Worldbuilding 301: Making a Currency
Greetings and signary! You know, I should write a post on it. ANNE! Is writing systems on the list? Anyway, hi and welcome! Today, I will show how one can go about designing a currency, as I wrote about it earlier, and I will show a currency system I made.
Currency is what?
In my earlier post on currency, I discussed quite a bit about currencies, but I didn’t give it a proper definition, so here it comes!
A currency is a medium that is accepted by various parties as valuable to use to exchange goods and services.
Notice a key thing? I don’t say that a currency has value in of itself; it might, but it is valuable for the explicit purpose of exchanging goods and services that always have value.
The question is, then, what can be a currency? The answer is essentially anything, but in general, you want these properties for a currency:
Fungibility: It means any unit is equal to any other unit. 1g of gold is 1g of gold of the same purity. But a 1-carat diamond and another 1-carat diamond are not the same.
Durability: If it breaks too easily, it is bad.
Divisibility: There must be enough divisibility so that you can have the right values for small purchases.
Portability: If you cannot in some way move it, it is hard to use.
Acceptability: If it isn’t accepted by people, it is not a good currency.
Scarcibility: Scarceness is the correct word, but I didn’t want to break the pattern. You don’t want a currency to be anything that is too easy to find.
Alright, that is properties, but what kind of currencies can you have? Well, broadly speaking, you can divide it into 4 categories:
Commodity: The currency itself has inherent value: shells, gold, silver, feathers, cigarettes, etc.
Representative: The currency itself does not hold any intrinsic value, but can be exchanged for a commodity that does by a central authority, usually at a fixed rate. This was done by all historical currencies in the 19th and early 20th century.
Fiat: Holds no value in of itself and cannot be exchanged for any commodity, and no one promises to do it, either. It is declared valuable because taxes have to be paid in the currency and nothing else. For example, all of today's currencies of nations.
Consensus: This one is fairly new and not officially recognised, but I am including it anyway. It is a currency that, like fiat, holds no value, and you have no direct way to get any commodity with value. The difference is that fiat has a central agency; consensus does not, and instead arises from the consensus of all its users. All cryptocurrencies today are an example of this.
The math
Anne’s least favourite part of currencies, or anything really: MATH! Do you need to math currencies? Yes, you don’t want to do a Potterverse idiotic currency system that no person in the world would ever have, and people would start tearing it apart to make it more sensible.
To make a long story short, the denomination of a currency is rarely a coincidence. As long as there is only one commodity, that is. If it is a polycommodic currency, it is a different tale–we’ll get there later. It has to be numbers that feel useful but also easy to use. Keep in mind that currencies generally work on positive integers. You can’t, for example, have 0.5 cents. The smallest unit is 1 cent, and all other units are a multiple of it.
So, what are these numbers? The preference is twofold and somewhat at odds with each other, for humans at least. One is easy numbers to count: 10, 20, 100, etc, are easy for humans to count because of your 5 fingers on each hand and your toes. So, having denominations based on that is popular. Most currencies today have a subunit of 100 in the main currency. The other one is more utilitarian and is based on what is called highly composite numbers (HCN): 2, 4, 6, 12, 24, 36, 48, 60, 120, 180, 240, 360, …
These might seem a bit odd to the uninitiated, but here is why they matter. Every integer can be divided by some other integers, its divisors. And when you cannot use decimals for arbitrary precision, good numbers to use are HCNs. Why? Because HCNs have the greatest amount of divisors compared to any integer that came before it, including other HCNs. 6 has 1,2,3,6, which is 4 divisors, which is more than 4, which has 1,2,4, only 3 divisors. That is literally the definition of an HCN: it has more divisors than any integer prior to it.
As you might notice, the numbers you like because of your digits do not correspond to the numbers that are HCNs, so there is rarely an overlap, unless you make aliens with 6 digits per hand and foot, then there will be overlap!
Denominations
I have spoken about it already, but what is it? It is quite easy: the span between the value of the cheapest thing a person needs to purchase to the value of the most expensive thing possible for any person, state, or anything to purchase is many orders of magnitude. So, most currencies have denominations to make up that span somewhat. Some currencies make it by having entirely different names for each unit of currency, others just make differently valued coins, bills, etc, but it is all the same unit.
So, which one is generally preferred? Historically, commodities tend to go for the former, while representative and fiat tend to go for the latter. The Roman Empire, around 0 CE, had 9 denominations of coins. Historically, it has not been too uncommon to have 4-7 different kinds of denominations of coins for a given currency. And the reason is fairly easy. Coins are VERY heavy when that is all you have. So, to cover a reasonable scale of values to trade it for, you will need quite a number of coins, and if you only have one type of coin, that is a lot more coins.
But both systems have one thing in common, namely that every denomination tends to get some kind of name. ANNE! What are the nicknames for all the coins in the US? (Anne: Wait, I know this one! Penny, nickel, dime, quarter, half-dollar, and dollar! Although the last two are rarely used, especially not the dollar coin, which is too bad because they’re beautiful. Oh yeah, and depending on where in the country you are, some Canadian loonies will get mixed in with your quarters.)
Yeah, we can see there that they have names, despite all being cents or dollars. In Sweden, however, we literally call them by their face value; we are not very creative. So, despite the fact that you might have a single currency with only one name, you can give a lot of culture to the various values having their own unique names. You don’t need whole new coins like the old British pence, shilling, or pounds!
So, when you decide on denominations, you need to consider the range. In modern values, you generally want to have the span of 10 cents/pence to 100 euros/dollars/pounds to be covered. Which is 4 orders of magnitude, or, to put it simply, the largest value available should be about 10 thousand times that of the lowest. This is, of course, not an ironclad rule–the Roman Empire had only 1600 times the value–but it is a good rule of thumb!
Currency is history
All currencies have a history that tells their tale. Let’s take a famous one: the dollar. It starts in the 1500s in Germany, where a silver mine exists in a region called Joachimsthal, which comes from Saint Joachim and Thal, meaning valley. The minting was so well done that it became quite the trusted currency to use, if I recall correctly. But calling it a joachimsthal is a bit of a mouthful, so it was shortened to thaler. The Dutch used a version of thaler, rijksdaalder–geezes Christ, Dutch and your spellings! It got to the 13 colonies, but the coin that actually got used was called “pieces of 8” and later got called “Spanish dollar,” or just dollar.
And the rest is, as they say, history. In Sweden, we had riksdaler–see the connection? But it was replaced by our modern currency, called kronor, or crowns. But in modern speech, when you want to be a little bit fancy, you to this day use “riksdaler” as another word for kronor. It shouldn’t come to anyone’s surprise that currencies have a lot of names and histories tied to them; they are used every day by everyone, essentially. This is also a place ripe for lots of slang for the very same reason.
So, how much do you need? You don’t need to go that super deep into it. I generally think about how it started, some random steps between, yesterday, and today… and that is a whole lot of thinking about it. But keep in mind, sometimes the currency history is not… that remarkable. Sometimes, its history is simply “We made it yesterday like this,” at which just hinting at history with a few historical words tends to be more than enough to give it the illusion of a rich history.
Though sometimes you just want a clear-cut start because of some big event, and that works, too.
Naming a currency
So, what do you name a currency? Well… literally anything. It can be exactly what’s on the tin can all the way to something incredibly obscure. Dollar just means valley and has nothing to do with it. Though I will give one big piece of advice I really want everyone to heed:
DO NOT NAME IT GOLD, SILVER, BRONZE/COPPER!
That is so incredibly trite and boring. Sure, I say it can be on the tin can, but D&D has made it so unoriginally boring. If you use literal seashells, calling them shells is fine. That is not overdone. But gold, silver, and bronze/copper are overdone, and we try to be creative here. Though if you make up your own metal, it can be called literally its own name.
Other than that, the currency can be named by history, location, person, either historically important, a specific minter, or the likes. As the joachimsthaler went westward and became thaler, it also went eastward, and in regions there, it became named joachims instead, with the appropriate phonological changes. You will see examples at the end.
Polycommodic currencies
Given my hatred for gold/silver/copper names, let’s go into this. With this, I mean you use many commodity currencies simultaneously. Historically, gold and silver at the same time have been the most popular. But gold and copper, silver and copper, have also been popular. I am not sure if anyone used all 3 at once, to be honest.
They can be fantastic to have as they can easily make it so your currency can span those 4 orders of magnitude of value you have to cover. It also adds a bit of fun and interest! And the history can be so juicy then!
You all can definitely hear the “but” a mile away, can’t you? Yeah, there is a HUGE but, actually several. But if you ask me, if you use these buts, the currency is more alive! The first one is that commodities will change value relative to each other. Let’s say we have gold and silver, gold is called an Aur, and silver coin is called Loj; the rate between them today is 24 Loj for one Aur. It is an HCN and all, fantastic, right?
Well, now they discovered a new gold vein and have gotten lots of gold in, decreasing the Aur’s value, so now it is 21 Loj per Aur on the market. Ouch, not so nice anymore. But hey, it is realistic and believable! This happened to the British coin Guineas, except it got more valuable; it was meant to be worth 1 pound, 20 shillings, but gold made it up to 21 shillings in value before they froze it there.
But you’re the Quing of the land and want to maintain it at 24 Loj per Aur, so by law it has to be accepted as that. Well, now you encounter Gresham’s law, which states, “Bad money drives out good money.” Here, good money is money that has little difference between its nominal value, declared value, and its value as a commodity. Here, Aur is overvalued (hence bad money), so when it comes to taxes and such, the citizens will prefer to pay with Aur, as they can cover 24 Loj per Aur, but on the market, they get 1 Aur for 21 Loj. So by using Aur as taxes, they essentially skip 3 Loj of taxes per Aur paid. Which, again, is not a bad thing in of itself in your world. It happens, it is fun if you include it, it helps show your world is alive and well!
Mini-practicum: Irrium Currency
In Stellima, I have a material called irrium, which is a nentrofied element–look into my post on struos! In my universe, it is space travel and all, so most have abandoned all forms of physical money because digital is easier. But the issue with digital is that it can be dealt with and traced even if you use the Cognisphere, which is designed not to allow that, so there is only so much you can keep secret before it becomes useless. So, as people started encountering each other, they had many problems. Different currencies were one, and having states breathing down their necks on transactions was another. People found this iridescent liquid metal that had all the previously mentioned qualities, including scarcity, named it irrium, and started using it.
An issue that arises with all commodity currencies is that purity is hard to verify. But one species, which just happened to have an unusually high amount of Irrium in their solar system, started using their newfound riches. The Selatshi, as they are called, started minting their own irrium currency. They had such a standard to it that their Central Bank did all the minting, and people started valuing the Selatshi-minted Irrium more than any other. And as that got more and more value and usage, the Selatshi Central Bank started to put bounties on people who tried to forge their currency. So, a good way to get money to this day is to capture counterfeiters as a bounty hunter; the Selatshi always pay well! This goes on to this day, and the fact that the Selatshi keep their own minting so secure and get rid of counterfeiters means theirs is the only trusted mint today, and they get to set the standard for irrium in known space.
So, how is the currency divided up? A lot; remember the 4 orders of magnitude? Yeah, it goes way further. The smallest denomination is called a strip. Its value could be thought of as about 24 cents. Next up is a slice, which is 60 strips. After that, you get a cut, which is 120 slices. Then a bar that is 180 cuts. Next is 1 barrel–240 bars–and lastly is a pool, which is 360 barrels. Which would be about 27 million dollars/euros/pounds. Between each of these are normally also various other valued strips: one valued at 5 strips, etc. So the range is enormous to satisfy both everyday people and states that use irrium as a currency. But did you notice the values? Yes, they are all HCN, and they grow fast. That choice is intentional because at the lower end, you need it to be finer as those are everyday items, and their values fluctuate more in relative terms, while expensive items change much less in terms of final value.
Do these subunits within each denomination have names? Yeah, of course they do. I will, however, admit I have not gone and named them yet or decided the exact values. I will get onto it soon, though!
Summa Summarum
These are just a few things to think about when it comes to making a currency. I made an example here that is, in fact, a commodity currency, but I literally have all kinds of them in my space opera universe. A lot of currencies can co-exist without trouble, as long as they are not trading too much, too easily. When trading comes in, having similar systems tends to be favoured, but you can fudge the numbers to work.
So in short, think about how you cover those 4 magnitudes, or more, and then try to give them interesting names and history. Then it will feel very much lived in and like the economy is working. And don’t do like Rowling and pull dumb numbers out of your ass without any justification. In case of doubt, read my math post!
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Copyright ©️ 2025 Vivian Sayan. Original ideas belong to the respective authors. Generic concepts such as currencies, commodities, the characteristics of currency, and other generic concepts are copyrighted under Creative Commons with attribution, and any derivatives must also be Creative Commons. However, specific ideas such as irrium, the Selatshi and their Central Bank, other elements of Stellima, and all language or exact phrasing are individually copyrighted by the respective authors. Contact them for information on usage and questions if uncertain what falls under Creative Commons. We’re almost always happy to give permission. Please contact the authors through this website’s contact page.
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