Fallout 4 is upon us, and it has taken the gaming world by storm. In this installation of Bethesda’s famed franchise, players take on the role of a 200 year-old military man, or his former lawyer housewife. The main character wakes up from a cryo-sleep in post-apocalyptic Massachusetts — discovering that his or her spouse has been murdered and son kidnapped. The “Vault Dweller” emerges from the underground vault the family sought refuge in two centuries ago, at the dawn of global nuclear war, to find the son. Upon surfacing, players are greeted with a breathtaking visual of a nuclear wasteland, an unknown world that the game’s main character must delve into.
Despite centuries of radiation and all the effects that come with it, the wastes of Massachusetts, known as the “Commonwealth,” have many societal aspects that should seem familiar to the pre-war Vault Dweller. The ruins of Boston and its outlying suburbs contain many settlements, offering government-provided services, and feature everyday survivors living “normal” lives. These communities have doctors, schools, and security, adding a sense of familiarity to this otherwise bizarre world.
The Fallout 4 world, as well as the rest of the Fallout universe, even has market economies complete with business, entrepreneurship and money. If you can’t find something from scavenging in the wasteland, you can always go to the nearest survivor settlement and visit the shops. And, just like in today’s economy, it’s all about one thing: cash. In the game, characters use bottle caps from pre-war Nuka-Cola bottles, the Fallout version of Coke.
Although the Fallout markets are not dynamic in the slightest — supply and demand doesn’t even exist — it is actually quite remarkable how similar these “caps” are to real world money. Unlike games such as Dying Light and Grand Theft Auto, Fallout doesn’t cop out and fall back to a dollar-based accounting system. Caps are the unit of account, store of value and medium of exchange. Additionally, almost all usable items in the game are unique to the Fallout world, so there aren’t real world equivalents to serve as references for value. Therefore, players are thrust into the game with essentially no knowledge regarding the value of a cap; we don’t know how much our currency is worth until we start buying things. As we buy and sell, we become acclimated to the price structure of the game, which allows us to economize our resources more efficiently and achieve greater success in our quests.
Nuke-Cola caps vs. Bitcoin
The way we are introduced to caps and learn how to use them in Fallout can tell us a lot about how Bitcoin gained value in our real world. In Fallout, we are introduced to a currency we know nothing about, and then undergo a process of discovering its worth and figuring out how to use it to get the best wasteland experience possible.
People looking at Bitcoin for the first time undergo a similar process, facing the same feelings of confusion and wonderment as Fallout first-timers discovering that seemingly worthless caps are the most valuable asset in the world. In the beginning, no one had a clue what one bitcoin might be worth; the digital currency only gained an exchange rate with the dollar after lots of small transactions between early adopters playing around with bitcoins. Even though Bitcoin may seem totally ridiculous at first, just like caps, we can still find value for it as a medium of exchange.
Fallout’s cap economy also serves as a reminder of how far Bitcoin still has to go. In the Commonwealth, entrepreneurs denote their prices in terms of caps. Players easily acclimate to these prices and become immersed in the cap economy in no time. On the other hand, with Bitcoin, we would have an extremely hard time figuring out what things cost without first converting prices to local currency denominations. Bitcoin is not ready to be used as a unit of account; it still must undergo a gradual and potentially long process of incremental shifts towards denominating prices in terms of bitcoins. Furthermore, since Bitcoin operates in a highly dynamic economy unlike Fallout’s markets, this process will take much longer than it does for new Fallout players. If a post-apocalyptic society can make Nuka-Cola caps work, though, surely we can successfully complete this process with Bitcoin in our highly developed economy.
Anything can be money
One last lesson Fallout 4 can teach us about Bitcoin is that humans can use virtually anything as money. At first, in the game, bottlecaps from centuries-old soda bottles might seem totally useless and worthless. If we listen to Mises and Rothbard, champions of monetary origin theory, our initial reaction would be that caps could never become money; old bottlecaps clearly don’t have any use to post-apocalyptic societies, how could they possibly have become a medium of exchange? Similar skepticism is leveled towards Bitcoin; if bitcoins can’t be used as anything except money, where is the use-based foundation for it to gain value? But by examining both caps and Bitcoin, we see that the people using them manage to turn these “worthless” trinkets into money because their characteristics make it easy to create price systems that communicate information about supply and demand. Both currencies are scarce and fungible, their values cannot be manipulated and one unit of each currency are equal to all other units. Furthermore, they both have a fairly strong network effect that makes it worthwhile for newcomers to adopt the currencies.
In essence, money is more about communication than prior use values. If everyone agrees that a certain object transfers value from one person to another, it doesn’t really matter where that initial value comes from. It could derive from prior use value, or it could be a claim to a favor from a neighbor or friend. Ultimately, it doesn’t matter what the money is made of, as long as it successfully creates a system of resource allocation. Money can be shells, bits of computer code, or old, rusty, and irradiated bottlecaps. If it works, it works.
What other games can teach us about Bitcoin? Let us know in the comments below!
Images courtesy of Reddit user CaptRICE, Bethesda, Deviant Art user Ademus Haruhara