An excellent idea. It should work excellently on servers but really not as a single player trading system. In SSP, it could easily be abused.
But on a server, I can really see this going somewhere. Certain things could be like gift cards I.e. a free iron sword + 2 iron picks. Thank you for the idea
I like the overall idea of having a Currency that can't be obtained in big amounts trading farmable products with villagers.
I just found a flaw :
The books have the value of in-game resources. All in-game resources can be obtained easily via trading or mining/farming.
Initially the books would have a value based on in-game items. For example, the value of an iron ingot during the first week of a server's life is far different from its value a year later. The books would start out being based on an item's value, but as the item devalued, the books would detach from their fixed exchange rate with the item, and "float" away from being tied to an actual item. From this point, the value of the books would depend on how many players accepted them as valuable, and how many books were in circulation. Some financial regulatory body would govern this and try to maintain a stable standard of value, similar to how US dollars were once worth a specific mass of gold, but now "float" freely.
This is an excellent idea, as provided the money is created by a trusted, intelligent player, it avoids the massive inflation that is common in almost any server with an economy plugin, and facilitates trade between players. However, a problem that's already been brought up is, that while the government can easily produce more money to circulate, it's difficult to recover it and use it in infrastructure and armies.
In a small server, I think an admin could easily produce and sell useful, but unavailable products such as passive mob spawn eggs and chain armor (aswell as rare items such as saddles), allowing the government to obtain money without printing more.
Another problem would be, if a government traded ores for currency until there was a certain amount of money circulating, this would solve the inflation problem- but players who spent most of their time exploring and building would end up a lot poorer than those hoarding resources. I think this could be at least partially solved if the government also bought exotic items from explorers (such as an island nation buying seeds, vines and jungle tree saplings) and hiring builders to make roads and outposts. The miners would still be richer, but at least exploration and building will be more rewarding activities.
If exploration and building aren't viable economic activities for survival, there's no reason that those who participate in solely these activities shouldn't be poor. While it's certainly possible for a Minecraft state to subsidize certain activities like exploration, it's not a necessary function of this currency. One problem you mentioned had to do with calling book-notes back in in order to combat inflation. One possible solution could be taxes or government sale of land. So long as there's no "free" land, individuals will either have to turn in book-notes (reducing the total number in circulation and therefore the inflation) for land, or go without. Likely this would result in widespread land purchases, allowing the government to eat up the extra bills that caused the devaluation.
I hate to raise this thread from the dead, but with the Minecraft version 1.8+ changes to how books are copied I think this info is worth posting here.
In 1.8+ copied books now have "copy of original" and "copy of a copy" on them. This means you can instantly see if the book has been counterfeited. This also means you can use item sorters to accept originals but filter out the counterfeited books. With this, you can make automated bank automated teller machines (ATM). They can give out x amount of currency books for x amount of items or accept currency books and give items. You can even have books with different values and have a machine that can add and subtract to give you change, multiple items, or combine change into larger denominations.
This doesn't need a plugin or mod to make it work since it uses everything Minecraft already has. The only down side is that large item sorting ATM machines are a bit slow and can only process 1 item at a time to have 100% correct output. Spamming tons of items at once can clog them. A more complex machine is needed to prevent this from happening.
Wow! I'm amazed this topic has been resurrected so long after the original post date. I haven't played Minecraft in quite a while, but I'd certainly still be interested in seeing this idea tested on a server. The key ingredients to a test would be a fairly large and stable population with minimal admin intervention, and I think this can be found on many servers today (which wasn't the case when this topic was first posted).
QuantumKey, you're absolutely right that a standardized currency with a predictable and stable value would open the door to many more financial opportunities. Players could trade offline, a banking industry could develop, a checking system created, etc. All of these would ideally boost economic productivity and the ability of players to make the most of survival mode.
A way to automate this would be to have a command block generate Written Books as different denominations.
A basic way to do this would to set up an "exchange" chest or some other container. Command blocks would testfor a slot in that container and give a basic exchange rate for that item.
For example: I put in 64 cobblestone into the first slot of the chest. The command blocks would tesfor that slot, take away that cobblestone, and put a Written Book worth $1 in another slot for that 64 cobblestone. Now if I put in a diamond it would get exchanged for a $50 Written Book.
A few things... You would need to setup several "base" exchanges to get the currency flowing. You can keep the items in circulation by setting up a reverse exchange system where you would exchange Books for Items. You can also make the reverse exchanges more expensive. If I want to by 64 cobblestone, I would need to spend $11(1 $1 Book and 1 $10 Book).