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Comment by nostrademons | Hacker News Reader

Small bottles of alcohol have historically become currency during instances of war and/or hyperinflation - there are reports of this during both the Bosnian war and WW2.

The problem with it long-term is that it's a deflationary currency. Liquor gets consumed; once you pay a drunk with a bottle of alcohol, he tends to drink it and take it out of circulation. This means the value of alcohol goes up as the crisis continues, which means people have an incentive to hoard rather than circulate it, which means that it eventually loses its utility as a currency.

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Well I was almost finished designing the base note featuring a florid faced, beaming Nixon for the obverse and parachuting dodo bird clutching a bundle of wilting tulips on the reverse.

If not alcohol, what then?

Don't throw that design out, we're, uh, still on for this. I've got some good news regarding the production of alcohol -- I suspect that the government will actually find this easier than printing money.

The challenge will be in how to ensure that all that new alcohol doesn't end up in the already-well-stocked liquor cabinets of the rich.

Like money...

Electricity

I'm not sure about that. It’s relatively easy to make and doesn’t require any particularly scarce materials. It just takes some time to ferment. But the alcohol industry is very good at supplying as much as people will buy. Seems more equilibritory than either deflationary or inflationary.

That's another problem for it: for a functioning currency, you really don't want something that's easy for people to "counterfeit" (make themselves). The ideal currency has a stable supply; can only be minted by a monetary authority that does not have a vested interest in spending it itself; is very difficult to destroy; is not perishable or hard to store; and can easily be exchanged in variable denominations. Alcohol is relatively good at the last two points, which makes it attractive during times of crisis when the central monetary authority breaks down, but it's not really durable as a currency.

To add some nuance: it's fine if you produce it yourself – it becomes a problem when you try to trick someone into thinking it's the same thing as what I else produce. More concretely, you are free to make your own promises of future delivery of liquor, but don't go around promising people that I will deliver liquor to them!

Technically that's only a problem if the value of alcohol as a currency is higher than its value as a good. If it's exactly equal then there's no way to "counterfeit" in the sense you're using the word. A ml of alcohol is worth exactly as much as itself, there's no way to convince someone that you're giving them alcohol that's worth more than it's actually worth. What's possible is that someone might produce impure liquor if it's easier.

Now, giving alcohol as a currency the value of alcohol as a good would mean having to buy, say, computer chips with hundreds or thousands of liters of alcohol. We might need some kind of token that stands for large quantities of alcohol, perhaps redeemable at certain places for the real deal.

Not for brews like beer and cider, but special materials and skill are required for distilled spirits, especially steel and copper, the latter of which already having a low level of scarcity. If Boozecoin mining rigs become popular (again), the price of pipe at Home Depot would at least quadruple.

> It just takes some time to ferment.

Barely any time, really. Most spirits can be made in a matter of days. It's only the ones that require long barrel-aging periods (like whisky) that take awhile to produce. There's a reason the first product a new distillery sells is vodka, and the second is often gin (vodka + added botanicals). You can get these up and running and out the door in no time at all.

It’s probably net inflationary. Some of the American colonies used to have tobacco-based currency and they ended up with inflation. And tobacco is a specific crop; you can make alcohol from just about any crop.

It is an old joke that in Poland you can get much more favors done with a bottle of booze than its cash equivalent. That is referring to now, not even war or hyperinflation.

But isn’t it its own mineable (fermentable) currency?

Perhaps that it has intrinsic value, can be consumed, and more can be made would cancel out inflation/deflation at some equilibrium point?

If value grows, acquiring materials to make it gets cheaper and cheaper so it would be self-regulating.

Seems like you could map it to something that expires on its own, like beer, to prevent hoarding.

Isn't that good?

Ultrasound money, Proof of Burn, etc.

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