Imagine a high-fantasy magic world where magic has the place of a science. Noble/rare metals – such as silver, gold, platinum – have the ability to conduct magic energy, which is commonly used in all areas of life (imagine, for comparison, a world like ours where all energy wires must be made of gold).

So, in this world, what can be used as money? I'm assuming that there is no way people would use things like gold coins, since gold is always required for practical use.

  • Comments are not for extended discussion; this conversation has been moved to chat. – James May 18 at 16:09
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    Have they invented the paper press yet? – Mast May 19 at 9:25
  • This question makes me think of "Dune" and water or "the spice". I'm assuming you are talking about a basis for wealth rather than an actual form of currency like dollar bills. – Jack R. Woods May 20 at 18:23
  • That's not that different from ours. Copper is good enough for most our energy wires, but there is plenty of gold in most electronic devices. – Jan Hudec May 20 at 20:11

19 Answers 19

up vote 105 down vote accepted

Manacoin.

Manacoin (abbreviated as mc) is an ethereal currency that only exists as shared thoughts in the astral plane. Everyone can create astral "wallets" to store manacoins. Wallets have names, which can be used to put money into them, and activation words, ehich are used to take money from them. A wallet can be tapped by anyone who knows its activation word, so be careful and keep your words secret - but do let people know your wallet's name so they can transfer to it.

To make payments with manacoin, use a cantrip to state you are moving a given amount of money from one of your wallets to someone else's wallet, identifying both the giving and receiving wallets by name. The cantrip will feed this information to an ethereal monster, of a species called "chainblock".

Chainblocks eat all information sent to them. When they have eaten enough they die in an explosion, after which the digested knowledge is accessible to anyone who is capable of accessing the astral plane (a broadbelt link is recommended), and the most recent manacoin transfers are present in that knowledge.

Chainblocks can only eat so much, though, and your cantrip is competing for stomach space with everyone else's, so you my have to wait for a few blasts until you find your transaction. If you are in a hurry you can include more manacoins in your cantrip, to fatten a chainblock beast faster.

Last but not least - manacoins are made of the chainblock beasts' scales. Everyone can have a go at the exploded beasts' scales to coin new manacoins. However, only some people manage to do so whenever a beast explodes.

It seems like chainblocks are evolving into a form which is ever less scaly, so it takes ever more powerful spells to get the same amount of manacoin per dead beast. At some point it won't be possible to coin new manacoins. This, along with the fact that no empire has been able to completely regulate it, and its high demand in the forbidden markets, has caused the value of manacoin to soar in the last few years.

  • Comments are not for extended discussion; this conversation has been moved to chat. – James May 18 at 16:09
  • For someone to give me money I must grant them access to my wallet forever by telling them it's name? – Mooing Duck May 18 at 23:55
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    @MooingDuck the name of the wallet alone allows you to put money in it. To take money from it you need the activation words, which are different from its name. – Renan May 19 at 1:17
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    I heard that everyone uses an obfuscation spell so their secret word is unintelligible to others, but which is clear in the astral plane. – Mark Maruska May 24 at 14:02
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    This could have been Terry Pratchett's next book. – Cain Jun 26 at 21:45

Well... money.

what value have that piece of paper you call 100$? What value have that piece of paper you call check?

Exactly what you want it to have.

If you're asking what support the value of said note then it also can be anything. Maple syrup. Choco beans.

Value of gold in ye olde goode times was not derived from it's abilities but due to it's rarity. Hence Platinum and Palladium that cost more.

If this is high fantasy then the ink for magic picture maker can be most valuable thing. Also drugs. Antimagicorbs - which can be fun because you don't need to have them so many. Because there won't be much wizard that would like to check your statement.

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    I'm not sure about other countries but in the UK it's a bank note is a promise to pay the bearer the sum of money indicated on the note. It's not actually money in its own right but rather a cheque made payable to the holder against the bank's own reserve. Historically any bank would issue these and that has occasionally caused financial crises when it turned out the banks didn't actually have any reserves (sound familiar? It's not the first time). But for most of history, the "money" was still gold in the bank's own vaults. – Separatrix May 15 at 9:16
  • @Separatrix Usually it's "something" gold in case of UK because at the time of introduction of golden standard UK was main power in the world and over half of world production was billed in sterling. But for example things get blurry when we're talking Euro. Different countries, different economy. Can Greece backup Euro value in Germany? Euro IS a golden standard on itself. – SZCZERZO KŁY May 15 at 9:51
  • The money has a bank's name on it, to accept it as having value you have to know the issuing bank is viable. We accept that he EU backs the Euro, that's a lot of weight to have behind a currency. Who is backing the fantasy money here? How far can it travel before becoming worthless? Gold and Silver were universally accepted as having value everywhere you went, they have no barriers. Paper money doesn't travel so well. – Separatrix May 15 at 9:57
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    Fantasy money is all very well but if you offered me DogeCoin as payment for something that actually had value I'd laugh and point you at the door before you wasted any more of my time. As a general rule such things have no effective value. Maybe that will change, but not for a while. TBH, I think the OP is overthinking this, but the answer he wants is going to be along the lines of the historical value of aluminium. – Separatrix May 15 at 10:12
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    Read this: en.wikipedia.org/wiki/Fiat_money for an introduction to fiat currencies, and why this actually works. – Dan W May 15 at 20:29

Modern currencies are very rarely backed up by any physical stuff. Tying paper currency to metallic wealth is not the guarantee of stability that people often think it is. See, you actually want to be able to control money supply in a society. Over time, as your economy grows, people start using money more - this is V, the money velocity. As V goes up, demand for currency goes up, and if you don't start increasing the money supply (the actual number of notes in circulation), your economy can start to crunch. This is in part why modern economists insist that a little inflation is essential for healthy economy growth.

So as your economy grows, you have to print more paper money. Many gold-based currencies were able to pull this off by simply changing the amount of gold that a single bill represents: that way, money supply can go up even as gold supply stays the same. But this is not a very good setup. First of all, what's the point of tying the value of your currency to a useless yellow metal if you're going to keep the discretion to be able to change the money supply at will? You might as well have pure paper money at that right. Second, the value of gold itself has historically never been very stable, so this causes additional unnecessary problems. Finally, in our world (not your fantasy world), we end up spending vast resources and committing enormous environmental atrocities harvesting a shiny yellow metal in quantities that vastly exceed industrial (utility) demand. In your world, this would be an even worse problem, because demand for gold as currency would put the squeeze on demand for gold as a magical input.

For superstitious reasons, it took a long time for many of the world's major economies to drop the gold standard, but ultimately it's worked out fine. Yes, there are governments that go nuts and print too much paper, but that used to happen anyway with the gold standard. Remember that the amount of gold a piece of paper is worth has to always be flexible to allow economy growth, unless you plan on mining tons and tons of new gold all the time, and so as long as any currency requires some type of government adjustment there is the same potential for bad decision making - so you might as well not tie it to a precious metal at all.

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    The point of the gold standard isn't to pin the value to something tangible, or to prevent the value of currency to change. That doesn't even make any sense - currency is a medium of exchange; if there's more things to exchange, the same amount of currency buys more things and vice versa. The purpose is to prevent the government/issuer from changing the value arbitrarily (and ever since currencies stopped being gold-backed, that's exactly what keeps happening so regularly people don't pay attention to it anymore). You're quoting keynesian economists, not "modern economists". – Luaan May 16 at 10:20
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    @PeterTaylor sorry, was just a lame attempt at humor. – barbecue May 16 at 18:38
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    @PeterTaylor That's a good point - a feudal society does not necessarily need to grow, and therefor does not necessarily need to increase money supply. However they can grow: even if population stays the same, new technology (or spells??) increases labor productivity. [Cont] – Pink Sweetener May 16 at 22:35
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    [cont] Increases in labor productivity either grows the economy (people work the same amount and produce more stuff) or it reduces the amount of work people do (people work less to produce the same amount of stuff). In market economies we call the second option "unemployment" because of how the labor market in capitalism works - though in feudal society it could actually mean leisure! [PS: @barbecue ] – Pink Sweetener May 16 at 22:35
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    @PinkSweetener Try finding a historical example of when a gold-standard currency underwent inflation comparable to e.g. the american dollar - the money supply at the beginning of the 20th century was \$7 billion; by the end, over \$13 000 billion. That's a growth of ~185 714%. Are you really trying to say that this just "matched the growth of the economy"? Gold standard means "currency is worth its gold value" - so adultering only works if you can force people to accept those coins; that means you need to be the only currency provider (like the dollar was for most of 20th century). – Luaan May 17 at 5:43

Having a commodity currency where the commodity has a practical use is actually a pretty good idea.

The problem with precious metals like gold and silver which had little practical use (besides jewelry) during the time they were used as currency is that their prices are highly volatile. There were several global and local economic crisis' in the past 1000 years which were caused by sudden influx or efflux of gold or silver. When someone discovered a new gold mine nearby, that was actually bad news. It meant that some of your wealth is now being redistribute to the one who controls that mine.

On the other hand, when there is an actual demand for a commodity, then the value of that commodity will be stabilized by that demand. It can not become too valuable (deflation), because people will riot before that happens. It can not become totally worthless (inflation), because people will keep consuming it.

Also, obtaining a pure currency commodity is essentially a pointless endeavor. Over the course of world history, countless wars were fought, whole countries were enslaved and tremendous economical resources were invested just to obtain gold and silver. And what was the point? What net improvement in quality of life has that gold and silver generated for humanity as a whole? None at all. It just redistributed wealth to those who acquired it, but it didn't create any.

On the other hand, if you need to work a few hundred people to death in order to obtain the resources which actually allows an improvement in the quality of life of millions of people, then that might actually be a justifiable sacrifice. I am not claiming that this is ethical, but you would at least have an utilitarian argument.

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    I disagree - check this question about currency in a post-apocalyptic society (worldbuilding.stackexchange.com/questions/106535/…) There's a number of folks (myself included) who suggest that using "useful" items as currency is a problem, cause if you use the item for its "other" purpose, you're essentially burning up money. The practical applications of gold and silver were limited enough in our world that there wasn't any temptation to melt a twenty dollar coin down to make a bracelet. – VBartilucci May 15 at 14:22
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    @cmaster I am aware of all this. But none of these uses existed during the times when gold and silver were still used as a currency. – Philipp May 15 at 21:31
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    @cmaster Actually, for a USB stick, it probably is purely aesthetic. Gold plated connectors only make sense where the contact area is small (e.g. integrated circuits) or the noise needs to be kept to a minimum (e.g. analog audio cables). Neither of these is the case for most digital connectors - it's just a way to pay more for the shiny thing :) But certainly, if gold wasn't used as investment, it would likely drop in price considerably and there would likely be many new uses for gold - it has some convenient properties. – Luaan May 16 at 10:29
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    @VBartilucci, prison economies are a real life example of "useful" items, such as cigarettes or ramen, being used as currency. – r12 May 17 at 6:47
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    And, apparently pudding, according to The Flash. But the same problem stands - a person has the choice of smoking (or eating) the "money", destroying it, and then not being able to get a haircut or whatever. To a degree it's the same mindset of hoarding potions in an RPG - the temptation to use it now against the fear that you might need it more later. – VBartilucci May 17 at 12:40

Gold?

This might not be the answer you wanted but gold would still fit the properties of money, arguably much better than in the real world. The properties are:

  • Fungibility: its individual units must be capable of mutual substitution (i.e., interchangeability).
  • Durability: able to withstand repeated use.
  • Portability: easily carried and transported.
  • Cognizability: its value must be easily identified.
  • Stability of value: its value should not fluctuate.

(https://en.wikipedia.org/wiki/Money#Properties)

(I think I remembered a property was divisibility, that money could be given in small amounts for tiny transactions.)

Contracts

Contracts with the government or any large body. These could be for grain, hours of labour, land or anything else the government could give that is useful to many people. The closer the objects the government promise to the properties of money the better. IE grain is better than horses because horses can be very different.

Sugar, Salt, spices or rare chemicals

These used to be very expensive items which fit closely the properties of money. Exception being chemicals which could become obsolete or decay over time, hard to identify unless put in a sealed flask with a trusted signature. Spices vary in quality quite substantially in my opinion. The flaw with these is they can all be produced at will, even if with difficulty so inflation is inherent, unless the government regulated the market.

  • As I said, gold can't be used in this case, because all of gold is required for a practical use, there is just not enough gold to make coins. – norlin May 16 at 14:57
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    @Norlin that would just increase the value and scarcity, people would use fewer, smaller and less pure coins. – PStag May 16 at 15:09
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    The English word "salary" derives from the Roman use of salt as currency. – arp May 16 at 22:22
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    Mind, grains used to be very different too. This caused considerable grief to societies that used grain as payment. I don't think there ever existed any currency that didn't have that problem - even silver/golden coins did. People learned to work with that, rather than complaining that nature is awful to their efforts :P – Luaan May 17 at 5:49
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    @norlin your objection seems to make no sense. If gold is bring used as a commodity there must be some gold in circulation - this can be used to transfer value between people (money). Do you mean that all/the vast majority of gold is locked up in magical artifacts too valuable for everyday trade? Or do you mean that gold is so valuable that it is not effective as money (because you would have to trade infinitesimal amounts)? – Ben May 20 at 8:53

Have a few highly-skilled (non-magic) workers who can create intricate objects out of (non-magic) iron.

Those objects then become the equivalent of bit-coin: you get them to record your transactions in something that can be inspected, but not duplicated or modified except by one of the few who are skilled and have the time.

Human blood. It is everywhere, it is inherently limited, and it is renewable at a predictable rate.

In everyday life, people would trade paper banknotes issued by blood banks. (There is a foolproof and surprisingly effective way to make unforgeable banknotes using random numbers, which can easily be generated with low tech.)

Imagine the practical and ethical implications of a blood economy. I think there is a fascinating story in that.

I can think of two basic ways to take this idea:

  • Extracted blood is not inherently useful or desirable, except for treating blood loss. (Which would be kind of like burning money to start a fire in an emergency.) People have simply standardized on blood as a currency because of its ubiquity and its stability. This actually provides a very predictable inflation. If blood is nonperishable, then inflation happens because the population is growing and people are always producing blood. If blood is perishable (subject to exponential decay), then "inflation" happens because older blood is less valuable than newer blood. Either way, people are encouraged to spend rather than save blood.

  • Extracted blood is inherently useful. Hypothetical example: magic is very commonplace, and all magic is fueled by blood, the amount of blood proportional to the power of the magic. Sounds like this is the opposite of what OP wants, but it could be an interesting mechanism in its own right. I think it provides a more plausible explanation for why blood became a currency than "people standardized on it because of its ubiquity and stability" -- it began as a commodity and became a de facto currency. Seems like this would be subject to pretty strong deflation though.

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    A great idea for some vampire-based theme :-) – norlin May 17 at 17:40

Will Wight's Cradle has nice system for this.

The coins are made up of pure mana. The more the amount / density / purity of mana, the more valuable the coin.

People can use pure mana in the coin for magic but nobody can create new coins. The mana, after entering human body, mixes with the individual's magic attributes and becomes impure. New coins created by individuals are have impure mana. Each clan / school has their own way of processing mana. So, impure mana coins are of no use anyone outside of that clan / school / sect.

Creation of new mana coins is done through specialized equipment that filters impury out of mana and creates new coins. But this equipment is hard / costly to make, needs continuous maintenance and even then coin creation is a slow process. This keeps the money supply under control.

Base metal coins (and/or paper bills) that have been magically enhanced (by governmental wizards) to be:

a) easily distinguishable from ordinary pieces of metal and paper, and
b) uncounterfeitable.

In "Red/Green/Blue Mars" by Kim Stanley Robinson, https://en.wikipedia.org/wiki/Mars_trilogy the martian colonists offer services so a form of barter.

But one of the services is to increase the local oxygen level of the atmosphere by some (small) amount. This is seen as a promise to do a community service, and might be perceived as a kind of "local sales tax" paid to the planet.

This would be open to abuse, in the form of All Take, No Give. So your currency comes from having a visible or measurable level of honour or truthfulness which is reflected in the flavour / colour / spin / taste of their mana / aura / magic.

So I give you a week's bread, you promise to spend 2 hours gardening and cleaning up the local kid's playground because you know my kids play there. You do it, everything is good. If you don't, you "smell" bad and I can sense that, and won't trust your promise next time.

Depends on the political structure.

If, and only if there are a strong government or authority, a highly likely scenario is that they would enforce their own currency, i.e., bank notes of some kind where a central banking institution under their control is the only one who can introduce new credit while guaranteeing the relative values between bank notes.

Otherwise, Ranan's manacoin seems more likely, or simple commodity trading.

Other answers have covered most of the things we have seen used as money in history:

  • Gold, and things made of gold.
  • Items such as banknotes that promise a certain person will exchange them for gold.
  • Fiat currency.
  • Cryptocurrency (which is really just a sub type of fiat currency).

To complete the set, we have two other options:

Something rare that isn't gold. Maybe copper is rare in this world.

Or, maybe your world is honest enough to use Rai Stones. Big pieces of rock, which are 'transferred' as an exchange of value. Except the stones are too heavy, so people just agree they have been transferred and they don't move anywhere. Kind of like bitcoin, using people's memory for the blockchain.

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    Really, anything that's hard to duplicate. There used to be a time in Europe where currency was things like handkerchiefs (cloth was rather hard to make), or ingots of steel (ditto). As technology advanced, processed materials fell out of favor, since increasing technology and commerce meant its availability was constantly rising a bit too fast. Gold and silver had their bumps (sometimes huge bumps - e.g. stealing all the gold/silver from the Americas), but those were always individual shocks, not an exponentially increasing growth. They disrupted the prices for a few months and stabilized. – Luaan May 16 at 10:34
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    The main difference between classical fiat and bitcoin is again the duplication - government backed currency can be expanded without limit, just based on what the politicians want. Bitcoin is more like gold in this regard - while it's supply isn't constant, it cannot be influenced by government bills. And the growth rate is dropping, so the bigger the economy, the lower the depreciation of the currency - even today, the expansion of the bitcoin supply is 4% annually, far less than any fiat currency in existence. In fact, the rate was chosen based on how gold mining worked historically. – Luaan May 16 at 10:38

Not to oversimplify the issue, but my quick 2vcents would suggest that you have taken what we consider precious/uncommon and converted it into a mundane everyday consumable/tool. Why not find something we consider mundane and turn that into a sought after currency?

This answer got too big for a comment, so I'll type it out here.

What you're describing is not unlike Stormlight Archive, where various gem-like objects do double duty: they are used as currency in the same way coins are (large gem = worth more), and they are used as magical energy storage (large gem = stores more magic). There's no interference between the use as magical objects and use as coinage.

Also, prison economies in our real world demonstrate that there's no conflict between items that are useful and items used for currency. Things like cigarettes, raman, and canned fish are common.

If you think about what currency is, it's just a fixed position on which people can barter.

"No, I won't unload your ship unless you pay me three [X]."

"Three [X]? That guy over there will do it for one."

"Fine, hire him, and it will take you all night. That ship over there offered me four."

"Then why are you asking three?"

"Your stuff looks easier to carry. I'll take less for my back's sake."

"Ok, Ok. I'll give you two today, and double amount if you come back next week."

That conversation can have any of the following inserted into [X] and still feel real, because it's probably taken place at some point in human history.

  • [X] = silver coins
  • [X] = pounds of fish
  • [X] = nights at an inn
  • [X] = haircuts

People have bartered and traded literally anything to get something from someone else. Favors, coins... you name it, it's probably been traded. I don't think the thing being traded having an actual use would in any way hinder the fact that it's being traded.

In Earthman Come Home by James Blish, the galactic economy used paper OC dollars backed by germanium, element # 32, for many centuries. Possibly silver, platinum, and iridium had been previous bases for galactic currencty.

Germanium is a rare element that has various uses. But using it as money in Earthman Come Home required that its price be artificially inflated to many times its real value. Eventually the galaxy went off the Germanium standard and everyone's OC dollars became almost worthless, causing a galactic depression.

the new monetary standard was antiagathic drugs - life extending drugs. Someone could choose to use his drugs - if he had any - as money or to extend his life.

Anyway, this is an example of how useful items like silver, platinum, iridium, germanium, and antiagathic drugs could be used for their uses and also be money.

Dragon scales, or some other piece of a fearsome beast. This would give you interesting options on how new money is mined/minted. Is farming these beasts a possibility? Can they be hunted by a small party or only by a larger force? Can the world be destablised by hyper-inflation, deflation or a group monopolising the supply?

There are only three requirements for something to be money:

  • It is common enough to be traded frequently, but at the same time is either regularly consumed or isn't too easy to generate.
  • It is small enough to be traded anywhere at anytime
  • The value is commonly known, or at least close enough for bartering to work out without too many conflicts.

I would recommend first picking one of the following categories and then your options will kind of fall into place depending on your world:

  • A simple mundane item
  • An item manufactured (possibly by magic) and regulated
  • A physical component to generating the "magic energy"
  • A source of storage for the "magic energy"

I can think of several answers to this question depending on how cohesive the political landscape is in this world.

The first and simplest is that there is no currency; instead everyone barters what they have for what they need. This requires no overarching governmental structure and no widely organised economy. It also creates problems with trading widely since all transactions are made with goods that are often bulky and or hard to transport long distances.

Manaconductive material as currency, because these materials are so very useful to this culture they have an intrinsic value based on their use rather than a simple market value based on their beauty and/or durability. This gives them a pure trade based value as a barter material already, to make them a currency you need some widely agreed standards of fineness and exchange. These standards could be agreed by a wide reaching merchant guild without reference to any larger governmental mechanism.

Backed currency, using manaconductive reserves as the basis for a Bullion Standard. This requires a lot of internal organisation in the form of banking institutions and international agreements that guarantee exchanges across borders. A single large bank that spans national borders can in fact run this kind of economy without much government input.

Fiat currency would change little in this scenario but to maintain the value of a fiat currency you need institutions that are stable over long periods and can be trusted to honour their promissory notes on demand. A large banking clan or guild with a well earned reputation for keeping up their end is possibly more appropriate as the arbiter of a fiat system in a fantasy setting than the, usually, feudal governments.

I think you can still use gold or silver as currency.

Either in a very "modern" or very "ancient" form.

You could see it in a modern way, as in, when you use gold to create something, is basically like you're paying for the object you're making. If you use it for a spell, in a way it is like you're paying for it, it's a cost for the service you're receiving.

Or, on the other hand. you could see it as a form of barter, like in the old times: where you could decide to kill and eat your cow, or use it as "money" to pay for something.

I guess in your world there must still be a stable source of gold, right? Otherwise you'd run out of it anyway, whether you use it also as currency or not.

protected by Separatrix May 18 at 8:33

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