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This is mostly an economy-based question, so I am using Fallout world as an example. But bear in mind I care about economy factor of switching from one currency to another.

The world is after a great nuclear war. Only a few people survived and are repopulating the world. Existing states cease to exist and new factions emerge.

One of them is the Brotherhood of Steel: a religious cult which worships technology and has a lot of goodies.

Luckily for the rest of the world, the Brotherhood is willing to trade. And, even more surprisingly, they accept a "currency" which had little value until today: bottlecaps

And because the Brotherhood has a lot of goodies, valuable goodies (weapons and other tech), it's safe to assume that bottlecaps will spread as a currency in the next decade.

But, here is the twist: What if the Brotherhood stops accepting bottlecaps?

Say after 30 years the BoS stops accepting bottlecaps as any counter value item

They will be still willing to barter, but one bottlecap will have zero value. The Brotherhood still has a lot of goodies to trade, they just have enough of bottlecaps for whatever they needed.

Question: Is the post-apocalypse world going to get rid of this currency in the future?

And if yes, why?

P.S: For scope of this question, there is no other currency the Brotherhood is going to accept. They will simply barter.

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could you specify how long the BoS accepted the bottlecaps? I think the answers might depend on the timeframe. – vanillagod Feb 16 at 13:10
    
Are these platinum bottlecaps? Do they have a great value based on the metals inside? Are cream soda bottlecaps more delicious? (These don't really affect the premise of your question, I'm just curious.) – XandarTheZenon Feb 16 at 15:16
    
They are just normal, ordinary bottle caps. Classic Fallout premise there. And one coca cola bottle cap is worth one Pepsi bottle cap ;) – Pavel Janicek Feb 16 at 15:28
    
Stuff You Should Know has an excellent podcast on bartering, which may give some good insight into how a currency-less economy would have to function and how you'll need some sort of currency eventually, from a standpoint of efficiency. (the article the podcast is based on is here: money.howstuffworks.com/bartering.htm) – DangerZone Feb 16 at 15:45
    
@XandarTheZenon: The material value is at least more valuable than todays paper money ;) – Bounce Feb 17 at 9:12

10 Answers 10

up vote 14 down vote accepted

TL;DR: Probably not.


Currency Value

A currency, whatever it is, only has the value that its users give.

If we live in a closed system, I want a piece of the meat you have, and I am providing wheat. We decide that 50g of beef is worth 1kg of wheat. Good. We exchange our goods with no need for any currency.

I come the next day and I still want a piece of your meat. But now, I don't have wheat anymore. I am now working in some armed forces. I protect you. We agree that your 50g of meat are worth 30 minutes of protection. Fine, but if I just leave with the meat, you are not sure that I will protect you during those 30 minutes. So we get a medium to seal that exchange: a currency.

So let's say that we set bottlecaps as our currency. I get 1 bottlecaps per hour of protection of the village. With those hard-earned bottlecaps, I could trade my time for your meat. That way, you pay me during the time I'm protecting you, and when I get your meat, I pay you. The exact value of the bottlecap in terms of meat is how much you are willing to give for one bottlecap. It also depends on how much people are willing to pay for both goods and services.

In an opened system, it is somewhat more complex.

Bottlecaps

Now, bottlecaps were originally traded with the Brotherhood, but you mention that it was later largely adopted. As a result, people started to attribute some value based on it. For example, I still get paid in bottlecaps for my watch and you still get bottlecaps for your meat. The fact that I can't get my newest Uzi with the bottlecaps does not change the problem.

As long as the resources are at the same time scarce enough to get a trade value, yet plentiful enough to sustain the economy, there is no reason to change it (especially without a central decision point like a government).

If the Brotherhood decides to start trading again, but this time they'll use rubber ducks, you will see a money exchange market between bottlecaps and rubber ducks. In the same way that the exchange rate between dollars and yens is negotiated.

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The complexity comes from me trying to buy meat, but you don't like wheat, maybe you are allergic. Then I have to trade my wheat for something you like, say fish, but the fisherman doesn't like wheat either and wants shoes, and the shoemaker wants .... And by the time I got the trade chain going the meat is gone. – nwp Feb 17 at 11:18
    
Just as a point of interest, depending on the abundance of rubber ducks their acceptance as a currency would cause spiralling inflation rates in bottlecaps - if lots of people can easily get a hold of rubber ducks then caps would quickly become undesirable. Why should I accept that measly amount of caps from you when this guy will pay me in rubber ducks that the BoS will accept? You're going to have to give me a better price than that mate. – I Stanley Feb 17 at 15:26

Most modern currencies are fiat currencies, this means they have value based on your trust in the government/authority that back it.

In this case your backing authority is the Brotherhood. Their willingness to continue accepting the "currency" in exchange for trade goods is what gives the bottlecaps their value. Since they have a reliable value to that one group it gives them value to others as they can always be converted to trade goods with the Brotherhood. However, because there's an effectively uncontrolled supply of bottlecaps they remain a barter item rather than a true currency.

Should the Brotherhood stop accepting bottlecaps you could have a financial crisis of sorts. The currency that people have been taking as trade tokens now has "no" value. It becomes up to the other traders to decide between them whether they'll still allow the caps to have value in their own trades. If they do so then they become the new backing authority for the bottlecaps and it's the Brotherhood who may lose out. Just as you would if you stopped accepting the primary currency of the country you live in. Everyone else accepts it, it's all anyone will offer you, it becomes very difficult to do business if you reject it.

On the other hand if only the Brotherhood accept bottlecaps and nobody else does, it again becomes very difficult for them to do business. A limited number of people will be willing to go to the effort of collecting this otherwise worthless item for things that could possibly be gained through other, simpler, methods.

You could find that the real moneymakers are the re-sellers, the middlemen, who acquire Brotherhood goods and sell them for more commonly accepted currencies, or the money changers who now sit between the Brotherhood and the outside world and take a percentage on almost every deal.

If multiple currencies are available in what is otherwise a barter environment, then any of those currencies is ultimately disposable in favour of one of the others. In such a situation it'll be the people who lock themselves to only one currency who lose out.

(I've not played fallout so I don't know the specific details for this economy)

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Is PostApocalypse world going to ditch this currency in the future?

Well, this a rather strange question. As in, bottle-caps are already NOT a currency but more of a trade item. Let me explain my point in detail.

Currency (as in paper currency) is a receipt of sorts. When we give a 100 Euro bill to a shopkeeper, the currency itself stands for nothing. It is the authority of the state which makes that bill valuable. If the authority of the state disintegrates, the currency value disintegrates with it. The real thing, which lays safe in deep bank vaults are bullion of gold. These (alongwith a few other factors) give the currency its trust and value.

In a post-apocalypse world, unless there is a state authority issuing a currency, there is no value for the pieces of paper (or whatever else). You have mistakenly stated that BoS is accepting bottle-caps as "currency". This is wrong. Unless the bottle-caps are regularized and produced under the authority and control of one entity, they are not a currency but a trade item like other barter trade items.

Here is the difference: if it does not matter who has produced a particular bottle-cap and only the size, material quality and shape of the cap matter for its value, the bottle-cap is a barter trade item. However if there is some stamp or other mark of recognition on the caps and the caps produced by only a certain entity are acceptable, then yes, they are a currency.

Will Post-Apocalypse world ditch bottle-caps?

If the bottle-caps are a formal currency produced by BoS themselves or someone they have authorized for their production, then no, they cannot ditch it all of a sudden one day. They would at least have to inform the world a long time before cancelling out this currency about this change. If they just wake up one day and cancel it out as currency, it would lead to an all-out war.

However if the bottle-caps are valued by their material type, size and shape, then they are not a currency, but a mere trade item and BoS can cancel them all out anytime anyday and there would be no legal consequences for that.

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Gold has no significant value, only a price. Most currencies are now Fiat Currencies, they have value only because their supporting government says so. – Separatrix Feb 16 at 13:36
    
In the last paragraph, would it not be more appropriate to say that the BoS is free to no longer accept bottle caps in trade? As long as the BoS stand by their previous trades, this does not change anything that happened before. – Michael Kjörling Feb 16 at 13:37
    
@MichaelKjörling: Yes if BoS are not producing these bottlecaps themselves for this specific purpose (or under their authorized production units), they are not bound to accept them at all. – Youstay Igo Feb 16 at 13:39
    
@YoustayIgo Brotherhood is not bound to do anything by anyone, as they have supreme firepower and if they decide something no one can refuse without going to war - which is something BoS would accept but other parties might not. Also, "legal consequences" in a lawless postapocalyptic world sounds funny. There is no legal system, except laws of organizations, villages and shelters. But they all are pretty localized and internal. Nothing BoS' supreme firepower wouldn't deal with. – Mołot Feb 16 at 14:42
    
Ethics comes with its own innate legalities. Easy to disregard if you think shallowly, but not so easy to disregard when you look deeper into human psychology and social structures. – Youstay Igo Feb 16 at 16:43

Answer: It depends

One of the big factors here is how long the Brotherhood has accepted bottlecaps as currency. If they weren't accepting them for very long, it is highly unlikely that the currency will survive. If however, bottlecaps were used long enough that other people started using them as currency (the other factions for instance), it seems unlikely that just because the Brotherhood stopped, they would all stop.

Another interesting thing here is that if the rest of the world has started using bottlecaps for money, the Brotherhood will likely be pressured to start excepting them again. After all, not all of the other factions will be willing to simply barter with them.

You might also be interested in this article talking about how BitCoin became an accepted currency, particularly the section on "How do bitcoins gain value?"

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Assuming the BoS are trading like the Brotherhood Renegades did in FO3. That is, you bring them laser guns, plasma guns or energy cells and they'll exchange it for conventional guns or ammo they've picked up whilst exterminating super-mutants, they would reduce their number of customers because someone might be willing to give up their antique laser pistol because they need some dandy boy apples washed down with some nuka-cola, but don't have much use for 5.56mm ammo because they prefer to defend themselves with a bumper sword. They would be able to sell it to a middleman trader, who would then exchange it with the BoS and later sell the goods they got for it.

In other words they would probably find themselves just trading with visiting caravaneers, which would suit the BoS isolationist stance. Whilst BoS are powerful for their size, they are not all that important in trading terms and everyone else would carry on trading caps.

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It is likely that a currency could change in a post-apocalyptic world, just as it has happened in the past. Throughout human history, the currency that was used has been everything from paper money, coins and tokens, beaver pelts, wooden sticks, shells, etc.

In theory a currency can be anything that is agreed upon as a form of payment. The US Dollar is considered fiat money. There isn't anything to back it besides the belief that it has value. US Currency used to all be backed by Silver, and Gold, but those days are long gone. Gold and silver coins have also been taken out of circulation. Strict laws were even passed that prohibited private people from owning gold. There were stiff penalties for holding onto the gold, which sometimes meant prison sentences. The cases were rare, but served as a deterrent for most people.

In the Fallout series, bottle caps are the primary form of currency. They can be used to purchase goods, and services just like the Dollar does today. This is the current accepted form of currency, but it could change in favor for a different form. The reason why they are accepted is that there is a limited amount of them, and there are enough around to circulate.

To understand why a particular form of currency is accepted, you will need to start getting into economic theory. The basic theory involved is with supply and demand. There are enough bottle caps around that can keep the economy moving, but there are not so many, that they can be found in over abundance. If someone stumbled across a couple billion of them and started to spend them all, then there would be inflation since the value of each individual bottle cap would decrease. If this went on for a long time, this could cause the currency to collapse.

As the population increases, there could begin to be a shortage of bottle caps, and the economy would begin to grind to a halt. This would be the equivalent to a depression. This has happened several times in American history. This is one of the reasons we had to abandon the gold standard. There simply was not enough gold available to be circulated for it to work. It was becoming too expensive to produce coins because the cost of the metal exceeded the face value. This is also what happened to silver coins.

The shortage of bottle caps could be caused by any number of reasons. There is no real banking system in Fallout, but The Brotherhood does have control over the supply of bottle caps. They could keep accepting them as a form of payment, but when they buy things for themselves, they would use another type of currency and stockpile the bottle caps. Eventually, there wouldn't be enough bottle caps in circulation, and the bottle cap economy would crash. If this was to happen, then bottle caps would fall out of favor, and it would be replaced with something else.

What could also happen is that the supply of bottle caps could be inflated by The Brotherhood. They could find a way to infinitely produce new bottle caps to pay for their cause. When the value of them gets so small that you would need trucks full of them to purchase anything, then naturally another form of currency would replace it.

In summary, the bottle cap could lose its status as a currency if there is either a severe shortage of them, or they begin to appear in such abundance, that nobody is interested in using them.

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Bottlecaps are NOT fiat currency - they have intrinsic value

After the Great War, the technology required to manufacture and paint bottlecaps was lost, so the supply of bottlecaps is effectively capped at whatever number of bottlecaps were in existence before the Great War broke out. Their intrinsic value stems from the fact that it's simply impossible to manufacture any more of them and the fact that they are relatively uncommon. This makes them a rare good with a limited supply, giving them properties similar to ones that gold has in our universe.

With means of production lost, neither the Brotherhood of Steel, nor anyone else can issue new bottlecaps. Everyone has to work with the amount that's in circulation already. This is in contrast to fiat currencies where you can always print some more currency.

Will they be replaced at some point?

Yes, they will have to be replaced by a new currency. They are a physical item which is subject to wearing down, damage and (possibly, I haven't checked on this one) rust. Eventually there won't be any more bottle caps, and with no way of making more, the society will have to switch to a different currency. More and more bottlecaps will eventually wear down, get destroyed or otherwise go out of circulation, so there will be less and less of them to go round to an increasing population of the Wasteland. This will mean that there will be a deflation before as the bottlecap supply starts to dwindle, likely coming to a point where people can't take it any more or they are physically out of all bottlecaps. That's when a currency switch will occur.

Will they be replaced anytime soon?

Not for some 1-2 centuries at least. There are plenty of existing advantages to using bottlecaps as currency:

  • They are very portable due to their size and weight - that's a big bonus for merchants and travellers
  • They are impossible to manufacture any more - this prevents counterfeiting and inflation
  • They are relatively uncommon - you don't have to carry a lot of them with you to pay for the purchased goods and services
  • They are not TOO uncommon - otherwise they would have to be cut up into halves or smaller pieces so that you could precisely divide out your payment for the transaction from the currency you have on your person
  • They are quite durable - they lasted at least 200 years (2077-2270s in New Vegas IIRC) and are likely to continue being useful for years to come, at least until something new comes along to replace them
  • They are already a widely recognised currency in the Wasteland - both the buyer and the trader have confidence that they can convert their value into goods with any party they come across. This is invaluable as it's no good having a lot of a particular currency if you can't use it later or convert it into goods and services easily.
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You've lost the meaning of value in the intrinsic value of bottlecaps. They're limited supply, yes, but they have no value in the way that potatoes have value. You can't exchange them outside a financial system that accepts them, hence they are still a fiat currency. – Separatrix Feb 17 at 12:23
    
Hi @user16295. You can't exchange gold outside of a financial system that accepts it as well, for e.g. when contacting a culture that accepts salt as their main currency instead. Gold is useful for some industrial applications (gold plating for more reliable connectors, etc.), but it's main value is its limited supply (for our purposes). Similarly, bottlecaps are useful because you can recover scrap metal from them outside of their financial system, but their main value remains their rarity. – Pabru Feb 17 at 17:00

Put simply: a currency (or any means of exchange) is only useful when both parties value it.

If you try to buy my house with gold and I feel that gold is worthless, then no amount of gold will get me to sell you my house. However, because other people value gold, then I have a reason to accept the trade: I can exchange the gold for something I value more.

If we were to take Fallout seriously, we would have to acknowledge something the games never did: caps weigh something and take up space. It may be practical to travel with a few hundred caps, but a few thousand? It's just as foolhardy as walking around with a ton of gold strapped to your back: someone will notice and want to take it from you.

I can only picture two situations where the Brotherhood stops accepting caps: in the first, other means of exchange arise that lack the inconvenience of hard physical currency, like a VaultCoin of some sorts, and everyone generally adopts it.

The second is where the Brotherhood issues its own currency and demands that all of its trading partners use it as well. This is only possible if they command a great deal of land and have a lot of authority over the people in and around their territory. They might accept some form of currency exchange but their business is entirely conducted in BrotherBucks (or whatever).

This does come with inherent risks, such as exchange rates. If the BoS produces a ton of exports, it will drive up the value of their currency, making it hard for people to afford their goods, while giving their competitors a relative edge. This kind of thing is a major sticking point today between China - which artificially lowers its currency price to make its exports cheap - and America - which is a historically stable economy and so a lot of people rely on and do a lot of business in dollars, and is why American exporters have so much trouble selling overseas.

Given that government-issued currencies require multiple stable states to have an effective long term value, it is unlikely that anyone in the known Fallout cannon will push for a replacement for caps, unless all the Raiders are killed off, the Super Mutants eliminated, and so on.

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The important question here is what else is worth trading. Bottle caps are a fiat currency, like paper money is when not backed by a commodity. If no one is guaranteeing them, then they would tend to get replaced by a commodity. Fiat money is supported by governments, which require payment in that currency. For example, US taxes need to be paid in dollars. This gives people a direct reason to accumulate dollars. Plus there is an indirect reason in that you can easily trade them to people who need dollars.

In your scenario, there is only an indirect reason to accumulate bottle caps. It is likely that other commodities with a greater intrinsic value would take over more and more of the trading.

It's been a while since I've played Fallout, so I don't have a great in-universe suggestion. Since it is located in a desert, water seems like a possibility. Steel, gunpowder, and batteries are other examples of potential currencies due to the high need for weapons. None of those are light enough to make good currencies, so a paper substitute is likely. The first banking organization to issue paper certificates for such a commodity or commodities might well become the new broker of trade and replace the Brotherhood.

What else does the Brotherhood buy? From the description, it sounds like technology, metal, and fuel. If, for example, the Brotherhood will take as much uranium as you provide, that would be a good currency. Remember that the most important characteristic of a currency is that it be easy to trade for things that you want. So if gold is something that you can always find someone willing to take, then it's a good currency. Same thing for pieces of paper, cigarettes, or bottle caps.

You suggest that you want to create a world where the dominant currency changes. You can do this by switching from one party that guarantees to always take the currency to another. In Fallout, the Brotherhood will always take bottle caps, so people will accumulate bottle caps under that promise. In another universe, you'd need different organizations to step up as the currency guarantor. Without more details as to the actual situation, I can't be more specific.

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On a slight tangent...

Can I ask how the brotherhood of steel came to own all "the goodies" in the first place? Is it possible that consensus in this new world is that a repetition of the circumstances that lead towards this global apocalypse would not be in our best interests as a species? That perhaps an alternative approach to organizing our affairs would be worth looking into, as opposed to, you know, repeating the same process all over again ad extinctio?

Perhaps humans decide on a new value proposition, one that is not dependent upon personal/institutional ownership of the earths resources as much as utilizing those resources in the most efficient and effective manner, incorporating such real world metrics as health, relations, quality of life, environmental impact, sustainability etc.

Essentially instead of an economy based on ownership it is an economy based on shared interests, interests that are almost ubiquitous among human beings but that when incentivized in the right way can do great things. Social and environmental consequences become more pertinent than monetary and ownership consequences? Such an antiquated currency/ownership paradigm had its time it worked well in a low tech environment but it had no concept of the real world or of real world consequences, new technology has always been the driver of human progress and as such it could enable us through a new economic system far more effectively and mitigate the destructive externalities and mindsets that were consequential of the antiquated unlimited ownership ideology that served us in the past but that in its ignorance has caused great unnecessary suffering and destruction and was likely (at least at some level) responsible for the apocalypse in the first place.

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This does not provide an answer to the question. To critique or request clarification from an author, leave a comment below their post - you can always comment on your own posts, and once you have sufficient reputation you will be able to comment on any post. - From Review – Hohmannfan Feb 17 at 14:54
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Welcome to the site Chizzle. These are all interesting points/questions, but your post unfortunately doesn't address the question being asked. Please take a moment to review and update your post. If you have questions let us know. – James Feb 17 at 15:14

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