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The Coming Economic Crash and How to Survive
By blue4n
This guide examines the TF2 economy, key "inflation", and the coming crash.
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Guide Index
Overview
Introduction
The Basics of the Economy
The Current Problem
The Roots of the Problem
Recent Fuel on the Fire and the Exponential Explosion
The Coming Disaster
The Solution
8 Year Update (God I Can't Believe I Wrote this Almost a Decade Ago)
Comments
Introduction
When Valve released the Mann-conomy update in 2010, they single-handedly created an entire microeconomy based around Team Fortress 2. Back then, keys were worth 2.55 ref. This is quite a far cry from today, as keys are set to reach the 10 ref mark. Veteran traders will often reminisce to the time when keys were so cheap. So what has caused the increase in value of keys, what will happen if it continues, and what can be done to stop it? This guide will examine all those questions and offer remedies. 
The Basics of the Economy
Before we delve deep into the illness that is plaguing the TF2 economy, let's go over the basics of how it works. If you are new to the game or have never traded this section will give you a quick understanding of it all. If you are experienced, you can skip over this section.
Random Drops
These are weapons and cosmetics that are randomly found as one plays the game. This is also what drives the economy. Every player is given these items over the course of a capped 10 hour per week cycle. Normally the player will recieve a weapon, two of which can be smelted into a scrap metal.
Scrap Metal
The most basic form of metal. As I mentioned above, it can be created using two weapons of the same class. This forms the base of the currency system. Original value ~ 10 cents Current Value ~ 2 cents.
Reclaimed Metal
The next tier of metal, created by combining three scrap metal together. This is the intermediate form of metal. Original value ~ 30 cents Current Value ~ 7 cents.
Refined Metal
The final tier of metal, these are created by combining 3 reclaimed together. It is the equivalent of 18 weapons. Original value ~ 96 cents Current Value ~ 22 cents.
Keys
Issued by valve on the Mann Co. store for $2.49, keys open crates. By doing this, a player has the potental of recieving strange weapons, hats, cosmetics, and other goodies. Keys have always had a value in terms of refined metal. That value has been constantly fluctuating, but rising in general.
Original value in terms of metal ~ 2.55 ref Current value ~ 9.66 ref.
Buds
A cosmetic giving to TF2 mac players in the mac update. There is a finite amount of these, as such they have evolved into a high value currency.
Original Value ~ 26 keys Current Value ~ 16 keys.
Trading
The heart of the economy are the thousands of trades occuring at any given time. Player often trade weapons and cosmetics constantly, whilst using metal, keys, and buds as currency.
Random Drops
These are weapons and cosmetics that are randomly found as one plays the game. This is also what drives the economy. Every player is given these items over the course of a capped 10 hour per week cycle. Normally the player will recieve a weapon, two of which can be smelted into a scrap metal.
Scrap Metal
The most basic form of metal. As I mentioned above, it can be created using two weapons of the same class. This forms the base of the currency system. Original value ~ 10 cents Current Value ~ 2 cents.
Reclaimed Metal
The next tier of metal, created by combining three scrap metal together. This is the intermediate form of metal. Original value ~ 30 cents Current Value ~ 7 cents.
Refined Metal
The final tier of metal, these are created by combining 3 reclaimed together. It is the equivalent of 18 weapons. Original value ~ 96 cents Current Value ~ 22 cents.
Keys
Issued by valve on the Mann Co. store for $2.49, keys open crates. By doing this, a player has the potental of recieving strange weapons, hats, cosmetics, and other goodies. Keys have always had a value in terms of refined metal. That value has been constantly fluctuating, but rising in general.
Original value in terms of metal ~ 2.55 ref Current value ~ 9.66 ref.
Buds
A cosmetic giving to TF2 mac players in the mac update. There is a finite amount of these, as such they have evolved into a high value currency.
Original Value ~ 26 keys Current Value ~ 16 keys.
Trading
The heart of the economy are the thousands of trades occuring at any given time. Player often trade weapons and cosmetics constantly, whilst using metal, keys, and buds as currency.
The Current Problem
As this guide is being written, keys are nearing the long predicted 10 ref mark. Keys have enjoyed a gradual rise. They went up 4 ref over the course of 4 years. But just from earlier this summer they have dramatically shot up 3 ref.
Now the question becomes: How high will keys climb? First off, it is important to realize that keys are not actually climbing or inflating. It is actually Metal that is inflating. Keys are a "tethered currency," meaning that they are set at a constant price. This is $2.49 on the Mann Co. store. They can never be worth more or less, as long as valve is selling them for that price. Refined on the other hand can fluctate at will. This is because you can not buy ref from the market--there is no fixed dollar amount for refined metal. Therefore a key is worth as much a metal as someone is willing to pay for it. There is nothing stopping keys from reaching heights of 15 or 20 ref each, and that would spell disaster.
Now the question becomes: How high will keys climb? First off, it is important to realize that keys are not actually climbing or inflating. It is actually Metal that is inflating. Keys are a "tethered currency," meaning that they are set at a constant price. This is $2.49 on the Mann Co. store. They can never be worth more or less, as long as valve is selling them for that price. Refined on the other hand can fluctate at will. This is because you can not buy ref from the market--there is no fixed dollar amount for refined metal. Therefore a key is worth as much a metal as someone is willing to pay for it. There is nothing stopping keys from reaching heights of 15 or 20 ref each, and that would spell disaster.
The Roots of the Problem
Back in the old days when keys were worth 2.55 ref, metal had a more useful and valued position in the economy. Back then metal was used to create hats. This can still be done today, although everyone knows it is cheaper to buy most things than craft them. However before the mann-conomy update, nobody could trade. So everyone relied on crafting to create weapons and hats that hadn't been dropped to them. Of course back then, as today, there were hats nobody really liked. Often times people would spend 3 ref building these crappy hats. They would then put two crappy hats into the "rebuild headgear" recipe in hopes of getting a more desirable hat. They could of course try to open a crate to get a hat or strange weapon, but those were more risky. The economy made sense back then, as crappy hats were determined to be worth 1.33 refined. Keys remained the same because people could get the hats they wanted without openeing crates generally, and they saw the risk to be worth 2.55 ref.
This all changed when the Mann-economy update dropped. With it came the coveted unusual--a hat with a special effect around it. These became the most saught-after things in TF2, and they could only be aquired by opening a crate with a key and a lot of luck. Suddenly people didn't want to build hats using ref or craft hats. They wanted to try to unbox a mystical unusual. Additionally, people could now trade to get weapons for far cheaper than crafting them. This has caused metal to lose its original functinality. It has been relagated to a currency, rather than a component in a recipe. Since then keys have continued to climb as people continually want to get their hands on killstreak kits, stranges, and, above all, unusuals.
This all changed when the Mann-economy update dropped. With it came the coveted unusual--a hat with a special effect around it. These became the most saught-after things in TF2, and they could only be aquired by opening a crate with a key and a lot of luck. Suddenly people didn't want to build hats using ref or craft hats. They wanted to try to unbox a mystical unusual. Additionally, people could now trade to get weapons for far cheaper than crafting them. This has caused metal to lose its original functinality. It has been relagated to a currency, rather than a component in a recipe. Since then keys have continued to climb as people continually want to get their hands on killstreak kits, stranges, and, above all, unusuals.
Recent Fuel on the Fire and the Exponential Explosion
This massive spike in Keys' value in ref has thrown many people for a loop. Some believe the influx of crates and unboxable taunts with the "Love and War" update was the cause. In actuallity the updates and content drops hold key prices stable. This can be attributed to the fact that people are once again crafting things. When "Love and War" dropped people were crafting the new weapons like crazy, meaning they actually had a real use for metal. During the month of June key prices were stable as a reflection of this. That being said, keys quickly resumed their assent. This has led to what I like to call the "Explosion." I believe that as people began to notice the key increases following the "Love and War" update, they began to feverishly buy up keys. Key owner's took advantage of the new demand, lower buying power of ref in general, and the presence of new crates to elevate their price.
The Coming Disaster
As keys have climbed the economy has adjusted and persisted, but how long can that last? What if keys reach heights of 15 or 20 ref each? How will that affect ref, buds, and even unusuals? 
The Death of Ref
If keys reach 20 ref a piece, refined metal will be reduced to a paltry 12 cents. Scrap will be reduced to a single cent. Individual weapons will be worthless. The buying power of refined metal will have vanished all together. Years ago, a player could save up 48 dropped weapons to buy a key, but with keys at 20 ref each a player would have to save up 363. That is close to five hundred hours just for a key.
Regular Hats
Regular and especially craft hats will become less and less valuable as keys become worth more ref. Years ago, two craft hats could buy a key. With keys at 20 ref, it would take 15 hats! In essence the actual monetary value of most hats will continue to drop significantly. A craft hat in the old days was worth ~ $1.25. If keys are at 20 ref, they will be worth 16 cents.
The Slow Fall of Buds
Although there is a finite amount of Buds out there, they are not a tethered currency. Therefor, their value in keys can and does fluctuate. As keys have gone up, buds have slowly gone down. This is likely do the fact that if a trader has to pay more ref for a key, they will want to trade less keys to get a bud. One day, buds will eventually reach a value of 1 key, and may even drop lower. Several years down the road, we may see buds as an intermediate currency between ref and keys.
Unusuals
Unusuals are the real question in this equation. Many traders who own unusuals are extremely experienced. They know the monetary value of their unusuals, and as a result it is unlikely they will sell their unusuals for much less. That being said, it is possible for some unusuals to lose a bit of their value as keys' buying power increases. Imagine trading an reletively cheap unusual and being able to purchase tens of thousands of craft hats
The Final Death of the Economy
If nothing is done, there will come a time when the economy grinds to a hault. This will be when opening crates becomes too risky for the average player. Unless a player recieves an unusual, a very expensive killstreak kit, an another rare item, there is no value in what you are getting. For exemple: if you got a craft hat out of a box in 2010, you had earned something with over half the key you spent to open the crate. If you were to unbox a craft hat now, you earned something worth a 7th of the key. If keys are at 20 ref, you will earn something worth a 15th of the key. Opening crates has always been a boom or bust. Soon though the bust will be far worse, and the boom will remain the same. If less people are opening crates that means less stranges and goods on the market. The economy will slow down considerably and may even stop all together as a result of this.
.
The Death of Ref
If keys reach 20 ref a piece, refined metal will be reduced to a paltry 12 cents. Scrap will be reduced to a single cent. Individual weapons will be worthless. The buying power of refined metal will have vanished all together. Years ago, a player could save up 48 dropped weapons to buy a key, but with keys at 20 ref each a player would have to save up 363. That is close to five hundred hours just for a key.
Regular Hats
Regular and especially craft hats will become less and less valuable as keys become worth more ref. Years ago, two craft hats could buy a key. With keys at 20 ref, it would take 15 hats! In essence the actual monetary value of most hats will continue to drop significantly. A craft hat in the old days was worth ~ $1.25. If keys are at 20 ref, they will be worth 16 cents.
The Slow Fall of Buds
Although there is a finite amount of Buds out there, they are not a tethered currency. Therefor, their value in keys can and does fluctuate. As keys have gone up, buds have slowly gone down. This is likely do the fact that if a trader has to pay more ref for a key, they will want to trade less keys to get a bud. One day, buds will eventually reach a value of 1 key, and may even drop lower. Several years down the road, we may see buds as an intermediate currency between ref and keys.
Unusuals
Unusuals are the real question in this equation. Many traders who own unusuals are extremely experienced. They know the monetary value of their unusuals, and as a result it is unlikely they will sell their unusuals for much less. That being said, it is possible for some unusuals to lose a bit of their value as keys' buying power increases. Imagine trading an reletively cheap unusual and being able to purchase tens of thousands of craft hats
The Final Death of the Economy
If nothing is done, there will come a time when the economy grinds to a hault. This will be when opening crates becomes too risky for the average player. Unless a player recieves an unusual, a very expensive killstreak kit, an another rare item, there is no value in what you are getting. For exemple: if you got a craft hat out of a box in 2010, you had earned something with over half the key you spent to open the crate. If you were to unbox a craft hat now, you earned something worth a 7th of the key. If keys are at 20 ref, you will earn something worth a 15th of the key. Opening crates has always been a boom or bust. Soon though the bust will be far worse, and the boom will remain the same. If less people are opening crates that means less stranges and goods on the market. The economy will slow down considerably and may even stop all together as a result of this.
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The Solution
How Valve Can Save the Economy
There is simply and easy way in which valve can halt the inflation of metal and effectively save the TF2 economy.
The Ticket to Salvation
This is the best and easiest solution to the problem. Valve needs to immediatly instatute a craft to make tour of duty tickets. For those that don't know, a tour of duty ticket grants a player the chance to enter Mann vs Machine Mann Up mode servers and have the chance of winning some really cool and valuable items. Currently these tickets are sitting pretty at around 4.33 ref. If valve would introduce a craft in which 4 ref could be combined to create one of these tickets, the economy could be saved. This is because that craft would effectivly tether refined metal to a set value in dollars. Because a tour of duty ticket can be bought on the store for 99 cents, a ticket can never be worth more or less in real money. Moreover, now that 4 metal is garenteed to equal a ticket through the craft recipe, metal must always be worth a 4th of a ticket. Therefore, a single refined metal will always be woth 24.75 cents. In addition, that would keep the amount of ref a key is worth stable, since ref now would have a defined value. Keys would always be worth ~ 10 ref, tickets would always be worth 4 ref, and ref would always be worth 24.75 cents. These values could never budge from this point, effectively solving the devaluing of items and keeping small-time players active in the economy. Which ultimately equates to more people playing the game and hence a stronger TF2 community.
What you can do in the mean time
I highly doubt that valve will be riding in on a white horse to the economy's rescue. In the meantime I suggest that you convert all you metal into keys. Additionally, you should liquidate any spare hats and strange weapons you have into keys.
There is simply and easy way in which valve can halt the inflation of metal and effectively save the TF2 economy.
The Ticket to Salvation
This is the best and easiest solution to the problem. Valve needs to immediatly instatute a craft to make tour of duty tickets. For those that don't know, a tour of duty ticket grants a player the chance to enter Mann vs Machine Mann Up mode servers and have the chance of winning some really cool and valuable items. Currently these tickets are sitting pretty at around 4.33 ref. If valve would introduce a craft in which 4 ref could be combined to create one of these tickets, the economy could be saved. This is because that craft would effectivly tether refined metal to a set value in dollars. Because a tour of duty ticket can be bought on the store for 99 cents, a ticket can never be worth more or less in real money. Moreover, now that 4 metal is garenteed to equal a ticket through the craft recipe, metal must always be worth a 4th of a ticket. Therefore, a single refined metal will always be woth 24.75 cents. In addition, that would keep the amount of ref a key is worth stable, since ref now would have a defined value. Keys would always be worth ~ 10 ref, tickets would always be worth 4 ref, and ref would always be worth 24.75 cents. These values could never budge from this point, effectively solving the devaluing of items and keeping small-time players active in the economy. Which ultimately equates to more people playing the game and hence a stronger TF2 community.
What you can do in the mean time
I highly doubt that valve will be riding in on a white horse to the economy's rescue. In the meantime I suggest that you convert all you metal into keys. Additionally, you should liquidate any spare hats and strange weapons you have into keys.
8 Year Update (God I Can't Believe I Wrote this Almost a Decade Ago)
I was right
1,014 Comments
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haha guys ~85-90 ref now
oh boy, remember when keys were 10 ref? good times.
fuck it im gonna sell keys at 2.55 ref (when i get one lol)
if everyone is getting a crap load of crates why not make that as another currency
yo guys wassup
