will happen to their value once everybody has their top gear and people are still producing silk and mining gold? I don't trust them to remain at their current value for months. The only item in the game that will mostly retain its value is the Game Time Token (aka Subscription Token), as it's directly linked to an external currency (the real-life US Dollar), though demand for it will also fluctuate over time. Currency from a large faction known to be reliable traders and that accept the currency as payment for a variety of goods is the second best thing we can get.

[Jalpha]

I guess a tin or iron coin for a blueberry is probably a reasonable rate of exchange given the effort involved. Factions are valuing their coins much higher than that though.

I don't know if this carries through to trade volume, this world with charterstones being so rare trade volume seems too low for any meaningful financial interactions.

[Jalpha]

It seems wrong to me that any faction use currency made from iron and tin. If you can't see why then I am very concerned.

I think it is a bad idea for any player to accept some currency that is intrinsically worthless (e.g. not silver or gold minted from)

Material doesn't matter. Coins are inevitably worth less than the material they're made from, because else why would you mint coins from them instead of just selling the materials directly? It also keeps the value of the coins independent from the value of the materials, and allows any arbitrary value to be the minimum unit of currency (rather than a minimum of 1 gold pebble/silver nugget).

It does matter because a currency minted from silver or gold starts off with a fairly well accepted value from the get-go, it isn't worth x amount simply because said faction says so. It also reduces the risk inherent to fraudulently produced coins. As another point, if x faction collapses then the coins left over from their legacy can be reverse minted for a return on their past value. My only real problem is that coins can't be smelted into nuggets.