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The key price thread


base64

  

181 members have voted

  1. 1. Should Keys Go Up Or Down? Would They Help The Economy If They Are Higher?

    • Up / Yes
      59
    • Down / No
      122


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Tell people to stop buying for higher or get everyone to pay taxes to backpack.tf. If everyone started paying taxes to backpack.tf, then it'd actually be like a government and have the ability to effectively implement fiscal/monetary policy. Basically everyone is complaining there's no government, so let's all pay taxes and form an actual quasi-governing body.

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In my opinion, if people did not continually buy for what sellers asked for, this wouldn't have happened. Buyers continue to bite. 

 

What I mean, is that buyers keep on giving into sellers demands. If we all stick to one price, say F*** You to people buying/selling for more or less then a particular price, then stability starts kicking in, something that hasn't been here since October. We go from there, and decide the best course of action.

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This. Just this.

In my opinion, if people did not continually buy for what sellers asked for, this wouldn't have happened. Buyers continue to bite. 

 

What I mean, is that buyers keep on giving into sellers demands. If we all stick to one price, say F*** You to people buying/selling for more or less then a particular price, then stability starts kicking in, something that hasn't been here since October. We go from there, and decide the best course of action.

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key thread #100 

 

here we go 

 

don't forget the steam market, idle accounts, and general greediness 

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We go from there, and decide the best course of action.

 

There's no action to be taken.  Please search the forums for previous discussions before starting a thread.

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Wow, calm down children, I do not consider Long as a troll and that screenahot was  spammed all over the place which was more than enough for me since I rarely visit the forums . I don't hide my hate for backpack.tf but my previous post had nothing to do with that. I'm saying that carded keys are always cheaper and one must have realised this is too fishy when anyone could have sold those keys for more very easily.

 

Why do you hate Backpack.tf?

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Metal supply is increasing.  That seems to be the thing affecting key price the most. 

 

I'm really interested in the long term affects of robo keys on normal keys though, assuming they continue to be sold in the mann co store and robo crates continue to drop (even as rare drops). 

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This poll* is rather useless and I will remove it to merge it with the key thread.

 

*The poll was: Should keys go up or down? 5 people voted for up, 3 for down.

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If key price can fluctuate, then why don't the pricing for items labeled with that change?

 

If the key rose 1 ref, then obviusly you would have to take that into account with all of the current pricings listed in keys.

Backpack.tf should automatically convert the listing in keys to account for the price of keys themselves, they probably don't do this already anyways, but if they do, cheers.

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They already do. When a key price is updated, the value of an item priced in keys will rise in refined, but it won't physically show it.

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They already do. When a key price is updated, the value of an item priced in keys will rise in refined, but it won't physically show it.

 

I think what he's saying is having the value stay the same in refined.

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Hey! I just read the TF2finance post on why the keys are so expensive now. Now I'm thinking, backpack.tf was the one that mostly contributed to that key inflation. So... what if we'd set the price to 2.55 again? Of course, it wouldn't work at once, some of us should start selling keys for that price again, so other sellers would have to drop their prices to sell anything... But, maybe that would make the market "stable" again? What do you think about this?

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Than new kids get sharked and everyone else keep selling and buying at 5+ ref. Also merged to the other key topic.

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  • 2 weeks later...

Something that occurred to me last night, and I apologize if this has been discussed already. 

 

With the latest updates and the new ability to sell unusuals on the steam community market, I wonder what affect that will have on key price.  Let's say I sell an unusual for "1 bud" on the market, or in actual terms, $60 in Steam Wallet money ($2.50 x 24).  Now I have the option of tracking down 24 key sellers so I a) can convert SW (Steam Wallet) money into keys, and B) save a few cents against the Mannco Store, or I can just buy 24 keys from the Mannco Store outright for convenience.  That means I have a convenience incentive to add 24 new keys to circulation.  Imagine that on a larger scale, across multiple users.  I know data has shown that the amount of metal in circulation much closely correlates to key price and not # of keys, but I thought this might have some effect. 

 

Thoughts? 

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Honestly I don't think unusuals on the community market will affect keys. I think it will drag down the price of unusuals a bit but thats about it

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Hey! I just read the TF2finance post on why the keys are so expensive now. Now I'm thinking, backpack.tf was the one that mostly contributed to that key inflation. So... what if we'd set the price to 2.55 again? Of course, it wouldn't work at once, some of us should start selling keys for that price again, so other sellers would have to drop their prices to sell anything... But, maybe that would make the market "stable" again? What do you think about this?

I was, and some people was on Outpost. And guess what... NOBODY CARES

 

The prickly cactus brought the mice to tearsbut they continued to nibble on it.

 

Meanwhile keys come to 6.00, 6.11... 

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Alright, my turn to discuss a couple of points  :)
Relax, I’m not here to judge what the Metal-to-Keys (MtK) ratio should be, whether it’s good/bad, etc.
Rather, the objective here is more to point out the many inconsistencies that I find in people’s arguments in the endless debate, to question the relevance what is tacitly taken for granted when determining key/metal prices in general and maybe try to provide some alternate – and hopefully relevant – outlook.
Here’s a preliminary list of some assumptions that will be attacked or debunked outright:
 
  • 1) “Supply and demand is the golden rule that determines every price and conversion rate and you are stupid to believe otherwise.â€â€‹
  • 2)â€Keys and Metal are mostly neutral currencies.â€
  • 3) “Metal is free money, so it’s no surprise that it was depreciated hard against keys.â€
  • 4) “Paypal trade is the most reliable / least unreliable way of estimating values and prices for the mid value market.â€
 
I) Production costs for metal and keys
 
Starting by stating the obvious, metal and keys do not randomly appear out of nowhere ; they need to be consciously created.
 
Where are they created?
Respectively in the “factories†that are the Mann Co Store and the servers. There is no additional method to introduce new keys/metal on the market.
 
How much does it cost to produce them?
For keys, it costs 2.50 Steam Wallet Dollars (SW$) and that is it. You can also produce as many as you want without any limit other than your judgment and your funds. 
Let’s now look at metal : you probably know the saying “time is moneyâ€, right ? The fact is that metal is not produced with SW$, but with play time, and its production is capped at a certain weekly production rate (around 10h/week). The most basic metal unit is the weapon (not the scrap), but it is the refined that is used to express prices. Now, taking in account the weekly drop caps, and the 18 weapons requirement to craft a ref, it costs an average of 2 weeks (i.e. 2 drop cycles) to produce 1 ref. Hence, metal DOES have a cost, and is NOT free money as many traders will tell you.
This taking in account of production cost will play a central part in my criticism of the current system later on.
 
 
TL;DR: Keys cost 2.50 SW$ but 0 time and have 0 production rate limit. Ref costs 0 SW$, but takes 2 weeks to produce because of drop rate constraints.
 
 
II) The conversion problem.
 
The current production costs have not known any change since trading was first introduced (Key SW€ prices were lowered after the Über Update I think, but SW$ prices did not change). This detail is very important to consider when observing the evolutions in MtK/KtM trading:
 
  • When 1k = 2.5 ref, this equated to 2 + 2 + 1 = 5 weeks of drops on average;
  • Now, with 1k = 5.33-5.44 ref (lol) this changes to 2 + 2 + 2 + 2 +2 +1= 10 weeks!
 
This conversion problem brings us to another, more serious one : since metal production is hard-capped on a weekly basis, (our “factory†is only productive 10h per week ), it becomes more and more difficult for individual buyers who seldom buy keys with SW$ to keep up (i.e. "casual" traders). This comes at a price in the mid-term : items worth less than 10 keys will stagnate at best, as any further increase will put out more potential buyers than ever before (this is known as a situation of high price elasticity), since adding 1 key equates to adding 4.5+ refined. Furthermore, don’t forget that since the summer of 2012, a lot of items passed the key mark (festives anyone?), many other newly-released ones traded steadily for 1-3k and a bunch of unusuals fell under 20k. That’s a sick increase in the volume of mid-value items, where keys traditionally reign supreme, and hence in competition.
 
This can provide a new outlook on why #40 stranges have not known any sensible rise: ALL the previous super price explosions (2011 SF’s, #30’s, BMOC…) started out with people who bought their keys with metal up to the Bill’s mark, more or less (from there, the tendency is more to trade down to keys rather than up from metal). But with keys taking more time to gather without the use of SW$ and stronger competition from other equally appealing items, these lightning growths cannot start or sustain themselves like before, and the chances of these prices going past the “sound barrier†of TF2 trade (the 10-20k range) are slim at best. That’s what the fools who paid 18 keys for their B.M.O.C. hoping for a 2 bud sell in January failed to understand (at least for those who purchased them after summer). They’re not at a total loss either though: if converted in metal, they went from 45 ref to 60 ref, which would represent about 23-24 old keys.
 
What is there to be learned ? TL;DR: Blinded by their “Supply and demand†holy words, many failed to foresee that the structural change in the valuing of metal and keys as well as in the mid value market would negatively impact and impede growths similar to the 2011 ones.
 
 
III) Determining values (or why supply and demand is for suckers).
 
Beforehand, I would like to say Base64's article is fairly well written. My opinion sharply diverges from his on theoretical grounds, but he has a good grasp of the various concepts he defines and uses and remains somewhat rigorous throughout his analysis, which is always nice to see. But overall, I was not impressed by the resulting verdict, nor do I agree with it.
Here's my take on all this value/exchange rate setting mumbo jumbo.
Like gold and silver, keys and metal have no intrinsic value, and their conversion rate is all but heaven sent. But neither can it entirely be whatever we want it to be.
 
Today, these values are chiefly based on two major pillars: the quantitative data of the grey market and major trading spots (supposedly mirrored by tf2finance) and the qualitative arguments of the classical "supply and demand" theory (which can be found in any of the pits of ignorance that are the suggestion comment sections, usually spewed by big opinionated traders and mods).
Unfortunately, I'll have to say that these two pillars are not only rotten to the core because of their improper use, but are also completely wrong to begin with.
 

Regarding the "grey"market, the problem is that it was first meant for unusual owners to sell their for hard cash,

which they could eventually reinvest in tf2 to buy more keys with to liquefy their assets in-game. It was more of a complementary service for cashing out expensive items. Relying on the GM values is wrong because it does not reflect the reality of trading inside the Mannconomy: that would equate to a South African company using the price of its goods in the US to fix their domestic price. Ridiculous, no ?

Second, it is wrong because because it undervalues keys, screwing both producers (Store buyers) and end users (uncraters and casual item buyers) while empowering the intermediaries ("currency" traders). Indeed, the grey market entirely ignores the production costs: let's say one creates 8 keys with the Store and spends them all in trading. This person has acquired the equivalent of a Bill's hat. But if Bill's are 10-12$ on the GM, then he made a tremendous loss from his initial 20 SW$ investment. I will also tell you why this screws the demand side later on.
And finally, the GM is only a footnote in the entire Mannconomy, notably because of the potential scamming risks, need for rep, use of hard cash, etc; not to mention that it is simply not adapted to the mid-value item market, in which the "key+metal" duo plays a central role, and where the raw traded quantities are rarely big, whether you like it or not.
 
 
Now, about this magical "supply and demand" that you've all read dozens of time. with a closer examination,
I can't help but realize that this pseudo-argument is filled with inconsistencies, evidencing the laughably poor grasp those who spew it out on every occasion have of this concept, its applications and implications.
Increase in price ? Supply and demand. Drop in price ? Supply and demand, my good sir. "OMGWTF 5.33 a key arrrwarrharaaawd" I sayeth, ignorant peasant, thou do no understand basic supply and demand.
Wow I feel so smart now: it's all balanced, all simple, all self-regulating, all natural........................all wrong.
What I believe are the most basic mistakes, which Base has also made, is to assume that the supply and demand sides are independent from one another, that the "currencies" are pure (i.e. it is their only use) and that prices are somehow given and represent a spontaneous equilibrium point.
  1. It would be more true to say that supply dictates its own demand: new item, new demand, higher metal cost of keys, more metal in circulation to cope. Demand is also highly restricted by mid-value items' prices, defined in keys (think the 1 key hat which retained the same price over the last 8 months, or expanders retaining a 2+key price up to the robo-sale). That's a lot of interdependence here.
  2. I consider metal/keys to be more "convenient barter items" than "currencies". While Base is right about differences between "supply" and "money supply", he seems to ignore that in practice, keys/metal tend to be treated as goods, while still being called currencies. This is due to these having other very concrete uses (uncrate and craft, which are very significant! Just look at all those stranges and craft numbers!)
  3. Let's not be hypocrites; prices are not heaven-sent, they are set by real people, who have their own rationale for choosing them. If I want to set my Bill's selling price at 20 keys or 2 keys, I can, and no one can bs me about it (that's why you should never EVER comment on tf2op prices. Their post, their world), regardless of whether someone will buy it or not. In this sense, the S&D theory is just that: a theory, "a useful, precisely formulated conceptual tool that clever people have devised to help us gain an abstract understanding of a complex world. It does not (nor should it be expected to) give us in addition an accurate and complete description of any particular market", chiefly because it is not built on empirical data.
TL:DR: The reliance on the grey market is unfounded and illegitimate, and uttering "supply and demand" to cover your rear and pedantically dismiss any other form of interpretation will only make you look like a fool, because it is wrong. S&D is a useful tool, but should not be relied upon to seek guidance.
 
 
IV) Is BP really responsible for all that jazz ?
 
Whether you like it or not, I support the BP-OP cycle approach. Base64's attack on the logic chain, while technically correct (because often badly redacted), suffers from two major problems. Say you have keys at both 2.88 and 3 ref on OP, where 3 is the new potential median price:
  • With many more trades progressively occurring at 3 ref, not everyone will stubbornly spend hours looking for 2.88 deals which are still valid on OP, or by server-hopping. Wait too long, and you may even have to pay 3.11 in the future, and "screw this, I want X hat/misc"
  • There is a big difference between someone wanting to buy 1 key and another wanting to buy 8-10! If you want only 1 key, you may be less motivated to find the best deal, and will pay for the most common price you see. If you want 10, a single scrap difference per key will turn into a 1.11 ref one for the total. Big idle farmers don't care, but "savers" and those with 1-2 alts do. My point is that, since key-selling threads mostly have buyers going for 1-2 keys, and despite the bitching, conversion rate modifications have little direct impact on these small purchases (i.e. people still buy). I do admit that, because of S&D interdependence, those buying 1-2 keys are (were?) usually more casual traders, who have little choice but to go with the flow due to their lesser (even non-existent) negotiating power vs key owners.
 
What you call "the vicious cycle of keys" is also known as a positive feedback situation. I cannot help but wonder how you can still have the guts to try and clear bp.tf of any participation in this when it is just so blatantly obvious that it is up to the neck in it. Nothing personal there Base, but you are completely wrong here, just as much as those conspiracy theorists who argue that bp is scheming to bring key prices up. 
Asking who is responsible is like asking "which came first: the chicken or the egg?": it's a false question. Feedback is a cyclic phenomena, a moving chain of which buyers, sellers, trading sites/server and pricing sites are all links; and bp.tf is no exception. It is not solely responsible for price variations, but it isn't a passive spectator either.
In a "price chain", you need actors to set prices, and information about the prices. The actors are short-sighted and have positive/negative expectations about future prices, and these expectations can have their potency heavily multiplied by "trusted" sources of information.
 
In that sense, the old spreadsheets are to bp.tf what a Nieuport 17 is to an F-16: information is updated way faster, is instantly and more widely available than ever before, and is more trusted (instead of depending on the ethics of a handful of people, you rely on the ethics a bigger handful of people who are also actors in the feedback chain, just as short-sighted, but more numerous). Therefore the impact of price variations will be bigger than ever before, and actors will be much more sensitive to price signals. Pricing trends also tend to linger for longer than before bp existed: it's much harder to change direction when going at a constant 100mph than when you travel at 10mph from time to time.
 
 
V) Is metal that bad ?
 
Firstly, it is a myth to say that metal has dropped hard (keys have really increased). While it is true that there is a stronger preference for keys vs metal, but believing that this alone would account for the depreciation of metal vs keys would be jumping to conclusions. GM prices are neither a satisfying nor a valid argument (for reasons I discussed previously, and seriously, buying metal on Paypal  :huh: ). I do not deny that this belief didn't reinforce the trend, however.
But in case you haven't noticed, you still pay a Bill's 8-10 keys, and random craft hats at around 1.22 ref each. If metal really had suffered an inflation (maybe not the correct term, but you get the point), that would have translated into greater metal prices overall, and an adjustment of items worth 1-3 old keys, which obviously has not the case.
 
The good thing today is that it's a bit easier to profit from metal than before, because you now have a 5 ref margin before people will start asking for keys, making the pricing of metal market items somewhat more flexible.
It can also be speculated that, should keys keep rising, newer intermediaries may arise, such as Tour of Duty tickets or certain tools. But for the time being, metal now has its own domain.
--------------------------------------------------------------------
 
 
So is it worth it to keep fussing about all this ? Was it ever worth it in the first place  :P ?
 
I hope this article has provided you with some new insight and perhaps corrected some of your misconceptions (fat chance, but I prefer being optimistic :rolleyes: ). Now get out of these trade servers and go play and enjoy some good old tf2  :D !
 
 
 
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Here’s a preliminary list of some assumptions that will be attacked or debunked outright:

  • 1) “Supply and demand is the golden rule that determines every price and conversion rate and you are stupid to believe otherwise.â€â€‹
  • 2)â€Keys and Metal are mostly neutral currencies.â€
  • 3) “Metal is free money, so it’s no surprise that it was depreciated hard against keys.â€
  • 4) “Paypal trade is the most reliable / least unreliable way of estimating values and prices for the mid value market.â€

 

 

 

I agree on Part I and Part II of the post, they are both well written.

  • Both Metal and Keys are Economic Goods, and they have costs (or opportunity costs).
  • Changes in conversion rate confuse the perception of nominal profit/loss.
There are certain points worth discussing.

 

Like gold and silver, keys and metal have no intrinsic value

 

Let's step back from modern commodities exchange and look at gold coins in ancient times.

The exchange value of a gold coin exceeds its melt value.

There is no formal definition of “intrinsic valueâ€, but using that word means that you can give example of goods with and without intrinsic value.

If the melt value for use in jewellery is not intrinsic value, then what value is?

If, one day, Keys are no longer generally accepted as payment for goods and services, or repayment of debts, i.e. Keys are not “pure†(TF2 sense) anymore -- when you buy any single hat, people say “I do not accept Keysâ€, is there any value left in Keys? Or is it really zero? Does the act of gambling (unboxing) give rise to utility?

 

Relying on the GM [Grey Market] values is wrong because it does not reflect the reality of trading inside the Mannconomy

 

Who uses relative price of Keys and Metal in USD to support a claim that in-game exchange rate is the same?

Real USD ratio and in-game ratio were never identical in the History of TF2 Trading. The divergence also fluctuates. Backpack.tf has never used this logic to establish a claim of exact price change. Read section 3.4 of “worthless comments listâ€. http://backpack.tf/vote/id/50e8b403ba25360e44000002#50e8c0d0ba2536fe61000001_row

We all know that Real ratio is different from in-game ratio, because of risk, insufficient arbitrageurs, Steam Wallet, etc.

 

supply dictates its own demand

 

Clarify the phrase “its ownâ€.

  • new item, new demand [for the new item]
  • New quantity supplied for the new item
  • New derived demand for Keys (production factor)
That logic is clearly not within “its ownâ€

Supply and Demand within single item is independent in general, at least during the initial changes, but the equilibrium is interdependent.

Markets between multiple items are also interdependent, but the effect is secondary.

Competitive/Joint Demand, Competitive/Joint Supply, Derived Demand are all examples of dependency “between itemsâ€, not “within its ownâ€.

 

I consider metal/keys to be more "convenient barter items" than "currencies"… keys/metal tend to be treated as goods

 

 

Money/Currency: generally accepted as payment for goods and services
Convenient barter items: (please define how “convenient†is different from generally accepted)
 

 

 

Have you asked how many people never unboxed a single crate even though they own hundreds of Keys?

Do Keys satisfy the requirements and function of Money/Currency? Store of value, common unit of account, homogeneity, etc

 

Goods: Anything that satisfies human wants
 
 

 

Does “owning Keys†satisfy human wants, or does “buying/unboxing items with Keys†satisfy human wants?

According to trade.tf, 75% backpack movements involve currency. Does that count as “generally accepted�

 

S&D is a useful tool, but should not be relied upon to seek guidance.

 

We have never relied on Supply and Demand reasoning to establish a new reported price. We discuss it because too many people and kids claim that “Price is going up for no reason†https://www.google.com.hk/#safe=off&q=site:backpack.tf+"for+no+reason"

That is why we are forced to find and examine all possible reasons, whether they are correct or not.

All price changes in major items on this site are supported by successful trades.

 

not everyone will stubbornly spend hours looking for 2.88 deals

 

“Not everyone†means how many players? Is it the majority? Is the “impulsive buyer price†a majority at this moment?

I never denied that backpack.tf has involvement. Please point me to the right text.

What I’m saying is that backpack.tf is only reflecting market price, and if people cite that “horrendously vicious cycle†as a legitimate argument for closing down backpack.tf in order to terminate the cycle and stop inflation (sic), they have to first understand that market force is behind every change in price report.

 

-------------

 

Good work on explaining the negative impacts of ever changing exchange rates. ;)

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The honest truth is, is that Backpack and Outpost are both contributing to this rise in Key prices. But people dont realise the PayPal community is another cause for this as refined becomes cheaper, lets be honest, $0.35 is hardly a large amount of money, it means prices of everything, EVERYTHING, will rise. 

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I think that to determine the definite price of 1 key we would have to go through a few mathematical calculations to define the last and untouchable price. I could try to do this tomorrow maybe. If anyone wants to help or do something about this, feel free to tell me.

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