Energy Credits as a Currency (Space Bitcoin!)

I’m working on a ground-up sci-fi worldbuilding project which I hope to turn into a fully-fledged system at some point, and had a fascinating idea that I would love to discuss with y’all.

So, basically, an energy credit is a galactic trade facilitator which equals a certain static quantity of energy. Let’s say a gallon of space gas or its equivalent.

Since it is statically linked to a certain quantity of fuel, the only way for the currency to in/deflate is for the supply/demand of fuel to fluctuate.

However, I have run into a couple issues and am looking for some help.

Here’s how the life cycle of an energy credit works:

  1. The energy/credit is harvested
  2. The energy/credit is sold to a distributer
  3. The distributer still has to spend money, such as by paying wages, so it pays in energy credits.
  4. The distributer sells the energy for energy credits to sellers
  5. The sellers sell the energy for energy credits OR local currency, but wait:
  6. The energy is consumed.
  7. But if the energy is consumed, what happens to the energy credit?

With ordinary currency, a dollar is always representative of a value, not a commodity. That value changes based on how much someone wants that dollar. But they don’t eat the dollar, they don’t burn the dollar, they pass it on to someone else in exchange for something of more value to them. Even though things purchased are consumed, the dollar itself is never consumed. With an energy credit, it is consumed.

Ideas? I am aware that there may be something obvious which I am missing, but if there is I’m missing it. :P

Why is it consumed, and doesn’t that mean the person accepting it as payment ends up with nothing? Why would they go along with that?

Yeah, perhaps I left too much to the imagination in the original post.

The catch is that if an EC, representative of a set value of energy, is used to purchase energy, there is now a disproportionate amount of EC to energy. To resolve this, the EC would have to be removed from the economy.

This is nonsense, I am in desperate need of a reboot

The only way for that to work is if the seller was “paid” in advance in some way. For example, the person is paid with an EC. He then uses that EC to buy fuel, which is then purchased for EC. With a markup each time, he makes a profit. But then that sort of defeats the purpose of EC to begin with.

Through a couple hours of thinking/discussion, I have not come up with a solution. I believe that if the idea of EC is to work, it will likely need a complete overhaul.

Energy and money are interesting corollaries, in many ways, and the idea of combining the two is fascinating. Especially because energy is of universal value and needed for the very interstellar trade the EC facilitates. But combining barter with currency and currency with consumable is, perhaps, unworkable.

What I’m trying to say is that somehow the person selling the energy owns both the fuel and what is paid for the fuel BEFORE someone buys the fuel. Reason being, they are a “custodian” for the “true owner” of the fuel, being the person with an as-yet uncashed EC.

An example of how this would work:
An energy harvester places an EC on the open market. It’s purchased, so they take that money and then pay the distributer to take the energy.
The distributor then takes their cut and pays the vendor to take the energy.
Then the vendor receives the EC and turns over the energy.

So the price for which the energy harvester sells the EC would have to include the profit margin at each stage of purchase.

It would have to be fairly tightly regulated, and I still don’t really think it would work. What if someone buys the energy with local currency? Actually… wait, they could be required to buy/destroy an EC. It might be a preferable circumstance to the vendor, actually, since they can charge more for the energy and make an additional profit (all still with downward pressure from competition).

Better? What do you guys think?

Wouldn’t this make them take a loss? Let’s say they own energy farming equipment, they have to pay to keep that equipment going and then all they get back from selling the energy is the cost of the energy - since that’s unit of currency, right? I am not understanding how they would gain from it.

Real currency used to be based off of gold, but gold itself wasn’t technically consumable like energy is. The money/currency was exchanged, and the value was based on how much it was worth in gold (energy in your case). So in your scenario I think having a currency based on the energy would be the way to go. Energy credits could be nothing more than coins or something like bitcoin. OR, it could be a classical barter system and energy itself is the baseline for all other costs (similar to our gas prices).

Not the cost of the energy. I may have misstated what I meant or said something unintentionally misleading, but an EC is equivalent to the “price” of a unit of energy.

At the pump, you don’t pay the cost to extract a barrel of crude oil. You pay the cost of that, plus every stage along the supply chain (plus profit) until it ends up at the pump. That would be an EC.

To clarify, an Energy Credit is NOT static in “monetary equivalent,” it is static in energy equivalent. So one EC is always worth X energy, but the actual price of an EC/unit of energy will change according to market forces. So in a way, it is like a forever stamp.

Can you please expound on your conception of EC? Because it sounds like basically what I am going for, but I’m hung up on the current “system” and so not able to see what you’re saying as anything different.

I reread your initial, bulleted list and it seems I missed out on a few of them. Looks like you ARE going to have a physical currency linked to an energy source. If that’s the case, then nothing should happen to the corresponding credit. If gold was smelted and turned into computer bits in our world, the dollar wouldn’t change in value.

I guess it matters what kind of energy is your basis for worth, and how easy it is to come by.

My basic idea is this:
One EC equals X units of energy (say, “1,000 watts” or whatever) of a baseline resource, such as starship fuel (since more/less efficient power sources can have disproportionate prices). One EC can be used to purchase a corresponding amount of an energy resource.

But a dollar isn’t a representation of gold. In fact, it isn’t even backed by gold any more (not since ‘34). The idea with an EC is that it is the rights to ownership of a certain quantity of power. “Redeeming” an EC, like using a coupon, gets you the fuel. But once that fuel is consumed, now you have more EC than fuel and the currency begins to inflate rapidly since more is produced as more fuel is produced. Part of my plan was that since it isn’t a “printable” fiat currency and is pinned to the supply, the currency equivalent shifts only as supply and demand shifts, making it much harder to manipulate its value and keeping it as a “safe haven” from the various nations’ fiat currencies.

It is similar to bitcoin in many ways, save one: It’s pinned to a material resource. Bitcoin is “mined” like the energy is mined, but (aside from accidents) it never goes out of circulation and the thing that actually holds value is never annihilated (unlike fuel).

(For all practical purposes, consider starship fuel analogous to gasoline in rarity and importance.)