What would be the universal currency?

Question

So, we are still in the context of this question. The next part of making the humans intergalactic would be ... currency! Due to the fall of many currencies before, using different materials as money, we need a universal one, acceptable by all. So first of all, it cannot be:

• Currency based on material. We have gold by the dozen, while Hebdonians from the Free Galaxy do not have much, yet they continue to have most of space Journalism in their hands
• Time. The Gutmachtims live over 140 galactic cycles, where even cases of 200 have been observed, while humans merely live a measy 17.

What might it be:

• Life energy? It has been asked in a question here in this site.
• Real energy? How would buying electricity work then?

What are some other ideas that can be implemented in the intergalactical sense?

Answer 1

There's really only one option in these circumnstances: Fiat currency.

If you're asking yourself, "What's 'fiat currency'?", you need only reach into your wallet -- all (or at least nearly all) of our modern nations use fiat currency, and have for at least the last half- or three-quarter-century; the US Dollar, for example, has been a fiat currency since Galactic Standard Cycle f7e99.8 (Earth Year AD 1933).

So, really, what is it? Put simply, fiat currency has value because the government (or some other ruling/powerful body) says so. Not that it sets the value of its currency, but merely that it declares that the currency is, in fact, a currency. In your world, perhaps the United Intergalactic Federation has decided that the basic unit of currency that all sentient beings within its borders can use is the "credit". Or the "umfswatch". Or whatever.

When you get right down to it, currency does not on its own represent any intrinsic value. Its value lies in what you buy with it, and that in turn is determined by what the seller can buy with it after covering his/her/its expenses, which in turn are determined by the seller's supplier's costs and what the supplier can buy after that, etc. It's a step up from a barter economy because now two different farmers can buy shoes from the same cobbler after selling their eggs, versus in a barter economy the first farmer could trade his eggs for shoes, but now the cobbler has no use for the second farmer's eggs and thus refuses that trade.

Using currency we avoid that hassle, but at the end of the day, when all is said and done, shoes cost 15 gorks because that's how much the cobbler needs to buy the eggs to feed his family (after paying the tanner for the leather he used to make your shoes).

And that's how fiat currency works. (It's also, generally speaking at least, how commodity and other such currencies worked as well -- cocoa was a currency because you could make it into sweets that anyone could enjoy, but how much it took to buy a pair of shoes was still determined by what the cobbler, in turn, could buy with it.)

Answer 2

If there is a galactic currency then there is a galactic government to manage it. So, as Kromey says, fiat currency is the most obvious and sensible answer.

However, there will always be races who do not want to participate in such systems. The universe is a vast and infinitely diverse place. Perhaps the concept of fiat currency is too strange for some aliens. In such cases, as it would be by default without a common government, the default is the seller chooses the currency. The barter system will reign.

You want to trade with the Gutmachtims? Those long lived creatures fear death, one can complete dangerous missions for them in trade for their knowledge.

The Hebdonians from the Free Galaxy need our gold for their shipyards, we want their platinum, we can trade.

Answer 3

Don't confuse the goods with currency. Goods are the things the people want to trade. The currency is only the mediator. It doesn't have to be a valuable thing. In fact, it shouldn't be a valuable thing, especially in intergalactic trade.

Why that?

Consider our situation now. For some time, there was the gold standard, which was the promise by the US bank system to trade in gold for money. This keeps currencies rather stable, i'd say. However, there is a problem: Once the money that's around surpasses the available gold, you can't hold to the promise. That's why we the gold standard was dropped (as far as I understand, and without the historical context). So, the value of the generated goods far outpass the gold value available to back up the money. If we kept to the gold standard, there would be shortage of money. You can't trade, although you have valuable stuff to sell and want to buy other valuable stuff.

This problem becomes even bigger the more you scale your system up. What do you think how much value is produced in an intergalactic society? I can't imagine, but it is certainly too much to make one specific valuable thing the currency. Not even the spice is THAT valuable.

Answer 4

A couple of possibilities:

Power Source - maybe there's an extremely rare material that's used to power FTL flight. Everyone participating in the interstellar union needs it, so it ends up with a universally accepted value.

Wishes - A particularly powerful Elder Race, or a group of them, could have declare and enforce a galactic currency. You would need a reason why they want it - maybe playing with economies is their version of chess? Since they need to back it with something to encourage participation, they make it so if you acquire, say, 1 billion WishBucks that you get literally that - one wish. Think a semi-friendly genie - immortality, technology that looks impossible to us, basically you name it and you get it.

Answer 5

I think the answer to this problem lies in the way money was actually created.

The year is 9000BC. You've done a hard day's work building those pyramids and now you want to get home and eat something. The trouble is, you have to find something on the way back home and nobody ever wants to give you anything, you usually just have to find it. But today you have... A Plan. You've got a big basket of fruit with you. And your Plan works. You go up to the man who raises cows and you ask him for a pound of beef. And of course he says no, but "aha!" you say, "I have here some fruit. I will give you this fruit if you give me that beef." And you get your beef and it's good.

And life continued such for a while. People traded things they had for things they wanted. But the problem was sometimes the person who had the thing you wanted didn't want the thing you had. And so the goldsmith comes along.

"People! I have great news! We all value gold, do we not? Therefore trade gold for that which you desire and never let your desire go unsated again!"

That's right, the first coins have been invented. But the next problem is thievery. There's no way to prove whose gold is whose so it's easy to steal. But the city guards come to the rescue.

"We will store your gold in the greatest locked vaults in the city, and give you I.O.U. notes for the lot. For a small fee."

And thus paper money was invented. And so on and so on, more thieves, counterfeit money and ways to combat it until we have today's system.$^1$

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The point of telling that story was this: money is actually a promise. A promise that if you take your paper to the bank, they will give you its value in gold. Technically. (It won't work in practice, I don't advise trying.) And originally, it was a promise from a banker to give back whatever it was you gave them to keep safe.

So my answer is this: paper. More specifically, bits of recognizable, fraud-safe bits of paper with promises on them, promises from a Universe Bank to give back whatever they've been given for safekeeping. The Bank would also be the entity that sets the value of each type of planetary currency.

It's a bit like the money we already have.

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$^1$ There's a pretty good video explanation of that on YouTube

Answer 6

Hmm, if your societies are NOT integrated, no fiat currency. From personal experience trading with other soldiers - luxuries. Popular with us was drugs (tobacco, booze, caffiene),'white gold' aka toilet paper, and staple food (exotic to the other)

Answer 7

Money is divisible, interchangeable, impossible to counterfeit, countable, verifiable, not subject to decay, rot, or rust, and it is rare. These are the properties of any money.

• Gold. It's universally accepted here, and is likely to be elsewhere. Gold has all the properties of money. It is unlikely there will be a lopsided distribution of gold in one planet, because stars can only make so much gold during a super nova. A planet full of gold or lacking gold is not scientifically realistic.
• If not gold, then perhaps another high-atomic number element, such as rubidium (which currently costs more than gold).
• If not a precious metal, then perhaps a synthetic element that only high-technology societies can create, like Einsteinium. Of course they would also have to find a way to make it stable.
• If these societies can transmute matter, and create gold or other elements from energy, then matter is not an option. The choice then becomes energy, information, or entropy.
• Energy. All money is in essence a form of energy, as it requires energy to dig gold out of the ground, or to synthesize rare elements. So there may be a common energy storage that creatures find useful, whether barrels of oil, or Energizer batteries, or dilithium crystals. Since stars will provide nearly limitless energy and presumably all societies will be capable of solar power, energy might not be a viable currency unless there is a unique and rare storage mechanism which enables storage of vast quantities of energy and allows divisions, verification, and all the other properties of money above.
• Information. Crypto-currencies. Bitcoins have all the properties of gold above, plus they allow instant transmission and low transaction and storage costs. Assuming no creature has created a quantum computer, then a galactic crypto-currency is highly likely.
• Entropy. The ultimate root of all money and value is low entropy. Gasoline is valuable until it combusts. Bitcoins are valuable because the bits are arranged in a specific order. Gold is valuable because it's a high atomic number particle that requires tremendous energy to create. So, assuming a society is so advanced it has unlimited energy, can transmute matter, can create quantum calculations, then the only value left is in highly complex and creative arrangements of matter, namely art, music, literature, sculptures, etc. This is why the Primer in Diamond Age was so valuable. All housewares were disposable commodities items even to the poor, but something so exquisitely arranged and rare at a molecular level was priceless. Of course any creature could copy one of these units of currency, but the first one of its kind borne of creativity will be quite valuable and can be auctioned for other creative works produced by other creatures - since commodity items are worthless. Even North Korea exports art for minerals and money.

It is highly unlikely that all creatures will trust a single planet or government and accept its fiat currency. Most technologically advanced societies will be able to counterfeit such a currency anyway (as North Korea does with US dollars).

Answer 8

In fact, current money are not promises that you can get gold back, nor that you can buy anything. They are promises that the State will accept the coins to fulfill your taxes.

This is why Counts and Lords minted their own coins during the Dark Ages: they wanted to be sure they were receiving the amount of gold they expected when getting the taxes in, so they minted coins, used them to pay their fellows for services and goods, the coins circulated because everybody trusted that the Lord will accept them back, and when it come to pay taxes, everybody used them, and the Lord accepted them.

This could not work with aliens.

So you have several options:

1. Find a common scarce material and transform it into a common currency count. It may be gold, platinum, iridium, uranium (in some form that avoids nuclear explosions)... something that is not easily craftable, but is easily measurable.

   1a. After 1. and after confidence has been established, create a fiat currency based on that common scarce material ("This coin worths 1 gram of uranium">"This note worths 1 gram of uranium">"Some annotation on my accounting book means I owe you 1 gram of Uranium")

2. Find a pair of abundant/scarce materials and agree on an exchange rate. Maybe their platinum against our water, on exchanges 1 ton for 1 ton.

   2a. After 2. and after confidence has been established and the value has stabilized, create a fiat currency based on that interchange rate ("This coin worths 1 gram of wood-equivalent platinum" etc.)

Answer 9

Due to the fall of many currencies before, using different materials as money, we need a universal one, acceptable by all.

Well, now the countries are bordering each other and we don't have one currency, acceptable by all. Having galactic currency is simply unfeasible.

First of all, issuing own currency is power. If you control the currency, you can change the value of your debts and the debts other have by you by printing it, or otherwise manipulate its value. This is what the US are accused of by other nations, and why the Chinese are threatening to switch their reserves to EUR.

Second, even if not intended, the currencies change their value. The intergalactic communication is the complete different time scala. The trade expeditions will take from hundreds to millions of years. It's completely impossible to tell what value would that currency have after so many years, and even if it will be accepted (the currency notes are changed every X years to prevent faking them).

Third, the whole trade concept. The energy needed to transfer some goods from one side of the galaxy to the other is so immense, that it exceedes any possible value of that goods. So the only goods that, I foresee, will be traded on long distances is the technology and the territory (space).

The trade will probably exist only on local scale (solar systems) and there will be enormous number of local values, practicably not exchangable to the other (non local) currencies.

Answer 10

You've established that both "time" and "materials" are too unevenly distributed to work. Rather than bringing in "energy", and the question of which form it should take or how energy is not unevenly distibuted, I'd go for what's left when you subtract time, matter and energy. Namely "space", the substrate of existence which is undeniably common to all species. Nobody needs a special flavour of space.

Concretely, the currency would be bubbles of warped space. Fiction and non-fiction has established these as a method for propelling spacecraft at FTL speeds, they can be harnessed to produce energy, used as weapons, employed as shields and barriers, used to store things in, to provide extra room inside a small spaceship or perhaps even to slow or speed the passage of time for someone within the bubbles, so that short-lived species can in a sense "buy time". This also makes for a nice substitute for cryo-sleep. You can imagine that bubbles of warped space could be produced in several different ways, which plot-wise allows the species to have comparable levels of wealth, if that's what you want for your story-universe.

Answer 11

Energy would be the most likely. Night's Dawn, whilst a generally human "universe", uses Fuseodollars, an analogous currency to petrocurrency, where trade was based on the availability, adjusted by the cost to transport, He-3 (helium 3), which is used in nuclear fusion (the dominant form of star-ship fuel in the story).

Basically, the cost of any item would be directly proportional to the expense to transport it.

However, what substances would an intergalactic currency be used for? Any commodity that could be bought in one sector of the galaxy is likely to be much easier to reproduce somewhere else rather than transport it. The only thing that could be valuable, in any sense, is intellectual property (as even raw mass can be produced from energy if need be). But as nothing of any value could be transported over those distances, there would be no value to be gained by maintaining a monopoly on the ideas or art. This would be a very different economy to what we would be familiar with: think of it like everyone has a 3D printer, and can turn starlight directly into mass.

The only thing that would be really valuable in this economy would be any element heavier than iron in the periodic table. That is, only once all other resources have been exhausted, however.

If this is the case, it would be likely that either Lead or Bismuth would be the most stable currencies.

Answer 12

Money simply facilitates trade - I'm not convinced that there is truly a need for a universal single currency.

Monetary needs are different for different economies, and no single monetary policy is likely to best for every situation in the universe at all times (surely there would be some variations in development, productivity factors, financial systems, etc).

If there isn't significant trade, such that there is a significant system of exchange between many people trading into and out of a currency, there might not even be any need for exchangeable currencies. Barter would be needed for the rare exchange because there is no meaningful use for the other currency.

In between those two (single currency and barter) would be local exchangeable currencies. Each locality can use their own currency, with monetary policy set to the needs of their economy, and using a clearing house for instant exchange between the various currencies being traded. This takes such a negligible amount of computing capability such that real-time conversion of currency denominations has been trivial for us for decades - it certainly shouldn't pose a computational challenge for the technological abilities of a intergalactic civilization.

But yes, were there a single medium of exchange, use of any physical object would entail actual transporting that substance as well as the significant price differentials between localities based on the value of that substance (presuming there is not costless instant transport through every point in the universe). Even 'energy' requires some medium to store and transport said energy no matter what form it takes.

A fiat currency would be the only meaningful intergalactic currency, and then you have problems of who sets the monetary policy of the currency (policy is set very tight on the capital, but some minor galaxies suffer serious depressions because they need a loose monetary policy). Just look at the problems with the Euro - Germany wants a tight policy, Greece is absolutely desperate for devaluation. A single currency would not be at all desirable.