# What is the currency in an emerging space economy? [closed]

With colony cities on the moon and merchant ships mining asteroids, humanity has begun to colonize the solar system. Most of these entities are self-governing and trading is a very important business since most of them are only barely capable to provide for their own basic needs.

out of the many goods that can be produced in an emerging space economy, which one would make for a good currency? (I'm talking about commodity money, so I want the currency being a piece of something valuable)

• What's wrong with good ol' USD? Or Euros? Or Yuan? – FirstLastname Nov 30 '16 at 18:03
• My guess? M&M's. Specifically the peanut ones. – AndreiROM Nov 30 '16 at 18:10
• By the way, this is all terribly opinion based. Most likely it would be some sort of digital currency such as bitcoins, etc. – AndreiROM Nov 30 '16 at 18:10
• Are you asking for some sort of currency standard? Or actually using the standard as the currency exchange? Ala gold standard and gold coins? – Ranger Nov 30 '16 at 18:22
• Obviously this is for fiction, but commodity money is more or less a myth. See Debt by Graeber. @Katamori's answer is good, too. – R. Salisbury Nov 30 '16 at 19:29

Since the purpose of money is essentially to act as a common and fungible unit for accounting purposes (rather than trying to decide how many cows this pile of apples is worth, then trading the cows for lumber....), there are several ways to go, depending on the philosophical and political foundations of the society in space.

1. Fiat currency. Most of the money in todays world is fiat currency, and essentially has value because the issuing government says it has value, and because enough people believe the promise of value. This is behind the "Full faith and credit" backing of the USD, for example. If enough people no longer believe in the value of the currency for whatever reason, then the currency becomes valueless. Fiat currency has issues in a solar system setting, since money from a distant asteroid is pretty unknown outside the local area, and you have no "full faith and credit" in this place.

2. Commodity backed currency. Money was historically backed by silver for centuries (stop and parse the meaning of "Pound Sterling"), and more recently by gold (the US gold standard set gold at $35 USD/troy ounce). Commodity based currency is inflation proof, but can cause distortions based on the supply of the backing commodity (this is why silver backed money, being much more common and available than gold). Mining is problematic, since an unexpected strike can flood the market with a commodity, while prolonged economic growth without new supplies of the commodity can strain the system since there isn't enough money to support growth. 3. Digital/cryptocurrency. There could be some debate about this, since electronic transfers of fiat money through the SWIFT system or even your ATM/Interac card resemble this to a certain extent. The prime difference is cryptocurrency is not issued by governments and cannot be (easily) manipulated or debased by governments or the issuing party. This solves much of the "faith" issues inherent in fiat currency, but the user may not know "who" the issuer is, and governments can make things difficult by refusing to convert cryptocurrency into whatever the local unit of exchange is, making holding cryptocurrency inconvenient (you would either have to convert it on the black market, or go through chain of converting cryptocurrency to an "acceptable" currency, then into the local currency. This could be either mitigated or amplified depending on the attitude of local merchants. If they accept cryptocurrency, then all is good, but if they refuse it, then you are stuck with the "full faith and credit" argument again. 4. Locally issued national currency. This was used to my knowledge in the US during the era of "Free Banking" and by Canada up until the late 1940's, where a bank could issue the national currency backed by its own assets. Bank runs and other financial misadventures were localized because the currency was asset based (bank loans and mortgages are the assets of a bank, your deposit is a liability to the bank...). Since much of this depends on trust (is the bank cooking the books?), then it has local applications in an asteroid or space colony, but would tend to break down over even planetary scales ("issued by the bank of what?"). I suspect there will be a multitude of currency systems in place, ranging from local currencies in colonies or asteroids to fully fledged, energy backed currencies which are issues as cryptocurrency to ensure full faith and credit (you can always buy a Kw/h with one Solar Dollar, for example). Trade currencies like the Solar Dollar will be used in "international" trade due to convenience, while local currencies will be more convenient for small local purchases (a Solar Dollar might be worth far too much to purchase a cup of coffee with, for example). • The idea of a Solar Dollar is a sound one, but it effectively puts us back into a commodity based currency. Additionally, how will the energy companies feel about having the price fixed? To raise or lower the value of energy, they would have to adjust the economy of the entire solar system. Money should be a proxy for labor, but even in that, you can't expect to have it remain static to any single job/industry. – amflare Nov 30 '16 at 21:03 • @amflare true, problem is because not kWh is the money in this answer. Having kWh as currency solves that problem. But buying strength will be different in different places(probably), despite it is same amount of energy. – MolbOrg Nov 30 '16 at 22:16 • I chose the example of a kW/h in the example because it is fungible, and you can accurately determine the value of a product by the amount of energy needed to create it. Different energy producers (solar, fusion, magnetosphere tethers) will have different "costs" to generate electrical energy, and clever producers will be looking to minimize the amount of energy needed to create their products. – Thucydides Nov 30 '16 at 22:25 • The thing about kWh is that it is a fusion of power plants and banks. You can get your kWh in batteries that you then take back to the bank when depleted, you can take your kWh from an "ATM", or you can get it piped directly to your home. Raising and lower the value of energy - in context to what? Everything is valued in terms of the energy. – TheZouave Nov 30 '16 at 22:27 ## Bitcoin, or some other form of government-endorsed cyptocurrency. Essentially, something digital. "Space," it says, "is big. Really big. You just won't believe how vastly, hugely, mindbogglingly big it is. I mean, you may think it's a long way down the road to the chemist's, but that's just peanuts to space, listen..." The Hitchhiker's Guide to the Galaxy, Douglas Adams It takes days to get to the Moon, and months to get to Mars. Do you really want to have to send a ship all that way just to make a payment for spaceship insurance, or to pay taxes, or to pay someone to mine for you on another planet? Of course not. That's slow and inefficient, and carries dangers. What if the ship crashes, or explodes? For planet-to-planet transactions, this is a terrible mode of payment. Use cryptocurrency instead, sent through signals in radio transmissions. Data in the transmissions can encode how much money is being sent from whom to whom. When you're on planets, you can just carry a card - like a credit card - and swipe that. The card contains money connected to your "Bitcoin" digital supply. A government - governments, really - would need to endorse the currency, to ensure its stability. That's one issue that Bitcoin has faced for a long time. In fact, you'll definitely need international approval. I highly doubt that only one country is involved in this space exploration. Cooperation is the only viable option. • If a government endorsed Bitcoin, it wouldn't be any different from dollars or yen or euros, just with better cryptography. The Fed's dollar clearing system is just as automated as blockchains. One might even argue that the fed has better security, since stealing money from an account with the Fed takes insider access and credentials, and not just bug exploitation. – kingledion Nov 30 '16 at 18:30 • @kingledion Indeed; that's why I'm suggesting using digital currency. I'm not sure how much more secure cryptocurrency would be over physical currency in this situation - perhaps space piracy would be less of a problem in the traditional way - but it still seems like a fairly secure choice. – HDE 226868 Nov 30 '16 at 18:31 • Thanks, I considered a representative crypto, I now edited the question to refer specifically to a commodity – SilverCookies Nov 30 '16 at 18:50 • @SilverCookies Are you saying you invalidated my answer and a few of the others? – HDE 226868 Nov 30 '16 at 18:51 • Bitcoin is going to be a lot slower once we start getting off one planet, presumably we'd like to have at least one round trip to all the major centers of commerce before accepting a 0-conf tx just to see if the tx pool has anything outstanding from those inputs. At the worst case mars will have 10m+ latency to earth so a new block is likely to be minted while the message is in transit. We'll likely see something better than bitcoin, or a major blockchain for each planet. – placeybordeaux Nov 30 '16 at 22:11 # It doesn't matter if you're thinking of traditional currency. At the end of the day, they're all the same. Given the vastness of space, anything is effectively a fiat currency. The addiction people have to the shiny! that is gold, despite its effective low value, will be lost in the shear quantity available. Gold merely becomes a fiat currency that's heavy, awkward and expensive to transport. Value can only be given to that whose value is accepted. All currencies will be fiat currencies, and that's just a matter of the accepted value of any given fiat currency. For those who choose to say that ultimately no fiat currency has value, I say you are correct but in return I ask a different question: What, in space, has value? The trouble with the follow up question is that it depends. If I'm at an asteroid mining colony then food with flavour has the most value. If I'm on a planet then maybe the resources from the asteroids have the most value. I'd say Terry Pratchett was right when he said: Time. The time of your life. Jalo fumbled in a belt pouch and brought out a was of 10,000 Day bills. Company scrip was harder than most world currencies. Any one of them represented almost twenty-eight years of extended life if cashed at a Company trading post. The Company's credit was the best. It paid in extended futures. This sort of thing of course depends on available technology, it's something that cannot be estimated from our point in space and time as we don't know the technology that will be available to future space traders. • Historically money is/was measured in its value to buy labor and raw materials, and the products that could be produced from those. As technology advances (and we reach a theoretical post scarcity economy), owning a self-replicating (robotic) manufacturing system and the energy to run it will make unskilled labor (replaced by machines) and raw resources (with the entire solar system to mine) no longer scarce. Money's value is based on what you can do with it (making, buying, or protecting things), specifically on that thing which is scarcest for efficient production (energy, labor, raw mats) – Mark Ripley Feb 4 '17 at 15:18 • If energy is the limiting resource for mass production, money will be based on or reflect the cost of energy. If labor is scarce in a location, money will reflect the cost of that labor. If oxygen is hard to make in space, money will reflect the cost of oxygen. Look to the scarcities in an economy. Even with a 'post-scarcity' society, some one factor will be the limiting factor to economic growth, and that factor will be what money will be used to buy. – Mark Ripley Feb 4 '17 at 15:22 • As to what in space has value, I would say I could make a whole lot of money (of whatever sort is used) if I had a lot of oxygen and other people didn't. Consider Maslow's hierarchy and apply it to space. – Mark Ripley Feb 4 '17 at 15:28 # No change The US Dollar is an automated electronic international exchange system. It is accessible from pretty much anywhere, makes$14 trillion in financial transactions every day. It already accounts for varying regions of control (by national central banks), payments between banks, nations, etc. There is pretty much no need for any other system in the near-future.

The only issue with the current system is latency. In a solar-system civilization there will start to be significant latency issues in transactions between Titan and Venus, for example. This is mostly an engineering problem, rather than a design problem. Trying to day trade with 15 min lag in the Venusian Cloud City Stock Exchange will probably not be a great plan; but there is no reason that current financial transaction queues can't account for lag time in arriving transactions.

• The lag is probably the simplest problem to fix in that situation. Just send the exact time you made your trade and the system can cross check what the value was at that particular time. Realistically, you could probably make the needed changes to the system within a day or two. – Braeden Orchard Nov 30 '16 at 23:36

Conventional money usually needs some kind of central "government", a federal bank that maintains many of its properties (including the amount of money on the market) and provides its value - at least, fix me if I'm wrong, but as far as I know, current system of money is based on the fact that we trust in that it's accepted.

This way, if your people have the connection to the other world, it's a perfectly viable option to use either conventional (like USD) or cryptocurrency. (Bitcoin) The latter theoretically can work without it, as well - what I try to convey is that in this case, your people don't have to have their own federal bank, which makes things easier. However, they will rely on the "outer authority".

If these people are isolated or alone, then you have to build the base of the economy from scratch. Depending on what kind of economy you desire to build, it may vary, but in a money-based system, a backing product is necessary - like gold on Earth. It has to be infinitely divisible, very rare and generally accepted, just to name some of the most important requirements. Rare metals, metallic alloys, minerals from asteroids - you name it.

There's a midway situation, too, and in fact, I try to explore this one: there's a connection, but the other authorities are hostile. It means you can't really use their currency as a direct form of money, but through smuggling and other means of the black economy can bring in money, that, from that point, can partially be considered value that is part of the space community. This way, I presume, your space communities can profit from these illegal connections, with smaller exposure to the risk caused by the decisions of the federal bank regulating given currency.

I'm sorry for inappropriate grammar; I was in hurry a bit.

• Actual conventional money was invented by private banks before governments got into the game. – ohwilleke Nov 30 '16 at 20:30
• @ohwilleke Oh, indeed, good point! That is also a working model, yet I think possibly risky in the second case (isolated environment) – Katamori Nov 30 '16 at 22:49

## Energy.

OP's question is actually similar to this one interplanetary trade in around 2400 CE by the nature of the problem.

As a piece of something valuable, even with space scarcity of resources(maybe), I'm glad to present you, the latest invention in energy money - energy diamond.

Scientists are turning nuclear waste into super-efficient diamond batteries

With a half-life of 5,730 years.

A diamond beta-battery containing 1 gram of C14 will deliver 15 Joules per day, and will continue to produce this level of output for 5,730 years — so its total energy storage rating is 2.7 TeraJ.

As energy it has cost about 75'000\$per gram (0.1\$ per kWh), compare it to the current price of gold \$38,214.73 per kg. Or it is 75'000'000 per tonne, even with SpaceX ITS prices of projected transporting cost with 140'000 per tonne it worth to transport in physical form if there is such a wish. • not so easy, in first place because energy in space is cheaper, but best of 3 worlds (energy, matter, and good cutting tool) for those who like physical transfer. But sure energy does not have to be physically transferred in cases when it is not needed, or impossible to transfer. Same way as gold backed money do not transfer gold. ### Purchasing power of energy in different places • This section is less about having tokens, which OP was asking for, but again more about why energy may be valid as money. Purchasing power of energy will be different in different places. But to use the energy in a different place one have to deliver that energy to the place, or exchange already present energy in the place to already present energy in another place, if one like to use it there or order something there. Price for energy from one place will depend on abundance of the energy in that place, abundance of matter in that place, cost of delivering goods and services from/to the place, technologies available, demand for services in the place, offers (what they can do with the energy, and how much other needs what they can do) in the place, energy sources available in different places etc etc. Purchasing power of energy will define direction from which place to which place this energy is flowing. If as an example a space station can produce lots of energy for cheap(effort, matter, work hours), but can't produce anything else(for some reason) there are 2 ways to solve the problem • deliver technologies and/or matter to the space station • deliver energy to other places where the energy can be actually used to produce useful technologies or products or services. It works same way as one may have a house in one country, but to actually use it -- one have to be in that house or rent it to others - for money or for services or use the house for other profitable operations. Same way as currencies, you may have currency of a other country in the country, but one can't directly use that currency to buy something, because they do not accept it as payment, they accept their own currency as payment. They do so because of a reason, artificial and practical reasons. And for those reasons one have to use exchange service to get a currency of the country where he is at the moment, directly or indirectly (as by asking will you accept my money, and they maybe will but how much you money worth they will know from exchange rates of that currency) Same for energy, one may have Terra Watts of power production on a space station, but if one can't use this energy for something useful it is worthless. If he have to obtain matter and deliver it from Jupiter, to be able to do something with that energy it may be not so much overall. Also different services will cost different price - on earth recycling is expensive process, because they do not have lot of energy, so they make big trash fields - it is cheaper for them. On a space station, recycling is cheap, because of cheap energy, but making some kind of trash storage is expensive, because delivery of new materials may be expensive, or just -- worth in energy in the place where it can be obtained and in energy needed to deliver it to the station. Delivery and gathering the matter from Jupiter will cost about 300kWh/kg (depends on technology you have for gathering), delivery of that matter may cost from Jupiter to some station near earth will cost X amount of matter and energy (depends on technology used in delivery) In general, it will stimulate matter to flow in a direction where it can be used, energy flow in direction where it can be used, and will stimulate to develop energy efficient technologies. • Energy has wildly different values in different places. At the bottom of a gravity well, in place where you have sunlight but no water, in a place where you have lots of power but no reaction mass. – jorfus Dec 2 '16 at 1:14 • @jorfus true. I added some thoughts about that in the answer. Initially I didn't because OP's Q is about tokens, kinda what can replace gold for space in case if there is a lot of gold in asteroids, and transfer costs of heavy metals, but it seems Energy as money is still a controversial topic. Another version of why energy is the money in this answer if you are interested in. This answer is also relevant to the topic - how you convert energy from the orbit in moneys of you choose. – MolbOrg Dec 2 '16 at 4:46 In an emerging space era, the currency model wouldn't be that far from today's era. Since even we can get a new source of gold in another place beside earth, a space mining process would be more complicated hence need more investment that would prevent a massive drop in gold values. When you say about trading, which means fuels (in any forms) would be a precious value that can give more affect to the economy. Politic is also in play here as infant government in remote space area who just barely capable to provide basic needs may need and abide to a 'parent government' (maybe in earth or other large capital planets) that shares a common currency. (So we may see a Saturn Dollar$\$)

Another possible things is a evolved model of currency that's not based on scarcity of precious tangible things, says like Bitcoins. This will be one of a possible solutions for currency to prevent our economy to fall to chaos when human can get their hands on a planet that entirely made of diamonds or gold.