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I am attempting to design an economy based around energy, namely, within a society possessing practical nuclear fusion. As I currently have it set up currency is backed by Hydrogen, meaning you could theoretically go to a bank and exchange all of your money for Hydrogen if you wanted to. Would this system work, and could things like superconductors also be used as a currency?

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    $\begingroup$ The problem with making the most common element in the universe a currency, is that it’s the most common element in the universe. $\endgroup$
    – Topcode
    Apr 2, 2022 at 18:04
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    $\begingroup$ Currencies backed by commodities went the way of the dodo about one hundred years ago, and for very good reasons. Why would you believe that in the future mankind will return to an idea which had its day in the sun and was eventually abandoned? (And hydrogen is cheap. It's about 1 USD per kilogram, compared to about 60,000 USD per kilogram for gold. For reference, 1 kg of liquid hydrogen is about 14 L or 4 US gallaundes. If you accept to be paid in hydrogen, bring a large tanker.) $\endgroup$
    – AlexP
    Apr 2, 2022 at 19:30
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    $\begingroup$ How would a currency be "backed" by hydrogen? Do all the nations of the world you're building have exclusive rights to all of its water? $\endgroup$
    – jdunlop
    Apr 3, 2022 at 0:36
  • $\begingroup$ don't bother with hydrogen, just base it on the kilowatt/ hour. that makes your base unit worth about 10 cents. or you can use kilojoules which would put your base unit at 0.3 cents of usd value. $\endgroup$
    – John
    Apr 3, 2022 at 14:34

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A somewhat niche Sci-Fi (the "Meganesia" cycle) used aluminum for their currency. It is basically energy-based, as most of the cost of aluminum is the cost of electricity to produce it. Still, paper money is used. In a tongue-in-cheek for British pounds (of sterling, basically, pound of silver in the early days), they basically say that one local unit of paper money (I forget, how they called it) is basically worth of one kilogram of aluminum.

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This could make sense in interstellar space where matter is rare.

I could imagine hydrogen being the basis for an economy in the outer Dark. Matter is rare. Aside from the people and the materials their ancestors brought, hydrogen is 99% of what there is. People can work to accumulate the rarified atoms from space, or bring it great distances at substantial cost.

Hydrogen is the feedstock for the fusion generators that keep the lights on. Hydrogen can also be fused into heavier elements and so replace some of the carbon, nitrogen etc that is lost to entropy. Hydrogen is fungible and frangible and so can be the basis for the economy.

-- Why are these people out in the middle of nowhere, far from any solar system? I admit I am curious.

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Not practical

Abundance: As various answers have noted, hydrogen is the most common substance in the universe. Each water molecule is made up of two hydrogen atoms and one oxygen atom - if hydrogen becomes a currency then the ownership of every molecule of water and the multitude of other hydrogen compounds needs to be tracked in order to determine who has what money. Remember that humidity is how much water is in the air at any one time? Good luck tracking not just every millilitre of liquid water and every millilitre of air but also the humidity of each millitre of air in the entire atmosphere. Remember to depreciate your assets when cooking and water vapor is rising from the pot of boiling water your pasta or rice is in!

Storage: Hydrogen molecules are so small that it is difficult to store it without any leakage occurring. Leak-proof storage containers are probably worth more than the hydrogen inside them would be. The alternative is to store stable hydrogen compounds (eg water) rather than hydrogen gas itself, but then it means that the majority by mass of what you are storing is something other than hydrogen (eg hydrogen is only 1/9 the mass of the water).

Consumable commodity: Making a substance that can be recycled (eg gold) a currency is not a great idea anyway in a modern economy, but making a substance that will be consumed in fusion reactors your currency is even worse. I'll leave a full discussion of this to someone with more economic knowledge, but let's finish with a quote from the Golgafrinchans who arrived to colonise prehistoric Earth in The Restaurant at the End of the Universe:

"Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become extremely rich."...

"But we have also... run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship's peanut."...

"So in order to... effectively revalue the leaf, we are about to embark on a massive defoliation campaign and ... er, burn down all the forests..."

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  • $\begingroup$ The basic meaning of the word "commodity" is anything that is traded in commerce. A more specialized meaning is any undifferentiated goods traded in bulk. Gold, silver, iron, aluminium, hydrogen, oxygen, argon, wheat, maize, soy, petroleum, coal, natural gas, electric energy are commodities. You cannot "make" hydrogen a commodity because it already is a commodity. $\endgroup$
    – AlexP
    Apr 4, 2022 at 8:44
  • $\begingroup$ @AlexP thank you for pointing that out, I have replaced the word "commodity" with "currency" where appropriate in the last paragraph section $\endgroup$ Apr 4, 2022 at 9:58
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Any economy based upon an element is going to have trouble. As has been noted, hydrogen is abundant. But liquid hydrogen is not abundant at all, it requires energy, electricity, and machinery to produce liquid hydrogen.

if your fusion reactor requires liquid hydrogen to run, then your currency may be the equivalent of a gallon of liquid hydrogen. NASA used to pay 98 cents per gallon; but the price varies, so figure \$1 is equal to 1 gallon of liquid hydrogen. That weighs 0.2679 kg, so \$3.66 per kilogram of liquid hydrogen.

So you can,theoretically, go to your bank today and convert all of your money into full tanks of liquid hydrogen. I did not price out the tanks themselves, those are pressure tanks and much more expensive than their contents, but reusable.

That said, if you really want an energy-based economy, price everything in kilowatt hours. That is a more reliable measure of energy; and a kilowatt hour can be generated by numerous means; including humans peddling bicycles, focused sunlight boiling water for a steam engine, burning wood or coal to boil water for a steam engine, etc.

In the USA, the average price of one kilowatt hour is 12 cents, but it varies up to 40 cents depending on the area. It means 1000 watts applied for one hour (3600 seconds).

In electrical engineering we actually use Joules; which is a very tiny amount of energy, one watt applied for one second. So a kilowatt hour is 1000*3600 = 3.6 million joules, which is 3.6 megajoules.

Saying "Kilowatt Hour" instead of "Joules" is kind of like measuring distance by speed and time, like saying a town is 2 hours away at 50 miles per hour, instead of just saying it is 100 miles away.

But "kilowatt hour" is the better known term, and on most electric bills; so perhaps the more understandable term for lay readers.

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1 credit = 1 kilowatt/hour

If you want to base it on energy base it on actual energy.

don't bother with hydrogen, just base it on the kilowatt/ hour. that makes your base unit worth about 10 cents, or you can use kilojoules which would put your base unit at 0.3 cents of usd value, for story conversion purposes. Since this is fiction you can assume way more efficiency than current energy and make your base unit equal ot a kilowatt/hour. This way your currencies value is only effected by the efficiency of energy generation which as an whole changes slowly, thus is nice and stable. This also means currency is worth more on the frontier, which was often true.

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