Crafting Money (was: RE: [MUD-Dev] Star Wars Galaxies: 1 characte r per server)

bhoyt47 at bhoyt47 at
Tue Jan 7 16:19:44 New Zealand Daylight Time 2003

Note: This message was written via the list web archives.  There is
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Original message:

On Thu, 02 Jan 2003 18:12:19 -0800
"Andrew L. Tepper" <teppy at> wrote:

> A Tale in the Desert (www.ataleinthedesert) does this, sort
> of. With some papyrus paper and ink, players can craft
> un-forgeable money. They can name the currency "JoeBucks" or
> "SteveShekels" or whatever. It takes the same resources to craft a
> 1-SteveShekel note as it does a 1000-SteveShekel note.

> Getting others to value your currency is a challenge. One player
> had had success by promising to keep one (for example) piece of
> Straw in a chest, per issued unit of currency. He had a policy of
> allowing anyone presenting his currency to swap for Straw. He gave
> a few others the ability to audit him. This was basically a "full
> reserve" system.

> Another group did the same thing, but only promised to keep a few
> of their chosen commodity (Iron) in reserve. If anyone wanted to
> swap for more than they had, they promised to stop whatever they
> were doing at the time and immediately make the demanded
> Iron. This was almost like a "fractional reserve" system, but with
> an undefined fraction.

> A third group tried a "basket of goods" approach, which was never
> well spelled out, and failed.

> Our Beta#2 ended soon thereafter, but it would have been
> interesting to see what evolved. In Beta#3, which is ongoing, they
> have not yet reached the Minting technology.

Fascinating system, Andy.  Though, I'm honestly not surprised to
that it didn't receive widespread success.  Remember, the primary
purpose of a fiat money system (such as coins, paper money, etc), is
to replace the more cumbersome barter system.  The primary purpose
of a money system is not to allow many individuals to mint their own
money, but rather to create a universally accepted currency.  There
exists a natural incentive to achieve a single, commonly agreed upon

If memory servers, this was one of the major factors that
contributed to the replacement of the Articles of Confederation with
the Constitution.  The colonies basically agreed that it made more
sense to have a single US currency, as opposed to the 13 colonial
currencies.  As we can see today, having different currencies for
the US, the EU, and all the other countries simply creates the need
for complex exchange rates.

Now, this natural incentive for a single currency is
counter-balanced by the benefit that some countries get with having
a stronger economy relative to others.  This is what kept Greece out
of the EU for so long.  Basically, the rest of the EU didn't want to
have to deal with Greece's weak economy having a negative impact on
the value of Euros.

Also, as you alluded, there is a complex issue relating to the
presence of a reserve.  If you have a fractional reserve (which is
to say that the bank only has to have a % of its deposits actually
on hand), then there is the risk that everyone will come and
withdraw their money at the same time and some people will suddenly
find that the money they thought they had doesn't actually exist
anymore.  This was a big problem that contributed to the great
depression because when the stock market crashed people ran to banks
to get their money out and the banks were too heavily leveraged and
didn't have all the money and many defaulted.  People lost
everything and BOOOM...Great Depression.  It was this result that
caused many people to store their money under the proverbial
mattress, as opposed to in a bank.

So, the Federal Government created the the FDIC, which insures that
people don't have to worry about this anymore if they bank with FDIC
insured banks.  So, my apologies for the lengthy history lesson.
But here is what i would be interested to see you (or someone)
implement in their game:

An honest to goodness banking system.  The step you described in
your post were really quite innovative.  But why not take it a step
further.  Instead of having players create their own currency, how
about letting players LEND in a formally, structured way?  Banks
enjoy having fractional reserves because doing so allows them to
invest the other money.  The incetive for individuals to store their
money in banks is that it's secure and it earns a return.  So start
by simply giving money a weight (1/1000 pieces to the pound or
something).  Eventually, players will choose to put their money in
banks if for no other reason than to avoid encumbrance.  Also, let
the players who act as banks offer competitive reates of return on
their deposits.  Insure those deposits through the game system
itself, but establish a way to create a negative consequence if the
players who organize a bank default.  The players running the banks
can then lend the money that they don't have to keep in reserve to
other players or use it to finance "investments" such as quests that
they can assign to other players or guilds.  Create an in-game
system for banks to "audit" those quests and receive a portion of
the proceeds.

NOW you're talking about a fascinating in-game economy...

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