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Over time separate countries have adopted common currencies, and a world can be imagined where a planet has a single currency. However, in building a world spanning a multiplanet system (several inhabited planets plus asteroid settlements and moon colonies around the gas giants), I would like to have a single currency for the whole solar system. Is this practical? Is there a way I can realistically implement this without it sounding contrived?

Problems that come to mind are the long delays of travel and communication, and the relatively slow exchange of goods compared to the rich exchange within a single planet population. Also I wonder if it would be practical to control such a system, or whether it would just devolve into separate planetary currencies.

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    $\begingroup$ Maybe you could use the euro for inspiration? $\endgroup$ – Liath Sep 22 '14 at 11:44
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    $\begingroup$ When the currency is based on other rare goods it would be no problem - see platinum in the star trek universe. Also, even if you have a set one currency, localy you will get more or less food or goods for them. We have the Euro in germany and if you go in Berlin in a store you get half the goods as in Frankfurt. (ok its not that much but you know what i mean) $\endgroup$ – Fulli Sep 22 '14 at 12:06
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    $\begingroup$ @FlorianPellet I would expect the FTL quantum communication to require transport of a steady stream of entangled entities at much slower than light speed. So it would be useful for getting an emergency message across once the entanglement is set up, but not so much use for frequent message passing, which would use up the entangled resources and require waiting for them to be replenished. If there are ways around this I'd love to see an answer based on it... $\endgroup$ – trichoplax Sep 22 '14 at 12:10
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    $\begingroup$ Communication speed is critical here. When your credit-card swipe (or moral equivalent) takes minutes, hours, or days to resolve instead of seconds, people will develop local alternatives. So knowing how efficient the banking network is is important. $\endgroup$ – Monica Cellio Sep 22 '14 at 14:02
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    $\begingroup$ @MonicaCellio There are plenty of ways to handle that though, quite a few of them using only todays technology. For example regional accounts that it takes time to transfer cash to, but that you can then spend locally instantly once it is transfered. $\endgroup$ – Tim B Sep 22 '14 at 19:11

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There is no reason that a currency couldn't span across multiple planets or even star systems.

The key thing that makes currency work is trust, people have to be willing to trust that what you just gave them is genuine, and that they can then trade it on in exchange for further goods and services.

So long as that problem is solved then even a galactic currency would be viable. Even in the case of major communication time lags a decentralized currency could still work. In fact even if the civilization that created the currency completely collapsed the currency may still be in effect so long as they recognize the value of the currency (and assuming it was in a form that survived the collapse).

What you need to remember is that money is just a way to give abstract tokens value. It means I as a programmer can go buy food from someone without needing to find a programming job they need doing. I program for someone who needs programming in exchange for money, which I then go exchange for food. They can then exchange that money on for further services that they need. Because everyone involved agrees to pretend the money has value the whole system works.

Decentralized currency

The Roman Empire's currency worked just fine even when it took weeks to cross the empire. They even had the concepts of credit, loans, banks and even their own bail-out due to a financial collapse.

The important thing is that you can prove that what you have is worth what you say it is worth, in the past that was done by using rare elements (gold for example) but in the future that could be done using other means.

Our cash now is accepted in circulation despite the amount of counterfeit money constantly made by fraudsters. So long as the protections in the currency are strong enough to keep most people mostly honest it works.

A purely virtual currency like bitcoin would be a problem as it needs to record each transaction with the network, but maybe that too can be overcome by some breakthrough in the future.

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    $\begingroup$ Wow, usually you answer with the massive post and I answer with the tiny one. Switched roles this time. But good summary and good point, I kinda missed that one. $\endgroup$ – DonyorM Sep 22 '14 at 12:52
  • $\begingroup$ @DonyorM I made mine a bit longer, just for you. Yours is still longer I think though :p $\endgroup$ – Tim B Sep 22 '14 at 12:55
  • $\begingroup$ I'm interested in the concept of a decentralised currency with long time lags. I wouldn't have expected that to work but it would be my preferred solution if it could work. $\endgroup$ – trichoplax Sep 22 '14 at 13:09
  • $\begingroup$ They're pretty close Tim. @githubphagocyte. I don't see why a decentralized currency wouldn't work, unless there were competing currencies (which there very well might not be). Look at my post, I basically addressed the point. Value of currency would actually be closer to living costs than actual currency value differences. $\endgroup$ – DonyorM Sep 22 '14 at 15:00
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    $\begingroup$ Interplanetary speed-of-light time lags are not long with respect to manufacturing lead times. So current financial system minus day-trading speculation would work. Interstellar (without FTL) is a completely different story. Charles Stross "Neptune's brood" to be specific. $\endgroup$ – nigel222 Dec 29 '15 at 19:56
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I'm going to go against the grain and suggest that not only is it impractical, but it's actually a bad idea to have a common currency across a single planet, let alone a single solar system.

Economics is not the study of money; it's the study of production. Money is just the means of measuring the product of disparate industries in a common way. A laptop costs more than a hamburger in modern economies because of the amount and cost of the raw materials that go into it, and the cost of the skills required to assemble it.

In a common market, the use of a single currency is actually a good thing; it means that when I make a laptop and offer to sell it, my resources and skills are being 'traded' at a par for their worth, based on supply and demand. The problem being asked in the question above is 'can we make the entire solar system a common market?' The answer is no, and it's a really bad idea to do so if you want to keep the entire solar system prosperous.

The Euro is a classic case in point. Let's just look at two countries; Germany and Greece. Before the Euro, German cars were expensive and tourism to Greece was cheap. Why? Because everyone wanted German cars, but when it came to international holidays, price was often a key consideration. That meant the people who wanted German cars HAD to buy Deutchmarks to get them, but you only bought Greek Drachmas if you were going there on holiday. This meant that the currencies are compressible; as you trade currencies, the supply and demand curve actually applies to currency itself in this case. What that meant in practice was that tourists injected a LOT of money into Greece because relatively speaking it was cheap. Fewer people bought German cars because they were expensive.

Since the Euro, that compress-ability between the currencies is gone. If you want a German car, you invest in Euros. If you want to visit Greece, you invest in Euros. BOTH countries require the same currency, but are competing in very different markets. The upshot? Germany is selling many more cars and becoming very prosperous, and Greece's economy is constantly on the verge of collapse.

The single currency makes sense for countries where there is TRULY a common market but in practice that never happens. This is why certain areas of any large economy seem to miss out on the prosperity as well. They are simply producing services or goods that aren't competitive at the current value of their currency or they just produce less of the main national products per capita than the rest of the country.

Even here in Australia we have this problem, with states like Queensland and Western Australia producing much of the mineral wealth of the country and wanting to keep the income from that product for their own state based services.

A common currency is only possible in a common economy, and every region (let alone planet or moon) will be different in terms of what mineral wealth they can exploit, how much of their own O2 and other life support requirements they can manufacture domestically (and how difficult that is), how self-sufficient they are for food, shelter, clothing and the like, and even transport; getting goods to and from (say) Neptune in this post-modern solar system would be almost as difficult as it seems to be getting it to Australia today.

The only way that these regions and planets et al can compete with each other in different conditions, with different economic strengths and weaknesses is with different currencies that are openly traded to supply and purchase goods and services between each other. Countries that are not competitive because they don't have much mineral wealth or excess goods to sell become more competitive by value of the fact that their currency reduces in value. That means that domestic services become more attractive to external buyers.

How do we know this is the case? In our globalised world, what countries have good official cash (interest) rates? None of them. Globally all the developed countries are offering the lowest interest rates on bonds and the like in history, because to keep their economies attractive to international buyers they have to keep their currency down to as low as possible a value, meaning that they only want people buying their currency to buy their goods, not as an investment opportunity. The other way of lowering the value of your money is to increase supply by just printing more (also called quantitative easing, something our US friends should know about quite well). If you do this in an uncontrolled manner it's bad because it leads to runaway inflation, so it can be risky, but if you know what you're doing your currency remains competitive.

So; if you're working on Ceres (for example) and have massive amounts of Iron Ore or Nickel to sell, but need to ship in Air and Food et al, you don't want the same currency as (say) Australia, which ships a lot of Iron Ore and also food. You want to compete on the Iron Ore, but buy food from them. Australia on the other hand probably doesn't want anything you can supply. So, you want your currency to go down in value by comparison to theirs. Sure, the price of food goes up, but at least now you can pay for it because people are buying your Iron Ore because in relative terms, it's cheaper than what Australia can supply it for.

The one caveat in all this is that if you have an effective government, with strong egalitarian principles and capability that is committed to ensuring that ALL citizens have access to air, food, and the other necessities, and that ALL commodities and services are priced fairly across the system, then the need for separate currencies goes away. That said, you're talking about a system of government that would need to enforce strict and complete regulation on all markets, and that's not feasible at all. Our modern forms of government are lucky to apply such ideals to their own country, let alone a solar system.

Therefore, if you're going to implement a society across the solar system, my recommendation is to allow them to trade in separate currencies and let those currencies rise or fall relative to the others based on their import needs and the values of domestic goods and services they can create. That's the only way to maintain some economic stability in the long term, and it also allows the different regions to adapt.

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    $\begingroup$ Upvoting for lucidity and economic understanding. Also, in a single currency system only one central bank would have the right to create money, and this is a big problem unless there is one central Govt. For example Greece is in dire need of money printing to be able to pay their debt, but Germany disagrees. Another problem is mercantilism. $\endgroup$ – peufeu Nov 25 '17 at 14:47
  • $\begingroup$ If, as the old saying goes, you can judge a person by their enemies, then I had no choice but to award you the rep due to the large number of answers that all begain with some form of "Tim B's answer was good, but...." (Although a few were refering to the other Tim B... are the two Tim B's realated?) $\endgroup$ – JBH Dec 2 '17 at 16:21
  • $\begingroup$ Further, I like this answer because it can accomodate the two most likely colonization scenarios: government and corporate. Corporate will likely use the old "company store" to encapsulate their colonies and force corporate-centralized trading while governments will inevitably run into all the problems you describe in their efforts to force the colonies to be just like the parent --- which has failed in every attempt throughout human history. $\endgroup$ – JBH Dec 2 '17 at 16:23
  • $\begingroup$ Just to be clear, the two Tim Bs are not related to my knowledge. The other Tim B has clearly been on the site for a while longer than myself, so if one of us has to change his name, I'm happy to be the person. @ Other Tim B, if you're out there, do you want me to change my name to avoid confusion? (Funny me asking that given I'm from Australia and I'm also active on Philosophy SE, although I've never been to Woolloomoloo) $\endgroup$ – Tim B II Dec 3 '17 at 23:24
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The easiest way to do this is to have a common government. A common government would regulate the currency and make it valued throughout its region of authority. This is actually a common principle in Sci-Fi stories.

If you don't want a common government, and you seem to suggest you don't, then it gets a bit harder. If the planets were heavily connected through trade, it would be possible that the two planets would work something out. A similar concept to the Euro could be used. Have the entire solar system agree to have a common currency, to make trading easier. This would also bond the solar system in an economic alliance, which very well could be useful, especially if there are other inhabited universes in the world.

You could also have it that a solar government rose and fell, but the currency was kept. This would would be especially likely in the case where the government was overthrown throughout the solar system, through a temporary confederacy of revolutionaries. These revolutionaries would then go their separate ways, but likely they would keep some things in common, such as currency.


Now, some would say that the value of the currency would vary from place to place. This would be true in some ways, but it isn't really a valid point. No matter where you are, the cost of living is higher in some places then others, even in the same country. It takes more money to live in London than it does to live in the countryside. Because there is no currency to compare this solar currency too, it has a set value, but in difference places the cost of living may be more or less. To regulate the cost of living, a solar committee (with delegates from all the sovereign planets), would decide how money could be produced. This would limit inflation, and prevent some planets from producing mass amounts of money, which would lower the value of the money on their planet, but they could still spend it on a high-valued planet. Because of these features, a decentralized currency could work.

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    $\begingroup$ Re the cost of living being different in different locations: wages tend to vary with cost of living; for example it's impossible to hire someone for minimum wage in downtown Seattle because they can't pay rent or commute far enough on those wages. So a workers at a McDonald might make twice minimum wage (and the McD would charge twice normal prices for a Big Mac to make any profit). $\endgroup$ – Mark Ripley Feb 25 '17 at 10:16
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A brief history of currency

The Ancient Way: Money has the color of gold

For a long time, 'money' was only something that could be exchanged for value. This is more or less and extension of the barter system with something that is widely recognized as having a value among many cultures and regions. Gold was the one natural commodity that fulfilled this best on Earth.

Gold has several properties that make it useful as a currency. First, and perhaps most importantly, is that it is visually pleasing and distinctive. Nothing shines quite like gold. Second, it is durable; that is, it is not used up. Spices were consumed, and more practical metals like iron were beaten into swords and plowshares. Gold was never 'used up' on anything practical; it was kept and displayed as a decoration (and expression of wealth). Third, it was imperishable. Gold famously does not rust, barely tarnishes, and generally needs only a rub with water and/or oil to polish back to a fine shine. Fourth, everyone knew what it was. Even if you have something that aught to be valuable, if you are trading it in a distant place the potential customers for this product must also recognize its value. A medieval merchant would not have paid for some valuable modern resource like crude oil or lithium. But gold, on the other hand, was present throughout the Earth, and pretty much every ancient civilization valued it. Therefore, it was an accepted article of trade from Cipangu to the Cambemba.

Of course, silver was often used worldwide as a currency-like trade item alongside, and sometimes even replacing, gold. But silver's properties are just like gold in this regard, in its aesthetic appeal,

Ultimately, trade in gold in this way is more like to barter than to a proper currency. It is exchanged value for value with another trade good. It just happens to be generally accepted as a trade good anywhere.

An analogy of this within a solar system is finding some good that is valuable to anyone. In our solar system, anyone on Mars might value a comet full of water or ammonia. People on Earth might value rare Earth metals or liquefied hydrogen. People in the outer solar system would put a premium on solar energy, or, lacking that, food grown with solar energy. But to make a good that is really like a currency it should be a single product that is universally valued. Gold is still a viable candidate, given its continued rarity and appreciation as a marker of wealth and prestige. But a better candidate might be some rare element that is critical to some futuristic technology. Perhaps lithium for batteries, Helium-3 as fusion fuel, or some rare element (I vote Bismuth) as catalyst for some futuristic technology (Maglevs! Cold Fusion! Warp Drives!)

The Medieval Way: Send your brother

Lets say you are the richest man on Mars, and you want to get into the ammonia importing business for this nitrogen-stared world. Lo and behold, there are a bunch of ragtag colonists have placed a station in orbit of Charon which has cryovolcanoes blowing the stuff practically into orbit (Note: this is speculative!). However, your Hegemonic People's Republic of Mars credits are no good in the wild west of the Kuiper Belt. How are you going to establish a trading relationship out there?

Well, if you are anything like the Peruzzi, Fuggers, or Rothschilds, you will send a trusted family member to act as your factor out there. You see, you still have lots of valuable Martian industrial and agricultural produce that the barbarians of the Kuiper belt would pay good money for. So you sent your brother out there and every couple of months ship him all the goods that he could ask for. He will then sell the goods for whatever goods or currency is valuable locally and then when he has amassed enough capital, pay for a giant ammonia ball to be mined out of Charon's surface/atmosphere and shipped back to Mars.

Sending a family member or similarly trusted person is key, since the time gap for even light speed communications to Pluto is 4-7 hours (depending on orbital alignment). If your factor is cheating you, the local law enforcement won't care (remember, the Kuiper Belt is the wild west), and it will take months to get a replacement sent out there. Better to send someone you trust, and what is thicker than blood?

Once your factor is in place there, many other options become available. Wealthy persons at Pluto Station will be eager to do business with your factor, because they can obtain a letter of credit there that will be exchangeable on Mars for a whole variety of commodities. You see, the wealthy people of the outer solar system have the same problem that you do: their 'currency' might not be accepted in the inner planets. If they want something as pedestrian as old fashioned as a leather belt made from a real cow, where will they get the money to pay for it? This is where your factor comes in. They pay him in whatever currency is valid on Pluto and in exchange, he gives the a note that they can redeem on Mars for something that will hold value in the inner solar systems.

In actual history, this is how most modern financial institutions were born. The Peruzzi and Bardi of Florence used this method to begin the first international banking in the 14th century; the Rothschilds used this same methods to start the international bond market in the 19th. It would not be surprising if the interplanetary banking market started this same way.

The Modern Way: Central Government Currency

There is a long way to go before you can have a 'modern' currency such as that we are all used to with the Dollar, Pound or Euro (apologies to readers from other regions). When the US Government first issued the dollar, it was explicitly backed by 'reserves.' These reserves took the form of something with a value that people could trust, gold (see: The Ancient Way, above). This continued for a long time. The UK did not come off the gold standard until 1931; the US until 1971 (for international convertibility, for you pedants out there, which is what is relevant here).

A central government can still, even without the currency being officially recognized, issue a currency that is valid in other places. I have personal experience with the value of the not-officially-recognized US Dollar in Africa. The key is, you will have to negotiate each trade with an exchange rate built in (again, as I personally experienced, and African merchants are much more up to date on the exchange rates than I). If the central government is stable and trusted (as regards its debts and currency, at least), then any currency it issues would be valid. Given that the Republic encompassed tens of thousands of systems during the Star Wars prequels, for example, Watto would have been a fool not to have accepted Republic credits. He could have driven a hard bargain on exchange rate (he did have the only available hyperdrive) and then found another local moneychanger to exchange Republic credits for whatever he wanted. Unless the Republic had a 10,000 year history of defaulting on its debts, anything that is valuable somewhere else is valuable here too, minus the cost of transportation (which, incidentally, seems pretty cheap in Star Wars).

In this solar system, it would be reasonable for any large and stable governments, United Earth and the Hegemony of Mars, for example, to have currencies that are widely accepted. Even in the far reaches of the Kuiper Belt, where pirates are more common than lawmen, anyone could appreciate being paid in Martian Ducats, since they will be sure that they can get a good deal from someone else for that money.

This monetary system relies completely on trust in government. By trust, I mean that people trust that the government is valid. This has been the case for so long in Western nations that people just take it for granted, these days. But it wasn't so long ago, barely 100 years, that civil wars raged, governments were replaced, and hyperinflation destroyed the value of currencies. So long as the people of your solar system can trust in at least one government that is issuing its own currency, there can be an agreed upon medium of exchange.

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I tend to agree with you, information delay could be the biggest hindrance, however, light travels from the sun all the way to Saturn in ~80 minutes. So assuming a worst case scenario that the earth and Saturn are on opposite sides of the sun and need a relay satellite you'd have about a 4-5 hour delay for round trip communications, and as someone mentioned quantum entanglement is coming close to fruition and that would change things quite a bit. Don't forget that most currency is really only a 'thought', a counter in a computer somewhere.

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    $\begingroup$ Actually, I disagree with this; information delay isn't a problem for a single currency, it's a problem for trading. In today's world, we have hedge fund operators processing thousands of trades a minute because they're hedging micro-fluctuations in share prices. You can't do that across the solar system. The single currency would actually make things MORE stable here because you could still trade speculatively on commodities, but not on currency. The tyranny of distance might actually make stock markets go back to basics and trade stocks for business value rather than speculation. $\endgroup$ – Tim B II Nov 25 '17 at 23:18
  • $\begingroup$ Seems like the more massive commercial entities would resume some of the character of historic (or at least pre-satellite-network) mercantile concerns in that respect, having to wait significant chunks of business days for transfers. Extrapolated beyond the solar system, a similarity to High Middle Ages emerges; only the security measures against interception/tampering are more like ICE and less like Templars. $\endgroup$ – N. Presley Nov 26 '17 at 2:10
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Implementation

In order to realistically implement a single interplanetary currency, you will need:

  1. A digital currency that can be "partitioned/sharded" by location

  2. Each partition acts as a "virtual local bank" for that specific location (jupiter, earth, etc.)

  3. Transactions are handled by the "virtual local bank"

  4. Everyone/every company will get one account per "virtual local bank".

  5. Many days will be needed for "inter-bank transfers" (one account at one "virtual local bank" to another account at another "virtual local bank").

  6. Personal transactions can be done on cell phones.

  7. "inter-bank transfers" are done over a network of RFC 4838 enabled interplanetary communication satellites.

This design seems to encourages a single currency. However, society may start to break things up into "local currencies" due to "cost of living". Social Engineering would have to keep that straight.

Money based on valuable materials

Currencies based on gold will collapse as soon as a space-based mining company got their hands on an asteroid similar to 433 Ero. http://news.bbc.co.uk/2/hi/sci/tech/401227.stm

Also, 16 Pshyce is said to have "$100,000 quadrillion US dollars worth of iron". https://www.sciencealert.com/nasa-just-fast-tracked-their-mission-to-explore-a-10-000-quadrillion-metal-asteroid

That is: for a space based civilization, raw materials are cheap. The movie "Jupiter Ascending" comes to mind.

Money based on physical coinage

IIRC, Klaatu from the original "Day the Earth Stood Still" movie said he uses diamonds as currency because of its durability.

However, since you can turn Tequila into Diamonds, counterfeiting the money would be a serious problem.

Actual article: https://arxiv.org/ftp/arxiv/papers/0806/0806.1485.pdf 2009 IG Nobel Prize in chemistry: https://www.improbable.com/ig/winners/#ig2015

Let's assume the diamonds that he uses are more like coins. As a coin, it should be worth more than the material used to create it. With enough anti-counterfiet measure built into the coin, the coins could be made trustworthy.

However, now you have the problem of moving money from one planet to another. Transferring physical money from one location to another will be affected by things many things. eg Pirates.

To me, this leaves digital curencies such as BitCoin as your only option for an economy of such large scale. (part of requirement 1)

partitioned/sharded virtual currency

partitioning and sharding are methods databases use to work with massive amounts of data. Recent database versions seem to blur the two concepts together. http://www.oracle.com/technetwork/database/availability/sharding-faq-3610620.pdf With similar technology a virtual currency should be able to be partition/sharded based on location. (other part of requirement 1)

This implies that each location handles its own portion of the virtual currency. As such, your lag time for transactions at a location is minimal because all nodes for that partition/shard exists within 3 light seconds. For reference, the moon is 1.3 light seconds away. You could conceive each as these "partitions/shards" as a "virtual local bank" (requirement 3)

To help limit overdrafts, everyone keeps some virtual currency at each "virtual local bank". (requirement 4) a person will keep more money at the "virtual local bank" that's near to their work/home at then the one near their vacation spot.

It becomes a social norm to do an "inter-bank transfer" as part of your trip.

Distance between "virtual local banks" can be measured in light days (oposite ends of kupir belt is 50 AU * 2 ~= 0.6 light days) Accounting for other time delays, a transfer of between "virtual local banks" could take up to a week or more. (requirement 5)

This would allow local "loan sharks" to become an industry.

Details

personal transfer

Now that I've explained how the "big picture" works, let's look at the details for an individual transfers. For this, things like "MasterPass" and "Google Pay" are viable basis of the required technology. I don't thing things like physical credit cards would be a thing. "Tap to pay" between devices is what I would expect. Most likely, people will use their cell phone. (requirement 6)

communication

Next to discuss is the problem with communication between such long distance location. Let's say you are on IO and your bank is on Earth. Being on opposite ends of the sun would be bad for communication due to the sun blocking the "line of sight" of radio waves.

I'm sure NASA doesn't like losing communication either. This is probably why they are working on Disruptive [or Distributed] Tolerant Networks as we speak. (requirement 7)

https://www.nasa.gov/content/dtn Image of DTN

Part of the solution includes RFC 4838. There are others RFCs that go with it.

Conclusion

It is very conceivable to build a realistic world that has a single currency that is used across multiple planets.

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Critical factor for a common currency is the sheer amount of commercial and people interchange.

There is absolutely no reason why having even a few days delay could not be handled via decentralized clearing house mechanisms.

It is well over half a century now there is no currency in the world which is actually backed-up by anything "physical".

All points in @TimB answer (which I upvoted) are valid but the last. There won't be any difficulty setting up a "purely virtual currency" beyond than the usual one: no privacy about how you spend your money. This has nothing to do with possible transaction delays.

The only requirement for a stable currency is the belief it will be honored, somehow, somewhen.

There has been a period (1975-1978) where shortage of actual minted coins in Italy spawned appearance of "minassegni" which were a kind of "parallel money" commonly accepted for the only reason people was convinced (mostly rightly) they could later spend them at no loss. In the same period also telephone tokens were exchanged as currency (nominal value 50Lit) for the same reason.

OTOH if there is but a trickle of interchange reasons to keep a common currency would be much lessened and drawbacks enhanced (see below). Note that large good transactions, operated mainly by international firms (e.g.: oil, cereals, etc.) are handled via completely different channels and do not contribute to push to unify currency.

Common currency is a necessity for highly integrated economies in order to avoid fragmentation due to customs duties and competitive devaluation.

China currency is a good example of why loosely connected economies could want separate currencies; a good summary can be found here, it boils down to fact that keeping Yuan value low they can keep foreign prices low and help invade markets while, at the same time, making import more expensive thus helping internal market.

It should be noted that (and this is a most important consideration) this can and will work mainly because China has a mostly closed economy relying on internal resources and thus not spending (much) money to import raw materials (how they acquire the few things they need abroad (mostly Africa) is a very interesting subject, but out of scope here).

OTOH some economies, most notably European one, are tightly interconnected and mostly based on transformation of goods with a continuous interchange with other partners. In this situation stable common currency is needed to allow each single firm (even small ones) to plan sensibly the myriad of micro-transactions needed to actually produce something.

Bottom line: Common Currency is a must for integrated economies and a hindrance when transactions are purely commercial and "not needed for production" (needed for revenue).

This has nothing to do with the actual form currency has (electronic, paper, gold coins, whatever) and time needed to clear a transaction.

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Use a virtual currency.

Not "virtual" like Bitcoin (although I imagine there would be plenty of cryptographic or otherwise "purely bookkeeping", non-physical, currencies anyway), but "virtual" in the sense of an abstract currency that no one actually uses directly.

Let separate local currencies develop. Don't even try to stop it. As explained in Tim B's answer, that'll be better for everyone's economies anyway. On top of all that chaos, though, you establish a single system-wide banking and/or payment system. (This doesn't have to be, e.g., a single bank or a single credit company; it could just be a universal industry standard recognized by a bunch of different banks and payment processors.) Even right now, in the real world, somebody can pay me in Euros and I can deposit those in my American bank, and the bank won't bother keep separate balances--they'll just tell me how much I have in total in dollars. And then I can fly to, e.g., Ukraine, and withdraw my balance directly in hryvnia at an ATM--the conversion just happens magically, behind the scenes, dependent on whatever the present exchange rate is.

So, now you're just going to use your universal banking system to add one extra level of abstraction--the virtual currency. Rather than reporting balances in any one real currency, you establish a virtual currency, not tied to any particular local economy or government, that's used to translate the values of different local currencies into a single common scale. Your reported balance might vary a bit from day to day as the exchange rates with the backing real currencies vary, but if you wanted to put in the effort to pay attention to the underlying details, you could instruct the bank to keep all of your balance in a specific real currency, or set of real currencies, or to automatically trade for you to keep your balance as stable as possible, etc.

If you don't want to, though, you'd only have to bother with the details if you ever wanted to actually withdraw cash in a real local currency. Otherwise, everywhere you go, people can quote prices in the virtual scale, you can pay for stuff electronically, and nobody ever needs to think about the fact that the real currency backing your transactions happens to be different in different places. The details of how all of the exchanges happen behind the scenes is a matter for governments and banks, not vendors and customers.

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This is kind of a supplement and solution to the problem that TimB pointed out of having different markets with different requirements competing with the same currency.

One solution is to have several levels/tiers of currency for different things.

The first tier would be a solar system(s) spanning currency. This could be block chain based, and it doesn't have to be fast. This is the kind of thing that governments and corporations would generally deal in, and normal citizens might use for long term savings/retirement funds. This tier is called slow currency because any interplanetary transactions have to be verified against the block chain at the speed of light. You might use this if you were buying property or other transactions that deal with large sums of money and don't happen quickly. Transactions are also slower because it would be verified against multiple chain sources for security.

The second tier is medium money, and would be for local systems, like the Earth/Moon system, Jovian system, etc. It could still be block chain based, but since the speed of light is less of a problem in orbiting bodies you wouldn't have to wait quite as long for the transaction to go through. Citizens would keep most of their money as medium money, and the primary uses would be as every day savings, paying bills, pay check from employers, etc.

The last tier would be fast currency, and could be token based, such as coins, paper notes, etc. which are issued for use locally. This would be for every day purchases such as food or goods where you don't want it to take hour(s)/days for a transaction to be verified.

How this system would work in practice:
Say you live on Earth, and want to take a vacation to a spa on IO. You would take some of your medium money and exchange it for slow money before boarding the ship for the trip. When you are a few days out from IO you would send ahead to transfer some of the slow money to Jovian medium currency so that it would be ready when you arrived.
When you land on IO and finish going through customs you'd exchange some of the medium currency into IO fast currency so that you could stop for some fast food on the way out of the space port, pay for a cab, etc.

Each system and local place would have their own exchange rates based on demand.
To exchange Earth system medium currency to slow currency might be 75:1, and the exchange from slow currency to Jovian medium currency might be 1:100.

The exchange rate from Jovian medium into IO fast currency might not be as favorable as it would be for Callisto fast currency, as IO is more popular.

Now lets say that you are there for a week and run low on medium currency, when the chance to see some super event comes up and you need a little more currency quickly. Now it takes a day or two to exchange normally, but that's too slow this time, and so you do the exchange with an added fast processing fee, say 10%, which is basically insurance for the exchange that you aren't trying to cheat them, so instead of 1:100 you'd get 1:90.

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Interplanetary currency

Scaling up the conventional currency to interplanetary exchanges shouldn't be a problem, depending on some parameters of the world setting.

  • Are the exchanges consequent and frequent enough to justify the use of a currency? Trading delays and costs or communication are issues?

    If it is a rare event, you are better off to just barter goods/services, your effort to establish a money wouldn't last with time.

    Eg: a colony on Mars would logically have its own currency, it would be too hard and meaningless to keep it "up to date" with earth, given the rarity of the exchanges.

    Though, selling goods/services to another planet and accepting its money, would be seen in a longtime investment/speculation on the potential of its internal economy ( e.g: you come back decades later on the alien planet, and now you can buy more/less alien's spaghetti bowls with 1 alien bill than you could the day of the trade)

  • The exchanges are frequent and feasible ?

    Then, deciding to use a common money across planets, makes as much sense as using €Euros across several countries in Europe.

The Consequences lies in the details

I personally think it is relevant to study our world to get ideas on how to build a world with planetary scale exchanges and currencies.

I will throw here ideas to explore:

Generic definition of currency

An amount of currency (material or not) is an amount of "purchasing power" into a certain economical zone (entities agreeing on using this money).

Inside its own economical zone, it is legitimate to trade it, because every trading partners trusts each other's efforts to put the right price (trading ratio) on their offers:

Once everyone in a group agreed on trading bills/virtual-money/gold pieces for their products, they are good to go with this currency.

Its value is a common scale to compare the value of goods and services between each other inside the economic zone:

e.g: A car is worth 20k \$ and a piece of bread 1\$, because it is 20k times harder to get it.

Although, "To get it" could mean 2 things:

  • Making it: resources rarity and availability,production cost
  • Trading it: from another economical zone (where resources, production could be cheaper), offer and demands...

Some Currency systems

  • Gold: Indexing value on a single material

    It is a viable system, if you can measure its exchanges across planets, but is quite unpredictable, it is lacking control in terms of supply:

    Meeting a new civilization with a lot of gold, would impact its value a lot, and it takes a lot of time for the market to stabilize again. (Famous story of King Mansa Musa, his massive gold donations during his pilgrimage to mecca devastated economies for decades: https://en.wikipedia.org/wiki/Musa_I_of_Mali )

  • "Paper money": centralized control of money value and supply

    It needs a centralized entity to control it, creates money "ex-nihilo", subject to deflation and counterfeiting.

  • Crypto-money

    Decentralized, infinitely splittable, fixed amount, not subject to counterfeiting (but subject to some attacks) ...

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What is a currency?

-All a currency is, is an item that society says has universal value such that it can be exchanged for goods and services. The problem with currency in general is what is that value and what happens when that value changes.

Historically, currencies that are made with rare widely desirable goods (like gold) tend to be more stable, because everyone wants gold. The problem with those currency system is that you then have a finite resource that represents the entire economy so the value of the currency becomes prohibitive in small denominations. You also have the problem when someone floods the market with that good so its value decreases.

Paper currencies have similar problems, so bottom line no currency is perfect especially across isolated economies.

Your best bet is to have a currency that's difficult to produce yet universally needed.

Perhaps: Units of Energy

Perhaps: In the form of anti-matter as a storage option, or some other sci-fi energy storage concept

Everyone needs electricity so it can easily be used as a universal futuristic trade currency.

The trick is coming up with a reasonable storage method that is carry able, safe, and easy to use.

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If we completely ignore the concept 'money' and focus on the mines or raw materials:

One of the the primary property of a material making it valuable is it's rareness. But to be able to become a currency and to be used instead of exchanging goods or services, a medium rareness level, I think, is better. (with always very high durableness level)

Let's define:

Low rareness level: Choosing stone chips as currency is not going to be a good idea as everybody can find tons of them easily.

Medium rareness level: Gold is hard to mine but not so hard. One can find gold almost everywhere today and it is not difficult to imagine a world using gold as the only currency.

High rareness level: Meteorite for example, is very rare but using it as currency is not possible because it is really rare.

Now, if we come to the point of the question; in today's world a Moon rack can not be a currency because it is incredibly rare. Only Apollo astronauts and the unmanned Soviet Luna spacecrafts brought some. However if we have shuttles going to the Moon and bring some racks every day, all day, and assuming the Moon rack is easily be distinguishable from an ordinary rack it can be used as a currency.

If we go one step further, if a several hundreds of thousands of people moves to the Moon, then Moon rock can not be a currency for the residents of the Moon, of course, while it can still be used in the Earth as currency. This time, Earth rack may be used as a currency among these very first citizens of the Moon!(This is not a good idea because carrying money is easier then carrying stones but we are assuming a moneyless civilization. (Just for analogy)) Then there will be exchange rates.

x units of Moon Rock = y units of Earth Rock.

x and y are determined according to the total number/weight of the Moon and Earth Rocks in the other celestial body.

Similarly, assuming spaceships can easily and frequently carry materials between planets or moons; a material reaching a medium rareness level in one planet and originated from another planet can be used as the currency. And there will be exchange rates.

Or any material, regardless of its origin, can be used as the intergalactic currency if it can reach medium rareness level in all planets.

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My favourite solution is to have a mechanism where space and time are null and void.

You need another realm.

The idea of a universal currency is fantastic. Whether some want to admit it or not, currency has driven every global decision since it was invented. Bitcoin is doing phenomenally well, this very day, and WTH is bitcoin?

So, how do you bypass space/time?

You can bypass the issues of space/time either with theoretical constructs like wormholes, which is the physicsy way of doing it (and probably rife with problems), or through what would be more appealing to many, including me, some sort of 'other realm.'

This could be, e.g. (1) the akashic library; (2) telepathic consciousness; (3) transcendentalism; or other.

How might this work? This is up to you. I'd suggest bitcoin as a current conceptual model. You realize it doesn't actually exist? I mean, WTH?

Perhaps, in the akashic library model, or some derivative:

Knowledge of the past, present, or future is transferred as currency. You bring your library card, with knowledge that, for example, Donald Trump was (quite unexpectedly) elected president. No one else expected or knows this yet (thank you, space/time), and so you have cache' of real value. After all, his election will change the power struggle on Earth, and therefore - ripple effects.

You cash in this knowledge, and in return, can learn about events in other systems. You learn, for example, that the orgasmic flow of the microscopic algae on Tantalus VII will, in five years, market their essence on a pan-galactic scale (hint, orgasmic essence, buy stock now!).

This is it, man. Intergalactic trade of commodities communicated through higher realms of consciousness not bounded by space/time.

(Similar constructions with telepathy, et cetera, as to the akashic library.)

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I think it depends on how (inter)dependent the planets populations are on one another. If most goods must be ordered from Earth, prices may vary regionally, but will probably be in Earth currency. If most transactions occur locally, you'd probably see regional currencies better suited for local trade not as directly subject to market conditions light-hours away.

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I suspect your answer rests with what happens here on earth. I posit that it will be a very long time before Earth's economy does not dominate the colonies. For the most part, trade will be of resources coming to earth, and finished products going out to the colonies.

So either the Earth will have a common currency, or each earth-based economic zone will trade in their own currency. Thus, any trade from any colony dealing with Europe will deal in Euros, Russia in rubles, India in rupees, and so on. This mishmash will lead to exchange problems in the colony itself. How do you price goods, when so many currencies are in circulation? Of necessity, I can see each colony adopting their own local currency (probably an ad-hoc black market currency to begin with), while external trade is done in other currencies.

However, if interplanetary trade is conducted predominantly in one earth currency, that currency will prevail on the colonies. Goods will be priced in the currency of import-export trade. The earth-based manufacturer will set the price in the currency they use and deal in. There will be no need to develop a local currency. Calculating exchange rates is absolutely the last thing a manufacturer wants to deal with.

There will be no historical inertia, no past culture or societal pressure to maintain a traditional currency in a newly formed colony. I suspect the currency that is adopted internally will be the prevailing currency of the colonizing country. If America colonizes it, the greenback will prevail. If Europe colonizes it, the Euro will prevail. Colonists will take their native wealth with them, in their native currency.

Using China as an example (and a good one, as it is now the largest earth-based economy) they use the renminbi internally, and it is really the only currency that is accepted in internal trade (beyond the tourist meccas). However, outside the country, the renminbi is worthless. It can not be used for trade anywhere. Try walking into a local store and buying something using renminbi. China basically uses the greenback for external trade, while ensuring it is virtually worthless within the country. If China colonizes a planet, will they use the renminbi or the greenback as currency?

I suspect of all earth-based currencies, the greenback has the best shot at being a universal currency. Notice I did not say American greenback. America has lost all claims to the greenback. Over half of all greenbacks in circulation are outside of America. Europe trades with Brazil in greenbacks, without the currency ever touching American soil. Effectively, every nation has a vested interest in maintaining a stable greenback, so even if America disappeared from the world economy, the greenback would still remain in circulation. World trade depends on it. I suspect some world trade organization, perhaps the United Nations, or an international consortium of banks, would take over 'ownership' of it. They would take control of 'the Fed' bank. I would not be surprised if 'the Fed' relocated to another more stable country in the foreseeable future.

In such a scenario, I would posit the greenback (not the American greenback, but the global currency greenback) would become the currency of international, AND interplanetary trade. A company would buy, say, lithium from lithium mines on an asteroid using greenbacks, and sell it for greenbacks to a manufacturer on earth for the same greenbacks. Weather or not the mining companies on the asteroid paid their employees in greenbacks, or the currency of their home country, would be unpredictable. Perhaps the decision would be made by the executives of the company, since the asteroid would primarily be a company town in the beginning.

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Please consider the Theory of the optimal currency area. Depending on whom you ask for such a common currency to work, you will need a) low trade bariers, b) labor mobility (people can and do move to where their work is needed the most, which is not this easy if they e.g. don't speak the same language) and c) a common fiskal politic or at least fiscal transfers.

Euro is a good example for a not-optimal currency area, because it has only a).

If you don't have wormholegate-maglev-trains you should get problems with a) and b). c) depends on your political system. It is not easy in a democracy to get votes if you give a lot of money to people on another planet just because e.g. (your opponents slogan) "they are to dumb to invent as much as your people" or because "they decided to save their ecology instead of burning coal to feed themself".

You might get around a lot of problems with digitalization, automatic translators, remote working and such, but then you might just want to establish an automatic currency converter on your banking-thingy instead. All this is of course 20th century thinking.

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If you have a Multi -planet civilisation you most likely have quantum communications already (given the current work dedicated/progress to this end, in a few tens of years it will be reality) , so communication won't be your biggest problem(i believe nationalist movements will be).

Just like the ones above me stated in some cases the EU is a fine example of what would the society you describe look like and for better of worse it's stil stable for now(excepting some political movements fueled by some particular peoples' interests...)

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Money cannot work across planets for the following reasons.

  1. The universe is yet to be discovered. We do not have full knowledge of how the universe works.
  2. Multi-universe needs to considered.
  3. Dominating intelligent life in so-called habitual planets has to obey this money treaty if at all we devise some.
  4. We are considering a narrow band of the universe into this picture out of the multi-dimensional universe that exists in higher dimensions out there.
  5. Maybe we are influenced by higher order dimension life forms' intelligence on what we are, we were and we have to be.

So, Your thoughts on how to make money work on different planets? is very narrow which is influenced by we being considered as the super life forms that live in this universe and we want to impose some treaty across planets.

Let's keep this simple. In this mother earth, only humans accept the currency/money in exchange for trade and no other living beings. Unless we get the solution here on earth we cannot derive a solution that works across planets. For that, money will not be the common treaty but something else has to be the way to go.

Ants will never come to this treaty if you wanna impose same on them. Dogs will never know what you are talking about. Virus bacteria will simply ignore you.

Instead of thinking about making currency/money work across planets. Let us think and solve the same problem on the earth. How can we make other living organisms on this planet earth to agree on this treaty of exchange of money?

If we make all the living organisms on earth to agree upon this treaty, we can do the same in space. Here, none of the so-called physical and technological barriers, such as cryptocurrency, paper currency, space-time travel, will ever matter.

The answer would be: can we use money?

NO, we cannot use the money. Something else has to be agreed upon across organisms and planets.

can we?

yes, we can make money work across planets, if we solve the above problem on earth for the different living beings.

how can we?

the same solution that we derive for all the living organisms to accept the treaty might work or even a complex solution might work on other planets.

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    $\begingroup$ Welcome to Worldbuilding! I think you're reading this question as something slightly different - given that there are people (of some form - I'd assume not necessarily humans, but capable of a similar level of intelligence at least and they can communicate/travel between planets etc.) on a large proportion of the planets in the solar system, how can a single currency work across such a system? As such would you be able to edit your answer so that factors from beyond the system aren't so constrictive? $\endgroup$ – Mithrandir24601 Nov 29 '17 at 8:41
  • $\begingroup$ Thank you and Sorry. I think, I generalized your question. Travelling across planets is the problem. For now, lets this way. We can do this god way. Trust, faith, belief, empathy will be the money. $\endgroup$ – Karthik Kumar Nov 29 '17 at 9:26
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If spanned across several planets, solar systems, galaxies, etc, relying on any kind of physical currency would be mostly unreliable. If in the case of multi planetary currency, they would most likely turn to a digital currency such as Bitcoin for example. The only issue with digital currency would mostly be backing, similar to how the US dollar (used to) Be backed with gold. It has to be linked to some sort of valuable physical object or material to make it worth something.

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  • $\begingroup$ Most currency today isn't backed by a commodity. Such currencies called fiat currency still have value, as evidenced by the fact that I can use it to buy things like food and drink. $\endgroup$ – sphennings Dec 1 '17 at 20:23

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