(Disclaimer: I am not an expert, and this article is for entertainment purposes only, it is not financial advice.)
This post describes five types of currencies that I believe we might see in the future: debt based, commodity/service based, bonds based, stock based, brand-based.
The goal of the post is not to argue which types are the best, the goal is simply to describe the different types.
1. Brand based currency (Currencies based on nothing)
Brand based currencies (not an established term) is money that is not based on anything, it exists, and people might use it, but the value is entirely based on people believing it. In a way the money has a brand that people believe is trustworthy, and will uphold a certain value. Many cryptocurrencies like Bitcoin and Litecoin fall into this category. These currencies could be replicated, but still some people seem to believe in the brands, that they will uphold a certain value.
It could be argued that gold is a brand based currency, it is mostly the belief that gold will keep its value that makes it such a common investment. (Gold will also be discussed in commodity based currencies)
2. Debt based currencies (ex Fiat)
Debt based currencies are currencies like US dollars, euro and yen. These currencies have been created by an actor (often Central banks like the Federal Reserve) issuing loans to other actors like governments and banks. The currency in itself is not tied to anything with intrinsic value, but since the actors who took the loans need to repay them, there is an interest in accumulating it.
For example, if all people suddenly decided that a currency was useless, still the banks who had loans in that currency would need to repay the debt, or break the law and face bankruptcy.
3. Commodity/service based currencies
These are currencies backed by commodities (like corn, oil, batteries, GPUs, Land) or services (like GPU time, leased real estate, or file storage).
Gold based currencies would fall under this category as well.
Often these types of “currencies” are in the form of futures, where there is a contract to buy a certain commodity or service at a certain price. Meaning if you buy an oil future, you are promised to get that oil at a specified date in the future. Since it works as a loan that is repaid in commodities, futures “should” increase in value over time.
Real estate can fall under either commodities or service, because the right to lease a property could be seen as a service, the ownership of land or real estate could be seen as a commodity. (A company that owns real estate is still under the category stock)
Bonds are loans that can be denoted in any type of currency. They are usually promises of a greater sum of that currency at a specific time in the future.
Stocks are ownerships of companies, and the value of companies are usually calculated based on predicted dividends (adjusted for time).
Bonus: Hedge funds
Hedge funds combine all the different types of “currencies”, usually with the intention to maximize the reward to risk ratio.
Own thoughts (feel free to disagree)
I imagine in a sci-fi future, we might have “commodity/service coin” as “low level” currency, that bonds are denoted in, and stock pays dividends in. Further it makes a lot of sense to denote prices of commodities and services in some kind of “commodity/service coin” since it would give the most stable prices over time.
Yet, the best investment form is probably either stocks or some type of hedge fund (unless you can outperform the general market). Stocks generally create the most value over time, but also come with higher risk than bonds and futures. Hedge funds should in my understanding give the best risk to reward ratio. So, for most people probably hedge funds are the best investment long term. For that reason, it might be preferred to automatically change all currencies to hedge funds, whenever possible, which I can see happening in a sci-fi society.
Feedback is appreciated
This is my first post, so any feedback on how I can improve my posting skills are appreciated.