Science fiction has speculated on the future of currency in space. Some genres barely give it a thought exchanging the term “dollar” for “credit”. Other works of literature base their currency off basic commodities like water or the more exotic commodities like years of life.
Centuries from now when mankind has (hopefully) taken to the stars, currency can possibly take a new form.
A Brief History of Currency
Early man made everything for himself or herself, sharpened their spears and hunted and gathered the basic necessities of life. Some time around the dawn of civilization, we realized that it was much better if people specialized in a task like weapon making, herding, cloth making, etc. Bob will keep a herd of sheep and Joe will have a herd of dairy cows and make cheese. Now Bob doesn’t need all those sheep, and neither does Joe need all the cheese he’s making, so naturally Bob will give some of his excess sheep to Joe in exchange for some excess cheese. Everybody trades what they have in excess for something they need. Ah, the barter system! Remember that.
But sometimes carrying a bunch of sheep around to try and trade it for something gets a bit cumbersome. Sometimes all you want is a button, and it’s hard to trade a fraction of a sheep for a button. And things like cheese have a shelf life, so cheese will lose its value eventually. If only you had something that represented a bit of cheese or a fraction of a sheep. Ah! Currency!
Cutting to the chase, currency is simply a unit that measures work done as determined by a regulating body. Hence a copper coin might have represented a fraction of a sheep herded.
The most popular currency in the world today (of many national currencies) is the US Dollar. Constitutionally, the value of the dollar is regulated by Congress, though the Federal Reserve Bank does so in practice. It’s simpler to say the US Government regulates the value of the US Dollar, but this isn’t completely accurate as exchanging the Dollar in foreign markets depends on foreign entities trusting the value of the Dollar. All the technicalities aside, let’s just say the US Government with influence from foreign markets determines the value of the Dollar.
Dollars are printed in bill form and minted in coin form. When you deposit money into your bank, there is in theory a physical form of that money in that institution. The bank’s computers tell you how much money they have that belongs to you.
Today you use a lot of ways to electronically transfer money via a debit card, electronic transfers and various internet and app services. But your money isn’t truly electronic. All you’re doing is electronically telling your bank to send money to another institution. In theory, your bank is physically sending money away.
Now there’s Bitcoin. Bitcoin has two attributes making it unique from other currencies. Firstly, it’s truly electronic. Nobody is minting or printing Bitcoin, rather it’s 100% represented as data within a computer. Secondly, Bitcoin is not regulated by any government. Like any other currency, Bitcoin is a representation of work that has been done. Varying in value from just enough to buy a fraction of a Papa Murphy’s pizza to now around $700 at the time of this blog, it’s debatable as to whether or not Bitcoin has a reliable system for determining its value. Beyond this, the author of this blog won’t pretend to know how Bitcoin works. For now, it just does.
Future Electronic Currency
From here on out, it’s pure conjecture. We don’t know if Bitcoin will last, but it’s a solid testing ground of the concept of electronic currency.
Like Bitcoin, future electronic currency may not have to be regulated by a government. However, regulation by a stable government with a track record of stable currency would likely reassure the stability of this electronic currency.
This could take place very simply by having government computers (an allegory for a bank), keep records of how much currency has been “printed”. A “transfer” would simply be the government’s computers telling a non-governmental banking institution how much money has been transferred. Customers like you or I would then have accounts at these banking institutions telling us how much money we have in the bank like we do today. In practice, transactions would very much resemble the way we make electronic transactions today.
The obvious benefits would be the elimination of paper and coin currency and associated costs in printing and minting. Today, a penny costs the US Mint more than one cent to mint it. Elimination of physical currency would negate this economic dead weight. Another benefit would be the reduction of currency for use in illegal affairs, the elimination of counterfeiting and the means to track currency flawlessly.
Now the obvious fears of having currency based electronically would be its vulnerability to computer hackers. Of course such a currency wouldn’t be 100% safe, but today’s infrastructure of electronic finances is actually quite secure. The security of future electronic currency would only increase.
Frontier and Fringe Space Economics
It’s very hard to buy a kilo of cocaine with official electronic currency. Of course there are ways to “launder” such transactions, but they are now 100% traceable. Repeated high value transactions at Bob’s Strip Club will eventually draw law enforcement attention.
Moreover, let’s say as an honest space citizen you are purely interested in buying supplies for your space adventuring needs. You may not have a good signal to the internet or whatever will supersede it in space. You also may not actually be interested in money, but rather in practical supplies. You may revert to a sort of barter system (remember that?)
Now in space, a commodity like water or air is going to be a universal need and will usually hold its value. The downside to those is that they are very hard to transport in usable quantities for medium to high value transactions. A gallon of water on Earth is fairly bulky, weighs about eight pounds and can be bought in purified form from the store for about a dollar (and much less through your tap). Let’s say the work needed to transport drinkable water into space increases it’s value to even $20. Imagine carrying an eight pound $20 bill.
We already have the capability to make super-potent mineral and vitamin supplements. It’s not practical to try to make the meal in a pill, but such mineral and vitamin pills will become quite needed in space. Combined with a fiber-rich empty calorie source, such supplements can become a common necessity and traded commodity. For money-less and off the record transactions, nutrient concentration packs can become a secondary currency in space.
Another compact and highly valuable commodity will also be drugs and medical supplies.
Trading gold and other precious metals will not go out of style. In fact the high technology of space travel may depend on certain metals giving the low tech minting of coins an ironic come back. Of course values may fluctuate as the cosmos are literally rich with metals of many kinds.
Discovery of a rare substance or drug of intrinsic value may be used as space currency much in the way salt was used back on Earth in ancient times. Several space genres feature a “spice” of kinds that is more exotic with extraordinary properties not found in any terrestrial spice.
Room temperature superconductors may supplant precious metals as such a discovery may make them many times more valuable than gold or platinum.
It’s impossible to tell with 100% accuracy, but the future may be dominated in “civilized” parts of space by an electronic form of currency with more easily transportable goods of intrinsic worth traded as a secondary currency.
I can’t say for certain if paper money or coins will completely go out of vogue, but they are already starting to seem obsolete.
Common and easy to obtain necessities on Earth may become spendable currencies in space where such commodities are hard to come by.
What form do you think currency will take when we start colonizing space and distant planets?
Written by Stuart Yee