Former editor of re/Action Stephen Winson currently spends his time reading, playing, thinking, occasionally writing and editing, fixing computers, and preventing his cat from destroying all we hold dear.

When Team Fortress 2 launched as part of the Orange Box collection in 2007, it didn’t have a market. There was nothing its players could trade.

Eventually, in 2009, Valve introduced items as achievement rewards, and items that dropped during gameplay for players to pick up as they went along. This included hats with no gameplay benefit other than fashion consciousness. Still, no trading was possible, and players’ inventories overflowed with duplicate copies of the same item. Later that year, a crafting system was implemented, whereby items could be converted to raw materials used to build new items, giving players something to do with all that extra stuff.

Finally in 2010, three years after the game’s launch, a barter market was implemented much along the lines that Adam Smith imagined in the founding document of the study of economics, The Wealth of Nations:

…it is but a very small part of a man’s wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

Smith’s theory extends to the spaces in games. Often these markets are intentional, as in the board game Monopoly, with its basic simulation of a real estate market, or the classic outer space trading sim, Elite. In Diablo 2, a thriving third-party market flourishes to this day, a decade and a half after the game’s launch. Find a game where the rules don’t prevent trading, and somewhere, either in a subsection of the official forums, a dedicated chat channel, or on a web site maintained by an interested party, you will find a market as active as the player base itself.

Team Fortress 2’s market was built almost entirely on vanity products. When the MacOS version of the game was released, Valve joking called the game “America’s #1 war-themed hat simulator”. Its financialization was so radically successful that nine months later, with the “Mann-conomy” update, Valve made Team Fortress 2 free-to-play.

The market that in-game haberdashery had built eventually came to undergird the entire Steam platform. Click To Tweet
Patric Parc (1811-1855) Bust of Adam Smith, 1845 at Kelvingrove Art Gallery and Museum, Glasgow, Scotland

Theorising barter

Adam Smith saw the barter market as leading directly to the development of money. This continues to be the popular conception of the origin of money. As Smith writes:

“In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet, in old times, we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland, where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the ale-house.”

While instances such as Smith’s village pub accepting nails for a beer may be workable, as the scale of both exchanges and the things being exchanged increases, problems rapidly arise. Smith thought that barter came first, then money, and he wasn’t alone, or the first to believe this. Aristotle, in the first volume of his Politics, laid out the same basic rationale as Smith for barter as the precursor to money.

“For example, a shoe is used for wear, and is used for exchange; both are uses of the shoe. He who gives a shoe in exchange for money or food to him who wants one, does indeed use the shoe as a shoe, but this is not its proper or primary purpose, for a shoe is not made to be an object of barter. The same may be said of all possessions, for the art of exchange extends to all of them, and it arises at first from what is natural, from the circumstance that some have too little, others too much.”

Aristotle had cultural reason to believe this was the case. The Greeks were early adopters of what we would recognize as coinage, which we believe was first invented by their neighbors in Lydia (which occupied the western half of Anatolia, the main part of modern-day Turkey) in the 7th century BCE in the form of small discs of electrum (an alloy of silver and gold) with a lion’s head stamped on them. When the common medium of exchange is oxen, slaves, or some other living thing, as was the case in much of ancient Europe at some point in their history, the cost of simply maintaining wealth can become ruinous. One of the advantages of using metal or paper (as the Chinese pioneered) as the medium of exchange is that you don’t have to feed it.

The properties of spaces greatly mitigate the physical problems of barter, and is one of the reasons that barter systems thrive, relatively speaking, in and around video games. In principle, it is no more difficult to collect, store, and trade virtual oxen than virtual gold coins. 

In a computer, an ox uses up as much space and food as the designer wants it to. Click To Tweet

The problem is that even in cases where barter markets are feasible, few people bother intentionally setting one up, because there are much simpler ways of conducting affairs than setting up and agreeing upon intricate lists of relative value for everything one could trade.

Watercolor by James G. Swan depicting the Klallam people of chief Chetzemoka at Port Townsend, with one of Chetzemoka’s wives distributing potlatch.

Gifting as an alternative to barter

“Gift economies” is an broad and fraught term for the multitudinous economic systems that operate based on personal connection between those who exchange things rather than an impersonal unit of account. In places with more complex economies, we tend to imagine the small villages and tribal societies of New Guinea, or desert nomads when the term comes up, but gift economies are omnipresent.

Even most corporations internally operate in what is effectively a gift economy. The company as a whole, and not the executives, or even stockholders, owns all the stuff. Paper clips, staplers, screwdrivers, coffee pods, computers, whatever; the company owns it all. If someone needs a screwdriver to fix a computer, paper to print up a report, or wants to make coffee, they usually don’t need to trade a stapler or enough boxes of paperclips to someone to get it. They may need to go ask someone who has been given control of rationing the community’s supplies, but if that controller demanded the value equivalent in gold, rolls of toilet paper, or candy bars in exchange, it would be treated as ludicrous. Sometimes very large corporations do set up internal trade systems among geographically or task distinct divisions of itself because of issues of scale, but on the level that individual employees operate it’s practically nonexistent unless it’s an incredibly dysfunctional or ideological company.

Team Fortress 2 has its own gift economy. People trade items to their friends. People give items to random people to empty their inventories and make space. And on top of that, Valve sells several items in the Mann Company Store whose only purpose is to give gifts. The Secret Saxton is an item that, when used, deposits a random item into a random player’s inventory. Key piles give a key used for opening lockboxes to everyone else on the server but the player using it. And all of the gift items, on top of the giving, announce your generosity to everyone, advertising your moral fitness (at least in the US, giving a gift to a total stranger is generally considered a good deed), financial wherewithal, and creating an obligation that you be treated more kindly.

Obligation can turn gift giving into an aggressive act. Click To Tweet

In many societies, giving gifts is a way of placing the recipient under obligation to the giver. “Swag bags” are omnipresent at all manner of industry events, because of influence of gifts on the recipient. When your siblings, parents, or partner give you a gift on Christmas, it’s a reflection of social obligation from cultural, familial, religious, personal reasons. Many a family blowup has been occasioned by a gift not made, or a gift that is given being considered inappropriate or insufficient — often as a proxy fight for something else that is harder to talk about. Of course, obligation is not the only reason we give, but it is in the fact that we so often and so strenuously deny in public that we give or say “thank you” out of obligation, that the importance of obligation to giving is acknowledged.

The ideal barter scenario requires finding someone who values what you have to give more than what you’re trying to get from them. Anyone who ever dabbled in trading cards, Beanie Babies, or any other tentacle of the collectibles market with the other kids at school, knows that there are problems with this. People don’t always agree on what something is worth. There may be no one at all in your local area willing to consider trading the things you need for the things you are willing to trade. The only things they may want are things you are unwilling or unable to part with. In economics this situation is called the coincidence of wants, or sometimes, the double coincidence of wants.

Low-saturation image of bullets and dollar bills
Team Fortress 2 promo art

Barter systems in Team Fortress 2

In Team Fortress 2, despite large changes to how the Steam Marketplace works for almost every other game that uses it, the coincidence of wants problem remains to this day. As far as TF2’s market is concerned, there are three types of items: Tradable, Not Tradable, and Marketable.


The vast majority of items the player can craft or receive as part of the drop system are Tradable, but not Marketable. Crafting metal also falls into this category, as well as some items found in lockboxes. The methods available to find people who are interested in trading for these items are very limited; people can only directly search the tradable inventory of their Steam Friends.

In order to trade in the wider market, players must take their in-game backpack to a place where there other people are to trade. Occasionally you’ll get invited to trade while playing on a normal server, but the most popular solution to this is trade servers. Trade servers are places where the point is not to shoot each other, capture flags, or escort bombs, but to trade items. Often trade servers run specially-built trading maps where various unusual server settings are enabled, such as invulnerability or low gravity, and areas are set aside for other activities to pass the time, such as boxing rings. Some trade servers require payment in keys for access, either as a way to make a profit or just to defray the costs of maintaining the servers. While this method is very popular, like other unofficial online marketplaces, scammers are everywhere.

The last way to trade these items is through the Steam Marketplace API, which allows players to generate a link that displays the items they have available for trade. This allows third parties to set up more full featured markets, where people that want to trade give the market site that link, which the site can index and allow searching. There are a fair number of these sites, but they are limited by the fact that there are a number of hoops a player has to jump through in order to get their items listed, and no one place lets a player set up listings on all the relevant third party markets.

Not tradables

Not Tradable items are just that. Generally the items in this category are achievement rewards, either from Team Fortress 2 itself, or from other games with a cross promotional achievements, such as Telltale’s Poker Night at the Inventory games. Non-Tradablility is sticky: while such items can still be broken down into metal for crafting purposes, the metal and anything it is built with is tagged Not Tradable as well. However, since 2010, Valve has sold “gift wrap” for $2 that can allow the items to be transferred once, with each further trade costing another unit of gift wrap.


The last type of item is Marketable. This allows them to be sold on the wider Steam Marketplace directly for Steam Wallet funds in the same manner as Steam Trading Cards and all the other game items that are listed. Marketable items are generally limited to the more specialized items. Keys, lockboxes, kits that turn items “Strange” (which adds counters of various kinds to the item, such as total number of kills with the weapon), the Strange items themselves, “Killstreak” weapons and kits (which do what it says on the tin), “Unusual” items with special visual effects, promotional items, and various other special types of item that Valve has introduced over the years.

An electrum Carthaginian shekel, c. 310–290 BC


This confusion of markets and trading benefits Valve in several ways. First, it incentivizes Steam users looking to trade to build big friends lists, which gives Valve data on interconnections between players, and at least in theory improves their various recommendation engines for the main Steam storefront. Second, the difficulty in finding trade partners encourages players to play the game more, either in the hope that a particular item will show up through the item drop system, or to eventually accumulate enough unwanted items that can be filtered through the crafting system to create the desired item. As a free-to-play game, the more populous the servers, the more likely that new people will consider being paying customers, and the more likely you’ll have repeat customers. Thirdly, since many items that can drop are available either directly from Valve through the Mann Company Store, or by buying keys which allow you to open the lockboxes which also occasionally drop, it is an additional incentive to spend money.

The history of accounting provides the most conclusive evidence of markets and the state as the origin of money, as opposed to a solution to barter’s problems. The practice of accounting is complicated enough with just one unit of account that people will hire professional accountants to do it. In a system with as many possible units of account as things to trade, as a barter system is by definition, it can be an absolute nightmare.

The earliest records of money that we have are from 7,000 year old accounting records of Mesopotamian temple taxes, where the various goods that religious authorities would accept in payment for tax debts were denominated in weights of silver called shekels (which we believe originally worked out to the weight of around 180 grains of barley). In those ancient days, temples also served as marketplaces, which the temple took its share of the profits from as well. Because this all was long before the earliest evidence of metal discs that we would recognize as coins were ever issued, unless you were a wealthy trader, ingots of silver weren’t likely to be what the temple was expecting from you. When the temple accountants needed to tally all the stuff they received up, they always referred to the ingot of silver, even if some of that silver was in fact bushels of barley, pots of wine, jars of oil, or other goods. This “unit of account” made the job of managing the complex ancient societies of Mesopotamia a lot easier.

A photograph of a piece of paper printed with Russian characters
Russian-American Company parchment scrip (1 Ruble), from between 1826 and 1858.

Units of account

In Team Fortress 2 there are three primary currencies that function as units of account: two types of commodity money, metal and keys, and Steam Wallet corporate scrip.


Steam Wallet currency, the last of the Team Fortress 2 currencies, is Valve’s own corporate scrip, a form of loan in the same manner as other common corporate scrip like gift cards, good for use across the Steam platform. It’s also pegged to the particular currency it was bought with, so it makes value determination on the wider market fairly easy.

The primary limitation on scrip in TF2 is the fact that direct exchange of Steam Wallet funds is not allowed, making it less useful than it might otherwise be as currency. That is to say, I can’t transfer $5 in Steam Wallet funds directly into to a friend’s account. The only way to do that is through an intermediary. I could buy a Steam gift card, but usually those cards cost $20 or more, making small gifts impossible, and settling debts with it difficult. I could buy two keys with Wallet funds, give the keys to my friend, who can turn around and sell them, but keys sell for a discount on the Steam Marketplace, and Valve takes 15 percent cut of all Team Fortress 2 market transactions, meaning that my friend would only receive a bit over $4.20.


Metal is the basis of TF2’s crafting system, and all of it in circulation is derived from items received through the game’s time-based item drop system.

Every player receives an item, on average,  every hour of time actually playing the game (connected to a server, on a team, and participating in rounds) with a cap on the amount of playing time per week that items can drop. On the official wiki, it’s estimated that the limit is around 10 hours per week. That translates to roughly 10 drops a week.

Through the crafting interface, two weapons useable by the same class can be turned into one unit of Scrap Metal. Three units of Scrap Metal can be combined into one unit of Reclaimed Metal. And three units of Reclaimed Metal can finally be turned into one unit of Refined Metal. Therefore, each piece of metal represents an actual (if somewhat approximate) amount of invested time, from 2 hours for each piece of Scrap Metal, to 18 hours for each piece of Refined Metal. As the old saying goes, time is money, and as a result, the various types of metal are ready made stores of value.

In the early days of the market, metal was more often used as currency, but its special relationship to time (the potential amount of in circulation goes up both as more people play, and as more time has passed for people to play the game) means that it is particularly vulnerable to inflation. It is still used by third party trading sites as a basic unit of account in much the same way that Mesopotamian accountants used ingots of silver. And just like in ancient Mesopotamia, being a useful unit of account doesn’t mean it is the most popular currency in circulation. That honor goes to keys.


Keys and lockboxes are a common way companies make money from ostensibly free-to-play PC games. If you’ve ever played a game that uses them, you know how this works. Keys are an expendable item that, when combined with a lockbox, turns into a random item from a short list of items dependent on the particular type of lockbox, divided into several rarity tiers. The higher the tier, the lower the chance that you’ll get that item when the lockbox is opened. Lockboxes in Team Fortress 2 are distributed in the same way as other items (occasional drops for play time) however on a parallel track as the normal item drop system; if you get a lockbox, it didn’t take the place of something you can actually use. This is a generally good idea, because each key costs $2.50 from the in-game store. For most people who play casually, keys are an irrelevance, and lockboxes an annoyance. A few cents of Steam Wallet credit is about all most will ever see from a lockbox as they sell them to clear up inventory space. A fair number of players end up with keys at some point, and buying something on the store earns the player “Premium” status, which gives access to rarer items through the game’s item drop system. 

Among Team Fortress 2’s merchant class, keys are the only commodity money worth bothering with. Click To Tweet

The reason for that is pretty simple. Keys perform well as commodity money. They have a use value and are in high demand for that use in the circles where they circulate as currency. They don’t degrade; as long as you can find the type of lockbox that goes along with them, they can be used. They can be turned back into the currency they were bought with at a high percentage of their original value on the unofficial Steam-items-for-dollars market. And on top of all that, they are very easy to store and trade, which is a major problem for physical commodity currencies such as gold, or other high demand physical commodities such as oil, copper, wheat, or pork bellies.

While technically worth a substantial amount of money, taking a refrigerator truck full of pork bellies to a car dealership is not likely to allow you to drive away with a luxury car. Even if they did, you would likely have to pay a lot more in pork bellies to offset the costs the dealership would incur in handling the pork bellies they took. Whereas, showing up with the car’s sticker price in hundred dollar bills (or euros, etc) in hand (or a briefcase) makes the transaction even simpler. US dollars are so valuable that you sometimes get a discount for paying in cash.

Similarly in Team Fortress 2, some people might accept a pile of Refined Metal in exchange for some valuable thing, but if you jump on a trade server, you’ll want to have keys in order to be sure that the other people on there will do business with you, and at the best prices.

This is the same principle that caused cigarettes to be treated like currency by prisoners across the US prison system for decades even though trade is prohibited in prison. One of the things that makes money so useful is that it allows people who do not trust each other to trade. Prison being what it is, there is a severe lack of trust within the walls, and that makes trade among prisoners even harder. Like Team Fortress 2 keys, cigarettes were in high demand and were easy to store and trade, and (in prison at least) a cigarette is a cigarette, so you know what you’re getting and giving.

However, since tobacco bans have made their way across the US prison system, a new currency had to be settled on. The process of settling on a currency involves barter.


Why we still barter

Barter is the option we “revert” back to when currency is unavailable. Actually, “fallback” or “failsafe” are probably more accurate terms, since barter’s usefulness lies in how it allows trade to continue when the settled medium of exchange is removed, and gives space for determining a new one. Barter’s function as as a fallback is also commonly relied on in ignored, impoverished sections of otherwise functioning economies, where there isn’t enough currency to go around, or where the currency system has broken such as in post-war Europe, Soviet-dominated Eastern Europe, small town America, or the hyperinflationary environments of recent Zimbabwe and Weimar Germany. The collapse of Mycenaean Greece led to an economic collapse that would have forced a fallback to barter after the loss of state mandated units of account, and it’s not a huge stretch to wonder if it is the source of Aristotle’s belief that barter was the ground state of human economic interaction, with so much lost even to his time of what happened prior to that particular Dark Age.

Since the tobacco ban, books of postage stamps have become the most common currency in prison since they are both legal for prisoners to possess (in certain quantities that are of course ignored in practice) and are legal tender. Those advantages make stamps pretty popular, but there are other currencies. Foil packages of mackerel are relatively common since each costs about a dollar at prison commissaries, as opposed to nine dollars for a book of stamps. In state prisons and local jails, various other oddities have become currency, such as packaged honey buns. In many ways, while trade still happens through other mediums, prison markets fail to fit the definition of barter markets. Trades are valued in stamps or some other unit, instead of dollars. Stamps, mackerel, and all the other locally accepted currencies have become the new unit of account, and thus are money.

At its beginning Team Fortress 2’s market was similarly bereft of the currencies that its players were used to. Barter allowed them, like its various practitioners throughout history, to figure out what the new money in this new space was going to be. As the situation changed through time, the money changed. The restrictions on Steam Wallet funds and the relatively inflationary nature of crafting metal led directly to the the primacy of keys.

So powerful is the key, that I would venture to say that the TF2 marketplace no longer has a barter market; it’s a key market now. It’s the most useful commodity. It’s the easiest to store, easiest to trade, and easiest to obtain store of value in the game. 

In TF2, the key is the predominant unit of account. It’s money, plain and simple. Click To Tweet


Telltale, Poker at the Inventory

Promotional image for Team Fortress 2 and image from review of Poker at the Inventory

Image of Team Fortress characters sat at a poker table
Team Fortress 2 promotional image
characters from a number of different game IPs sit around a poker table
Image of Telltale’s Poker Night at the Inventory


A note on Premium status

Premium status was introduced when Team Fortress 2 changed from requiring an up-front payment for a software license, to a free-to-play model whereby the game is free to use but certain items and privileges can be bought as an in-game purchase.