Quote
The thing you need to remember with early d2 is that gold was not even bad as a currency because gambling rare items is actually pretty powerful in the game and everyone needs gold to repair items.
The Problem was that there was and still is a maximum amount of gold which your chest and character can store and that characters drop the gold they hold on death.
Also gold could not be traded safely over the trade window in d2, you had to drop it on the ground. That's why it failed as a currency.
How early are we talking? I am not considering any time earlier than .09. You raise good points, I can only speak from my own experience which is that there wasn't any amount of item repairs to even come close to using up even a fraction of my gold.
Quote
Why the soj was used is largely connected to 2 reasons:
1) It was universally useful for all chars, because everyone likes +1 skills & the huge mana buff, so I would call them a "commodity". They were close to best in slot on any character which needed +1 skills to scale their damage and made mana management a lot less stressful on all chars.
2) and this is the more important reason, sojs where rare and a 1 SLOT item, d2 always required one to create a lot of mules, if you wanted to trade at a certain level because the combined chest + character inventory space is very limited, so using anything as currency that occupies more than 1 slot was out of the question
1) I did consider that people used soj's in their character builds. I struggle with this because it doesn't meet my personal definition of a "sink", which is destroying the thing or binding it up so that it takes significant economic energy to release it again back into circulating supply. The best comparison I can think of is sticking money in a mattress. It slows down the velocity causing a deflationary effect, I'll admit. But it takes no real effort to take it out of the mattress and spend it. The supply sink in real life is taxes, once taxes are paid, supply is destroyed until the government issues bonds and creates more supply. An example of the "binding" supply sink is gold. If I want to extract gold out of an electronic i have to spend gold to do that. If it is cost prohibitive then the gold stays bonded until it is worth is it to extract it.
Also on top of all of that, people didn't have that many characters they played and each character can only equip 2 SOJ's so I dont think this was a significant deflationary force.
2) Your spot on with the the 1 slot. Also a huge factor was the all SOJ's were homogeneous. This isn't necessary because exchange rates could have been created between different grades of SOJ's if they weren't homogeneous. This was how it was with runes since not all runes were the same. But not having exchange rates makes life easier for everybody. And of course they were fairly scarce, this is huge.
I barely remember other items in the game, but I don't think SOJ's had any real competition. It is easy to see why runes took over.
Quote
Do you mean over arching as in an autoregression (AR) kind of model or in a general sense of bigger picture model?
I mean general sense of a bigger picture model. I looked up auto regression and I didn't find an explanation that was in plain english.
Quote
One thing to keep in mind though is that in PoE there is a sort of "hard cap" on how much a crafted item can be worth because of the Mirror of Kalandra, which allows one to make a copy of an existing item. Usually the cost is said mirror + a fee for the item owner.
This imho is a smart way to prevent deflation and said "hoarding of commodities" in this case crafting currency. Because even if you could create a total scarcity of crafting resources you could never drive up item values over a certain point.
Thats really interesting thanks.
Quote
I'm not too familier with cryptocurrency but I think one of the main "commodity uses" of it is that is bypasses financial supervision and regulation as well as the anonymity it provides.
This probably sounds like splitting hairs, but in this sense Bitcoin is more of a service provider or in darknets, its a liquidity provider. There will be a slowing of velocity from people keeping redundant Bitcoin for privacy or liquidity purposes. Kind of like keeping money in the mattress. But I don't see this as a supply sink so Bitcoin cannot fit into my definition as a commodity.
There are other cryptocurrencies that do have a commodity use case. These are the utility protocols such as Hashgraph, Ethereum and Eos. And I think they will be the death of Bitcoin in the long run. In the future, the coins can be used to initiate smart contracts or purchase any other service built on their network. But I still struggle with these also because there is no supply sink. When the coins are spent they just changes hands in the networks economy and there is nothing to slow down the velocity. Ethereum and Eos have a staking option but there requires practically no effort to take the coins out of stake. This is in contrast to gold where recovering gold from electronics for example can be energy intensive and a cost/benefit analysis has to be done to see if it is worth it.
Im down to talk about this more. like for example is there needs to be a sink if theres a hardcap on supply or how it costs economic energy to run the network and maybe thats the sink.
Also, I created a similar post here
https://forums.d2jsp.org/topic.php?t=81954655&f=90This post was edited by Grippster on Oct 21 2019 03:30pm