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The Cause of Rising Key Prices.


AwesomeMcCoolName

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History of Keys:

September 2011, Keys were 2-2.33 Refined 

Halloween 2011: Demand increased, key price rose to 2.66 Ref

Xmas 2011: Demand increased again, key price rose to 3 Ref 

January 2012: Demand returned to normal and keys stabilized at 2.66 Ref 

Fast Forward 8 months...

September 2012: keys were 2.66 Refined

Halloween 2012: Demand increased, key prices rose to 3 Ref 

Marketplace was introduced (People thought key supply would dwindle to nothing): Key prices climbed and climbed and climbed, until today. 

 

History of Ref $-value

September 2011: Ref was roughly $0.70 (Keys were 2-2.33 Ref)

September 2012: Ref was roughly $0.50 (Keys were 2.66 Ref) 

Now: Ref is $0.36 (Keys are 3.77-4 Ref) 

 

So, What happened....

Key prices have been kept low for quite some time, even though they should have gone up in value as Ref went down, but how come they didn't? 

>Well, the answer is some-what simple. It's not easy to change the price of a currency without some major event....This event didn't occur until Halloween 2012. Halloween 2012 the demand increased driving key prices up, and then immediately after Halloween  the marketplace was added to the game. People believed that keys would no longer enter the market, resulting in speculators buying up keys and sellers asking for more and more and more. This has continued until now, at which point people just assumed key prices will continue to rise, so they have no problem buying keys for the current price since they feel keys will continue to rise indefinitely. 

>Furthermore, people's main arguments against rising keys prices is: The supply is actually higher than it was before Halloween...To which i would ask, How many of those keys are for sale for Ref, and how many are for sale on the market place? Even if the total supply has increased, with the advent of the marketplace many keys have actually left the ref market and entered the $ market. 

>Another key point, Back in September 2011, there were 10,000 registered users on Outpost, now there are 300,000 users.... So even assuming that some have stopped trading that's a pretty big increase.... So the demand is FAR greater now that it was back when keys were 2.33 Ref....

 

Why Backpack.tf is NOT to blame.

bp.tf is NOT at fault for 2 reasons. 

>Buyers are willing to pay whatever the seller asks because they believe keys will continue to rise (so even paying top dollar is a safe investment). 

>Sellers sell keys @3.66 Refined, they sell a too many too quickly and decide to raise their price. Buyers see sellers beginning to ask for more and go buy up the rest at the cheaper price while they can. More sellers start asking for 3.77 Ref, and the cycle repeats. 

 

Keys are NOT increasing, rather Ref is decreasing.

Keys have been quite stable around $1.20-$1.30 for quite some time, its Ref that's fluctuating. Nowadays people idle like crazy injecting tons of Ref into the market, Ref which was never in the market before.... And most people don't want Ref anymore (aside from small item trades).... Try buying bills/buds/unusuals with Ref, most sellers will want a decent overpay in metal due to the fact that they're going to need to spend time to convert it to Keys/promos anyway.... So, aside from small trades (craft hat~ trades) no one really wants Ref, Ref is just a means to an end--to buy keys/more expensive items.. 

 

Is Backpack.tf having an affect on the key market?

No doubt, but its not creating the rise in prices.... if anything its just speeding the process up. Which isn't really a bad thing. At some point keys will reach a point of equilibrium and when that happens key prices will stabilize. 

 

Also, i'd really love for someone to explain to me how rising key prices are crashing the market..... People keep saying it, but it makes absolutely no sense... at all. 

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Very interesting topic!

I agree how you approached it in a calm way. Unlike some traders who blur out there meaningless comments with a mix of swears a insults.

I can agree with the marketplace concept, and the crashing of the market, in my eyes won't happen. Simply this will either continue to rise, or stay at the current value. Whether steam gets involved ( unlikely in my eyes) could effect the market, however steam has never got involved before, which we saw in the bud rising. Which people speculated (Acesgamer) a major crash and failure. :)

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I can explain how its bp.tfs fault if you like (mostly at least even though you didnt ask) 

People will always try and sell an item for a bit more thats how you make profit in this game.

So when people with nothing else to do in their life see this they get loads of proof then make a suggestion.

There suggestion is correct because people are obviously selling things for 1 or 2 scrap more.

Make a key suggestion accepted (idk why probably just wanna ruin the market and get more money for themselves) 

Then keys cost more people up the price another suggestion is made and again thats accepted. This is happening daily which is bull**** soon keys will be 10 ref you wont have to wait long. 

Someone has to step in and put a stop to it brad could be like many others he is happy sitting there watching his backpack go up $50 daily with a huge smile on his face. 

There is demand for keys however not to increase the price daily its people doing what you do on tf2 trying to make some form of profit.

There you go rant over (off to lie down)  

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I can explain how its bp.tfs fault if you like (mostly at least even though you didnt ask) 

People will always try and sell an item for a bit more thats how you make profit in this game.

So when people with nothing else to do in their life see this they get loads of proof then make a suggestion.

There suggestion is correct because people are obviously selling things for 1 or 2 scrap more.

[rant]

Makes you wonder why not every single item in the game isn't going up, given that everyone will always try to milk a scrap or more from their items.

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I doubt keys will ever reach 10 ref, and bp.tf isn't creating the price increase, it would happen with or without bp.tf (whether bp.tf is speeding it up or not is a different question) 

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Kiljoy keys are currency thats why people want to sell them for more.

Bp.tf has a huge effect enabling the community to set prices as we are the people that play the game so it would not be going up daily if bp.tf did not exist

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Except thats not true. Sellers woukd constantly ask for more, and buyers would be willing to pay.

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When I first started trading TF2 trading last summer, I was shocked at how much I could get with my weekly drop 'allowance'. 2 reclaimed was like 25-30 cents! Overall, that is a lot of money for valve to be generating and injecting into the economy. The only way that is sustainable is if there are large amounts real money purchases to keep things in check. I have always avoided microtransaction based games and it is one of the reasons I did not get back into TF2 earlier. Though after I looked into things, I quickly realized that I could get everything I wanted quite easily while all the stuff worth significant amounts of money is basically cosmetic crap.

What I would like to know is how other game economies deal with this sort of inflation between game-created currency and real money currency. What sort of ratio is found there? Is this basically just  growing/adjusting pain as the economy matures? Idlers are found in every game economy from what I hear. Are they allowed or are they banned when discovered? I have seen some stories of some pretty crazy farming setups such as 12 computers all controlled together. Is the ease/cost of idling in TF2 abnormal?

Greed goes both ways. Its not just 'key sellers (or anything else) always raising prices' that has got us where we are. Just as many people are looking for ways to buy for less as there are trying to sell for more. I completely agree with your point that the price is currently rising so fast because people expect it to continuously rise. That happens with just about everything in TF2. Laughably huge overspeculation everywhere (even if it is not necessarily out of place in this instance - yet).

The underlying issues have already been well covered in various levelheaded discussion posts like this one with the basic point being that keys have many uses (high demand) while can only be generated when purchased from mann co. (low supply) while metal has few worthwhile uses and high supply. The economic value lost to metal crafting appears to be far lower than the economic value lost to unboxing. Few people craft hats for 3 ref while unboxing is quite popular which means that little metal is leaving the economy compared to keys. The key:metal ratio will continue to grow for as long as MetalIn:MetalOut > KeysIn:KeysOut

Here are some example numbers (for my sake and yours - I'm just ranting my thoughts at this point with no idea of the validity of them)


Weekly ref in: 1000
Weekly ref out (crafting): 100
Metal ratio 10:1

Weekly keys in: 400
Weekly keys out (unboxing): 100
Key ratio 4:1


Metal ratio to Key ratio Ratio (lol) 10:4
Result: Metal will continue to drop in value compared to keys until the ratio normalizes at 1:1
The desire to unbox compared to the desire to buy more new full priced keys needs to match the desire to craft metal compared to the desire to attain metal (idling or otherwise)

We need one or more of the following to occur: Less metal created (Valve intervention required), More metal used in crafting (aka more people crafting more stuff), More uses for metal (Valve intervention required), Less unboxing, more keys generated from mann co (lower prices (unlikely), or some other incentive).


Whether the total quantity of metal/keys is growing or not is irrelevant, the ratios work properly even if the total number of refined and/or keys is decreasing.

Now theres probably names for everything I just did here but I don't know them. Economics is not my thing, this is just an extension of my common sense theory crafting and as such may be completely wrong. I am also obviously leaving out all the other less mathematical parts of the economy like speculation and whatnot but that has been discussed elsewhere by people who actually know what they are talking about. Also, if someone has actual estimates on these data points (especially over a long time period) I would love to know to see if any of this holds up.

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Types of people on key suggestions:

1. People who actually vote for the sake of voting. (Neutral)

2. People who vote only for profit and have no keys (downvote)

3. People who vote by looking at blue star (upvote)

4. People who vote by whether OP has lots of keys.(downvote)

 

Why key suggesting always results in negative rep.

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I can explain how its bp.tfs fault if you like (mostly at least even though you didnt ask) 

People will always try and sell an item for a bit more thats how you make profit in this game.

So when people with nothing else to do in their life see this they get loads of proof then make a suggestion.

There suggestion is correct because people are obviously selling things for 1 or 2 scrap more.

Make a key suggestion accepted (idk why probably just wanna ruin the market and get more money for themselves) 

Then keys cost more people up the price another suggestion is made and again thats accepted. This is happening daily which is bull**** soon keys will be 10 ref you wont have to wait long. 

Someone has to step in and put a stop to it brad could be like many others he is happy sitting there watching his backpack go up $50 daily with a huge smile on his face. 

There is demand for keys however not to increase the price daily its people doing what you do on tf2 trying to make some form of profit.

There you go rant over (off to lie down)  

The way to make profit isnt selling higher. I know how to make profit, you got it all wrong. Sell low

 

People who care about trading or rep make suggestions to correct something. 

 

 

If you agree that the key suggest is correct why you complaining about it? What is wrong with correct prices? Is it only okay to raise the price if it was hats/items you owned but leave keys alone?

 

Since keys are constantly changing is wrong to correct it ? Because you dont want normal traders selling they're keys for what they can get, instead oyu want them to get less then whats possible and its bull because you cant afford or as willing as many other traders? 

 

There you go, you do agree that theres a demand on keys, well its only obvious if there is less keys selling then people trying to buy it'll go up

 

Who has to step in? Brad? Last time i checked he didn't make tf2 or tf2 trading , he just made a helpful site to give a quick guide to items. This is valve's game if they see  problem with key prices (which im sure they are fine with) they are responsible to fix it not some pricing GUIDE 

 

And that $50 he gets extra wouldn't really count if he went to paypal and sold keys are the right price and not bp.tf price. His bp isn't actually going up. Unless he's been trading. 

 

 

 

What you should have said is "Guys! I dont want to use more of this FREE metal i get for just playing this great game, to get keys which had cost people 2.50 and i think it isn't fair, that theres tons of others that are willing to use more metal, we got to stop them, so i can get more bang out of my free stuff" 

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Of course it is when the price of keys go up so does its monetary value therefore it increases you backpacks price its happening to my bp which means its happening to everyone elses.

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Of course it is when the price of keys go up so does its monetary value therefore it increases you backpacks price its happening to my bp which means its happening to everyone elses.

Key prices are NOT goibg up, keys have been stable around $1.30 for quite some time.

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Well there you go then the markets broken surprising

Mind explaining?

Peopl keep saying the market will crash, or the markets broken but never explain why......

 

I clearly explained why NOTHING is wrong....

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Firatly, keys will never get that high, or anywhere near it. I guarantee they will never top 20 ref, and i doubt theyll even reach 10.

 

And the only thing affected by key prices are expensive items (like unusuals).

 

Craft hats, And most hats will never be affected.

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And the only thing affected by key prices are expensive items (like unusuals).

Not really, they are traded in Keys, Promos and other Unusuals, not in Refined.

Who buys their 1st expensive item with Metal, or better yet, who ever sold one for Metal?

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I've actually bought a couple for metal... (But those are odd occurrences, and not my point) 

 

 

If Keys become 1000 Ref, then unusuals would become a virtual infinite amount of ref, alternatively, craft hats will NEVER be more than 1.5 Refined, and better hats, would never be more than 10~ ref.

 

For Clarity: My point was that the ref value of most items wouldn't be affected. Only the ref value of unusual-like items would be affected. 

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So basically anything that drops in game is dropping in price, by being dragged by ref.

Not in terms of Metal, the "currency" they are traded for. In terms of $ and Keys, yes. But nobody sells craft hats for $, and everybody can adapt to a new Key price (higher or lower) in Metal, so who cares?
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Not in terms of Metal, the "currency" they are traded for. In terms of $ and Keys, yes. But nobody sells craft hats for $, and everybody can adapt to a new Key price (higher or lower) in Metal, so who cares?

 

 

Well you talk like the value of items isn't changing, but for someone who sells items for ref/keys/money and then uses the re/keys to acquire money to get more items then the value is going down for anything valued in ref.  Craft hats have gone down alot, and I used to sell a lot of craft hats for paypal.

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Well you talk like the value of items isn't changing, but for someone who sells items for ref/keys/money and then uses the re/keys to acquire money to get more items then the value is going down for anything valued in ref.  Craft hats have gone down alot, and I used to sell a lot of craft hats for paypal.

All I can say is that you exploited / used the game in a way only very few did and it was never meant to be used. Too bad those "golden days" are over. Why do you think craftables and drops are not marketable, and likely never will be? Valve did that with intention, and I dare say it's even more fair for the majority of players.

Besides that, wouldn't the gain in ref you got from all those unusuals and stranges not make up for the "loss" in value of your craft hats many times over (if you like ref so much)?

Looking at your backpack history, I can see no indication that you lost anything at all, especially not since Oct last year.

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