Creating an all electronic currency

CalGrave · Dec 3, 2007

Hello, I have a question concerning how currency works.
Some details about the setting:
It's a post apocalyptic scenario and rebuilding society would include recreating a currency. The most valuable resource is land, as due to an incident a majority of the earth is tainted and land is a precious but dwindling resource.

Now you have this up and coming government attempting to return everything to the status-quo while claiming as much land as possible for itself. Of course for any government to function it needs a medium of exchange to keep its restless and not too trusting citizens satisfied. There is no communication with other countries, and therefore so no international market leaving them there own devices to maintain an economy.
I'm in the dark when it comes to creating a functioning currency. My idea was an electronic currency, since this government might have trouble producing physical money and coining it, everyone would have a chip implanted and could manage, upload and exchange money directly to and from there person.

You pay a kid 5 bucks to sweep your porch? With a few pushes of a button you transfer it directly to him.

But I'm not sure if it is a plausible system..or if it would even work since they have very few minerals that are actually worth anything, but can be exchanged for things of actual value. I know that paper money is actually worth nothing but it is used for convenience, but would a society be willing to have the same risk with an electronic system? Since now you can exchange your paper money for something that DOES have value such as a gold bar with the equivalent value. But I'm not sure how it would work when there is no gold to exchange.

Maryn · Dec 3, 2007

CalGrave, it's a massive book, but setting up all-electronic currency was one plot thread of Cryptonomicon. I've already give the copy I read back to its owner or I'd find and review those parts.

My understanding is that for a paper (or electronic) currency to work, it must be backed up by goods recognized by all users to have intrinsic value. If a government just issues currency without backup, massive inflations results.

In this new world you've got going, what retains its value besides land? The government could have a stockpile of whatever that might be. It should be something the citizens cannot find or fabricate, and which is not tainted in the way much of the land is.

Without knowing more about how the world you've made operates, I can't guess what that might be, but I bet you can. My first thoughts were gemstones and art.

Maryn, hoping this helps

Bmwhtly · Dec 3, 2007

Maryn said:
My understanding is that for a paper (or electronic) currency to work, it must be backed up by goods

That's the way I see it too.

My first thoughts were gemstones and art.

my first thought was food and drink.

It doesn't neccessarily mean the currency has to be exchangable for goods by law. It's just that, as a society, they have to produce stuff.
There's no real reason why paper or metal currency can't be replaced with electronic transfers.
That's how international transfers (and most inter-company transfers) are done now.

As to using the implanted-chip, that doesn't seem a great leap from citizens carrying debit cards, so it's not outwith the realms of possibility.

Also - Sounds like you've got an interesting concept. I do have a soft spot for post apocalyptic fiction.

The Grift · Dec 3, 2007

CalGrave said:
But I'm not sure if it is a plausible system..or if it would even work since they have very few minerals that are actually worth anything, but can be exchanged for things of actual value. I know that paper money is actually worth nothing but it is used for convenience, but would a society be willing to have the same risk with an electronic system? Since now you can exchange your paper money for something that DOES have value such as a gold bar with the equivalent value. But I'm not sure how it would work when there is no gold to exchange.

Currency is as reliable as the people using it want to be. Many modern currency systems, including the US, are no longer backed by gold. Many currencies are backed by nothing more than the faith of the people in their government.

It's too complicated a thing to give a cursory treatment to. In my humble opinion you either put the system in place without too much of an explanation and just assert that whatever it is works, or you give it an in-depth treatment a la Neal Stephenson in the aforementioned Cryptomonicon, or in the Baroque cycle.

Prawn · Dec 3, 2007

There is already an electronic way to do things using cell-phone based banks.

I would suggest having something like bearer bonds, to be drawn on an individual bank.

Before the Articles of Confederation in this country, each state, and in some cases, each bank had its own currency, and there was a thriving trade of exchange of these currencies. If you lived in Delaware and wanted to buy something in New Jersey, you'd have to exchange your Delaware money for Jersey money. This strangled trade. Why not have each area have its own money?

The currency could be backed by gold or some other commodity, like food. The romans used salt to pay its soldiers, which is where the term "a man worth his salt" came from.

CalGrave · Dec 3, 2007

Well I have read Cryptonomicon, I wasn't really thinking about it when I had the idea since, when I read it the concept of a data heaven was the theme that got my attention. Although I read way before I had my idea, his other stories inspired me on how to introduce a different government.

Having the system in place without explaining it would be playing it safe but I feel that this alone could be worth its own story. In fact I just had an idea..since the there's already a rush for land, that would coincide with a rush for resources and minerals. A modern day gold rush. And another theme of my story is paranoia, since the country is cut off from the rest of the world, no one knows if they have nukes pointed at us or doing worse than we are. So it would make sense to horde as many minerals as possible for the day the international market makes a comeback. Food and drink is also a rather obvious part that I overlooked since the people rely on their new government to provide for them, it makes sense that they'd be willing to use the system in place to obtain goods.

frimble3 · Dec 3, 2007

CalGrave;1856653 My idea was an electronic currency said:
If they have the technology to make and maintain electronic chips and implant and upload and download, why would they have trouble producing physical money?

Maryn · Dec 4, 2007

I'm not wild about the food and drink idea, since those are goods which even under perfect storage conditions have a shelf life and degrade after a certain time period.

Less exciting, but I'm liking mineral rights. Your country could have the world's entire supply of some gem or metal (whether decorative or industrial), or vast oil reserves compared to the rest of the world.

Or, stray thought--what if your country has the biggest collected knowledge store, such as the Library of Congress? Or the only scientists who survived whatever happened who know how to convert readily available X into extremely useful Z? Knowledge and expertise can be extremely valuable commodities.

Maryn, having fun with the concept

CalGrave · Dec 4, 2007

frimble3 said:
If they have the technology to make and maintain electronic chips and implant and upload and download, why would they have trouble producing physical money?

Because I think I'm going to use the different cities have different currencies idea. The chip would be a way for a universal trade system. And the chips are easy obtain. And because the government is so divided and cities are so far spread out, that transferring goods is very difficult and risky.
Thanks for the ideas people I appreciate it very much. I've learned more than I could have asked for.

sulong · Dec 4, 2007

All you need is something that is difficult to duplicate. Super special secret inks and engraved plates. Then back it the way money is backed in the real world, with force and control of production of said money.

FinbarReilly · Dec 4, 2007

Why not a three-stage economy? Barter for the minor stuff (like the kid sweeping a porch, you feed him), coinage for the intermediate stuff (it sounds like you have a functioning government, so that shouldn't be a major issue), and credit for the big stuff.

If you want a story, you could have someone rich get their PIN stolen and used by the hero. If you really want to have fun, make it something else besides a card, like a ring or pendant with a magnetic strip...

FR

CalGrave · Dec 6, 2007

Ugh the thing I'm finding the hardest in this story is creating a belivable up and coming government. Most sci-fi in this category is always in one of these three stages.
1) The nukes are falling oh my God we're all going to die run for cover
2) Lawless land with everyone dressing in leather and spandex going on epic adventures across the ruins.
3) The rebuilt but corrupt Utopia that can only be fixed by a renegade police officer.

This fits in between steps one and two and while it isn't going to be a Utopia it's attempting to become a functioning government and try to gain control of a damaged and spread out populous.

LIVIN · Dec 10, 2007

CalGrave said:
Since now you can exchange your paper money for something that DOES have value such as a gold bar with the equivalent value. But I'm not sure how it would work when there is no gold to exchange.

Timeout. The gold standard has not existed since 1972.

Creating an all electronic currency

CalGrave

Maryn

I Tried

Bmwhtly

Yes, I'm back.

The Grift

Tom Swiftly's Favorite Adverb

Prawn

Writing is finite,revising infinite

CalGrave

frimble3

Heckuva good sport

Maryn

I Tried

CalGrave

sulong

It's a matter of what is.

FinbarReilly

CalGrave

LIVIN