I see a lot of people asking, "Why do we need a new ore (emeralds) for trading with villagers? Why can't we just use gold nuggets?" Others demands a use for emeralds other than for trading. Some complain about emeralds being 25 times rarer than diamonds when mining them.
What I am about to do is explain why the way emeralds have been implemented makes sense. Now, I don't know if the creators at Mojang have thought about all of the factors I will be covering, or whether this is all coincidence, but in any case, the current implementation of emeralds makes sense from a standpoint of realistic monetary theory.
Reason #1: Inflation.
An ideal currency is one that is naturally very rare. For something to act as a stable store of value, the total amount of that currency in circulation needs to stay relatively constant. If you make more of the currency, its value will go down—you will get inflation. Therefore, it makes sense that emeralds in Minecraft are 25 times rarer than diamond in terms of natural occurrence of the ore. What this does is ensure that the hypothetical amount of emeralds in circulation stays relatively constant—more concretely, it assures that you have to sell useful stuff to villagers (like wheat or books or whatnot) about as often as you take useful stuff from them. If emeralds were as rare as, say, gold, then you could get by giving villagers emerald after emerald for useful stuff, and at the end of the day, you will have a bunch of useful stuff, and the villagers will all (hypothetically) have a bunch of useless emeralds (useless insofar as not having an inherent use—and in trading with each other, the emeralds would not be very useful because all of the villagers would each have so many of those emeralds that there would be inflation). So, emeralds being rare helps Minecraft better simulate a real economy.
Reason #2: A useless item is an ideal currency.
An ideal currency is an item whose value is relatively stable. This stability makes keeping track of the values of other items easier. For this reason, a useful item is not an ideal currency. If an item (like gold nuggets) that has practical uses is also used as a currency, then the value of this currency will fluctuate based on the supply and demand for the item as a useful commodity—in other words, if powered rails are needed, the value of gold will suddenly go up—and so will the value of everything else, since everything else is denominated in gold. Inflation by a different route. Therefore, you want an item like emeralds that is otherwise completely useless if you are looking for something to use as a currency.
For these two reasons, Mojang's implementation of emeralds is surprisingly realistic from the standpoint of monetary theory, whether by accident or design.
That said, I'm not really sure why Mojang thought that using a currency system, as opposed to a barter system, was the way to go. Perhaps it would have been more complicated to code a balanced barter system (where you directly trade, say, a certain amount of wheat for iron or something). Based on the level of economic development of Minecraft villages, one would expect, anthropologically-speaking, for these villages to have a barter system rather than a currency system. Currencies usually benefit from large empires that can enforce the recognition of a particular currency over a wide jurisdiction. It would be odd to find isolated villages all using a single currency (although, if emerald is one of the only items in the Minecraft universe without another, practical use, then perhaps it would not be so surprising to find separate villages independently landing upon the same choice of currency, or maybe agreeing among themselves to all use emeralds).
This is all speculation with regards to the realism of Minecraft. At the level of gameplay, the currency system implemented seems to work fine. My only concern is whether it is possible to find a villager who buys wheat for emeralds, and just keep shoveling wheat to that villager for emeralds. That would be both unbalanced and unrealistic. I hope that villagers start demanding different things once you have exhausted one type of trading opportunity.
These are all very good points, but the only thing in the way currently is the fact that exchange rates are incredibly off-kilter. All i hope is that this will be fixed, so i wont have to spend 11 emeralds on a diamond pick.
This is a game, money doesn't need to be simulating a real economy it needs to be balanced so people don't get good items really early. Honestly it's easier to sell things for emeralds than to dig them up and this needs to be balanced out. In all honesty it should be more profitable to mine than to trade. Another solution would be to make the villagers have a finite amount of emeralds.
What I am about to do is explain why the way emeralds have been implemented makes sense. Now, I don't know if the creators at Mojang have thought about all of the factors I will be covering, or whether this is all coincidence, but in any case, the current implementation of emeralds makes sense from a standpoint of realistic monetary theory.
Reason #1: Inflation.
An ideal currency is one that is naturally very rare. For something to act as a stable store of value, the total amount of that currency in circulation needs to stay relatively constant. If you make more of the currency, its value will go down—you will get inflation. Therefore, it makes sense that emeralds in Minecraft are 25 times rarer than diamond in terms of natural occurrence of the ore. What this does is ensure that the hypothetical amount of emeralds in circulation stays relatively constant—more concretely, it assures that you have to sell useful stuff to villagers (like wheat or books or whatnot) about as often as you take useful stuff from them. If emeralds were as rare as, say, gold, then you could get by giving villagers emerald after emerald for useful stuff, and at the end of the day, you will have a bunch of useful stuff, and the villagers will all (hypothetically) have a bunch of useless emeralds (useless insofar as not having an inherent use—and in trading with each other, the emeralds would not be very useful because all of the villagers would each have so many of those emeralds that there would be inflation). So, emeralds being rare helps Minecraft better simulate a real economy.
Reason #2: A useless item is an ideal currency.
An ideal currency is an item whose value is relatively stable. This stability makes keeping track of the values of other items easier. For this reason, a useful item is not an ideal currency. If an item (like gold nuggets) that has practical uses is also used as a currency, then the value of this currency will fluctuate based on the supply and demand for the item as a useful commodity—in other words, if powered rails are needed, the value of gold will suddenly go up—and so will the value of everything else, since everything else is denominated in gold. Inflation by a different route. Therefore, you want an item like emeralds that is otherwise completely useless if you are looking for something to use as a currency.
For these two reasons, Mojang's implementation of emeralds is surprisingly realistic from the standpoint of monetary theory, whether by accident or design.
That said, I'm not really sure why Mojang thought that using a currency system, as opposed to a barter system, was the way to go. Perhaps it would have been more complicated to code a balanced barter system (where you directly trade, say, a certain amount of wheat for iron or something). Based on the level of economic development of Minecraft villages, one would expect, anthropologically-speaking, for these villages to have a barter system rather than a currency system. Currencies usually benefit from large empires that can enforce the recognition of a particular currency over a wide jurisdiction. It would be odd to find isolated villages all using a single currency (although, if emerald is one of the only items in the Minecraft universe without another, practical use, then perhaps it would not be so surprising to find separate villages independently landing upon the same choice of currency, or maybe agreeing among themselves to all use emeralds).
This is all speculation with regards to the realism of Minecraft. At the level of gameplay, the currency system implemented seems to work fine. My only concern is whether it is possible to find a villager who buys wheat for emeralds, and just keep shoveling wheat to that villager for emeralds. That would be both unbalanced and unrealistic. I hope that villagers start demanding different things once you have exhausted one type of trading opportunity.
This is a game, money doesn't need to be simulating a real economy it needs to be balanced so people don't get good items really early. Honestly it's easier to sell things for emeralds than to dig them up and this needs to be balanced out. In all honesty it should be more profitable to mine than to trade. Another solution would be to make the villagers have a finite amount of emeralds.