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Forum Economics 101: How Valuable is FP$?

JoshuaBux

Many forums, particularly promotion forums, have a virtual currency system which allows you to exchange “points” earned by posting for services, either from the forum staff or from other members. Most of you will already know this, and Forum Promotion is one of those forums which has a particularly interesting virtual currency. FP$ can be exchanges for several types of services, including posts, reviews, and advertisements. These types of services can also be bought for real money, which implies that it is possible to compare the value of FP$ against the value of real money, by looking at how much of each currency it costs to buy a particular service.

How Valuable is FP$?

The question which this article is asking is: “How valuble is FP$?” The type of answer which I am looking for is not “very valuable,” or “not very valuable.” Instead, I am looking for a specific number of US dollars which can be used for the purpose of assessing value. It states in the Forum Promotion guidelines that FP$ cannot be exchanged directly for real cash. However, if you are assessing whether or not to purchase something like a post using real cash or FP$, or if you are assessing whether or not someone is selling an advertisement at a reasonable cost in FP$, it is important to know how much real money that advertisement or post is being sold for, when you take into account the value of FP$.

So, how do we figure out how valuable FP$ is?

When economists deterine the value of the US Dollar against the value of the Euro, they monitor supply and demand. That means that every time I have a euro and want to exchange it for dollars, the value of the US dollar goes up. However, FP$ is not allowed to be exchanged for US dollars directly. But, you can do this indirectly, by exchanging FP$ for something which you could have, alternatively, exchanged for using US dollars. So, to figure out how much FP$ is worth, what I will do is figure out the cost of a post on a forum in FP$ and the cost in US Dollars, and them compare the two.

A single post on a forum, bought from the FP marketplace, is worth about $0.10. That means that if you want someone to make ten posts on your forum, you have to pay them approximately $1. If you want them to make 100 posts on your forum, the going price is about $10. This rate will occasionally change, and better deals are offered, but this is a very common rate which can be found from a number of topics in the board. Here are a few examples of current exchanges in US dollars which use the rate of $0.10 per post. Example #1, Example #2, Example #3.

Now that we have established the value of a post in USD, what is the value of a post in FP$? The going rate for a post in the FP exchange boards is currently 10 FP$ per post. That means that for 100 FP$, you can get someone to post 10 posts on your forum. For 1,000 FP$, you can get someone to post 100 posts on your forum. Here are a few examples. Example #1, Example #2,

These examples indicate that $0.10 and 10 FP$ have the same value. That means that the value of USD and FP$ is governed by the following very basic mathematical equation.

$0.10 = 10 FP$

To make this equation simpler to use, I will use a very simple algebraic rule: I will divide both sides by 10. That means that the equation is still valid, just expressed in a slightly different way.

$0.01 = 1 FP$

That means that every single FP$ is worth one cent in USD. Now that we have established this relationship, it is very easy to figure out the value of a number of other things. Here is a table. Note that the current exchange rate for USD to EUR is $1 =€0.91

United States Dollars (USD)

1 FP$ = $0.01
10 FP$ = $0.10
100 FP$ = $1
1,000 FP$ = $10
10,000 FP$ = $100

Euros

1 FP$ = €0.01
10 FP$ = €0.09
100 FP$ = €0.91
1,000 FP$ = €9.07
10,000 FP$ = €90.77

Using the above tables, you can approximate the value of your own FP$ supply in USD. You can also figure out the exact amount by simply using a calculator to multiply your current FP$ supply by 0.01. At the moment, I have 4,816.96 FP$. In USD, that is worth approximately $48.17.

Conclusion

FP$ is a currency which has a tangible value, even though it cannot be converted directly into a real-world currency. In this article we established a baseline for comparing the value of FP$ and USD. In future articles in the Forum Economics series, I will be discussing how the ideas of inflation and Deflation effect forums, how much other things are worth in FP$, and how to assess the value of your own forum’s virtual currency.

Anyone else feel like this is targeted at me somehow? :)
C
Why would I ever do such a thing? :D

When I was writing this article, I decided to come up with a unique icon. So, I opened up Illustrator and thought for a little while. I tried putting the FP logo on a dollar bill, but it just didn't look right. That's when I realized that on currency, you don't put logos, you put Presidents. So, I chose Joshua! :D
Great article. :D
B
I enjoyed reading the article. I'm looking forward to reading your sequels. Question: is there a legal reason why FP$ can't be exchanged for real money? I've seen virtual currency on other boards exchanged privately for cash.
    C
    I'm not sure why the rule is in place. It has been there for a very long time (more than 5 years, almost certainly) and the issue very rarely comes up.

    My guess is the following: it was decided at some point that the only way to earn FP$ should be through exchanges or through posting, rather than by exchanging real money for it. Some people might see it as unfair that someone with a good amount of real money could exchange it for as much FP$ as they like. This is similar to how in most MMORPGs, it is forbidden to trade game items for real items.

    I do not think it's a legal issue, as much as it is a issue on how the admins want the economy to work.
J
if your basing the value of FP soley on the fact at how much people pay per post etc makes the entire thing not accurate.

As all of that is not even official.

If you want to take something official than you can get a domain from FP directly for 2,000 FP$!

How much does a domain cost? Well if you go with Godaddy it's $7-$8. If you go with Namecheap, roughly $10.

So in reality, 10,000 FP$ would be roughly $30-$50 depending on the situation. Not $100
    C
    I also did the calculation using Package Team numbers, which I think are a bit more official. Here's the math:

    Going by post value:
    costOfPostUSD = 0.10 = 0.1
    costOfPostFP = 7 // From the PT = 7
    // costOfPostFP = 10 // On the FP Market
    FPinUSD = costOfPostUSD / costOfPostFP = 0.0142857143

    Going by value of domain:
    // costOfDomainUSD = 10.29
    // costOfDomainFP = 4000
    // numberOfFPtoValue = 1

    // FPinUSD = costOfDomainUSD / costOfDomainFP

    valueOfPostOnFP = FPinUSD × 2 = 0.0285714286
    valueOfPostInCommunityReviews = FPinUSD × 15 = 0.2142857143
    valueOf100FP = FPinUSD × 100 = 1.4285714286
    valueOfArticleA = FPinUSD × 400 = 5.7142857143
    valueOfArticleB = FPinUSD × 300 = 4.2857142857
    valueOfReviewStandard = FPinUSD × 100 = 1.4285714286
    valueOfReviewAdvanced = FPinUSD × 300 = 4.2857142857
    valueofCloverfield = FPinUSD × 40000 = 571.4285714286

    valueOfPostByPTM = FPinUSD × 25 = 0.3571428571

    The value of FP$ is actually greater using the PT value for a post, although I decided to use the marketplace value, as the calculations are a lot easier since they're both 10, and since it's a bit more conservative.

    The original calculation I did was actually on the domain, but I decided that the domain is actually a fairly bad deal, so not something to base the value of FP$ on. Remember that the domain is something that was added quite a while ago, I think by Fergal, as a solution for people who didn't have any real cash. It is very rarely requested, from what I understand. It isn't really an important aspect of the FP economy.
      M
      • M
        M
      • March 10, 2015
      Going off Jordan's logic (which I agree with in this case as FP is directly correlated to real currency), the prices for the various services on FP make absolutely no sense and can't be given a real currency value because of the discrepancies between official services.

      By saying that you don't feel it's important, you are disregarding the fact that throughout FP, the official services are given both real currency values and corresponding FP values. If you were to place an actual value on the currency rather than the theoretical rates used in the official services, you'd need to completely overhaul all services to reflect the community given value of $FP. That would mean constant price updates with FP operating on more of a work harder for less option at one point in time to a work less for more option.
        C
        Official services are important when assessing the value of a forum point system, but it's important to note, I think, that if a service has an unreasonable price, it doesn't necessarily effect the value of the currency.

        Imagine if there were two banks which allows you to exchange USD to Euros. One offers $2 per euro, and the other offered $3. Since there's no real reason to use the bank which offers $2, and if most people used the bank which offered $3, then I think it would be fair to say that the Euro is worth $3 USD.

        Similarly, the fact that one of the official options for exchanging FP$ for something of tangible value is not that good of a deal doesn't mean that FP$ is less valuable. It just means that by choosing that means of exchange, you are not taking full advantage of your FP$. For 4,000 FP I can buy either a domain name or 400 posts on my forum. The former is worth $12 USD, and the latter is worth $40 USD. As long as I can reliably purchase the posts, which can be done using either the exchange boards or, for an even better rate, the package team, purchasing posts is a better use of the FP$.

        I'm definitely not in favor of setting service prices based on whatever the community value of FP$ at the time. I just think it's interesting to analyze how much it's worth. This article is, of course, completely subjective. If you have your own model and are interested in writing it up, we'd be glad to publish that as a blog article too. :)
B
Excellent article and excellent explanations. I am glad that someone took the time to do this as it gives a better understanding into fp$. I especially love the icon :)
B

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