The Problem with the TF2 Economy

[OPAF More Medic]

I used to be in love with trading in 2012. Now I'm not. However, what I still am, is an economics major. Can I shed some light as to why this economy has gone down the drain? If you want the TL;DR skip down to point #5.

 

1.) Paints & Strange Parts.

 

This is one of the saddest points in the TF2 economy. When trading was good, you would could paint for 50% of it's previous value after it had been added. Now you're lucky to get an extra refined if your hat is painted An Extraordinary Abundance of Tinge (1.5 keys). The same for strange parts. Some of these parts are going for 4 keys, however, once applied, they go for a tidy sum of 0.00 refined. RIDICULOUS! You know why this has come about? Scrap.tf and similar sites, primarily. Their craft hat banking system is severely flawed in the way that they give no additional value for paints. Unfortunately, traders have copied this style and have begun to dismiss paint as an additive value/asset. The same with strange parts. This is most depressing as it used to add such immense variety to the game and everyone had different colored cosmetics. Now no one will apply paints/strange parts to an item because it goes down the drain and loses all potential value.

 

2.)  Buds

 

Buds. In 2012 if someone had buds you knew they knew how to trade. They were worth ~30 keys and they were considered pure. Now they're considered items and aren't even worth 2 keys. It disgusts me. No one even wants them any more because you can literally get them for $5. Whereas they used to be $75. It's just so sad to see this economy dwindle.

 

3.) Site/bot Reliance

 

Don't get me wrong, these are amazing tools, when used CORRECTLY. For things like trading a Winger for a Chargin' Targe, not for buying and selling mass amounts of items. It's frustrating to go to backpack.tf and look in the classifieds to see absolutely nothing except bots buying items for under their worth, and selling for more. Why? Just why? What is the purpose of having a cool backpack if you had a computer do it for you? It's like using cheats in a video game. I'm sorry, but you don't deserve the backpack you have if you used a bot to get it.

 

4.)  Backpack.tf (Ironically)

 

I gave this it's own paragraph to stress it's importance. This website has had the biggest negative impact on the TF2 economy than EVERYTHING ELSE COMBINED. Don't get me wrong, it's classifieds are about 100 times better than TF2outpost's, but it's voting system is immensely flawed. First off, there shouldn't be a voting system! Keys are worth $2.49. That doesn't change, so why should the in game currency change? This website has ruined the economy along with many other things and it drives me crazy. Yes, it has many good features, but not all should exist.

 

5.) The Crash

 

This is a doozy. Surely you've heard of the Great Depression. Remember how that started? Well let me give you a refresher. The stock market crashed after growing an absurd amount. Well, in the past five years, the price of a key has gone from 2.33 to 28.33. That's over 12x the amount it used to be, all the while the prices of craft hats and the $ cost of keys has stayed the same. Picture this. 2012, you have an unusual worth 10 keys, $25, or 23.33 refined. Now, picture this. 2017 you have that same unusual worth 10 keys, $25, or 283.33 refined. CUZ THAT MAKES SENSE RIGHT GUYS?!?

 

I'm sorry, but if you don't see the problem by now, I don't think I'll be able to get it across to you. Please let me know what you think.

[Geel]

You may want to consider a major besides economics.

[AwesomeMcCoolName]

1. It's not like craft hat banking didn't exist before scrap.tf. Scrap.tf isn't to blame. The reason it's difficult to get much added value is because there are so many painted/parted items and so many different items that someone could buy. Besides, it was never easy to sell most painted/parted items for +50% paint/part value, and cheap hats/stranges were nearly impossible to sell for extra.

 

2. Buds dying doesn't mean the economy was dying. The reason buds (and bills and maxs) become valuable in the first place was to accommodate the trading system that only allowed for 8 items in a trade at a time. The only thing maintaining bud/bill/max value after Valve introduced stream trading was history. It was only a matter of time for them to be completely replaced by keys -- which is where we're at now. 

 

3. Yeah, screw anyone who wants to make easy money. 

 

4. The dollar value of refined fluctuates, not the value of keys. As time goes on, Refined gets more and more diluted to the point where it's nearly worthless (which is where we're at now). Keys have been fairly consistent at $1.70-$1.95~ for the last seven years.

 

5. Keys used to be <1 Refined. You do understand that Metal is literally free...right? Every time someone opens tf2 they get drops in the form of weapons/hats that are worth metal -- this results in significant amounts of metal that enters the TF2 economy that is just created out of thin air. This leads to the inevitable devaluation of metal. 

 

 

 

The real reason trading has gone down the drain is because of a lower userbase, many more options (more competition), and a higher ratio of profit traders compared to genuine traders. When everyone only wants profit then no one will ever buy/sell anything. The only reason profit traders trade with eachother is because there are many ways to gain "profit" -- a hat that sells quicker but for less could be considered profit, a hat that sells slower but for more could be profit, a hat that isn't third gen could be profit, etc... 

[ThePickleCat]

Are you a freshman? It's never too late to change majors/careers. This is more like a history lesson/nostalgia trip on trading

[hugh]

It is true, the economy has changed significantly since the days of 2012. As a trader that has been around for almost this whole time, I have had to adapt my practices, just like any other business in the real world needs to adapt. Real world markets open and close, I'm sure the market on candles took a big hit when electricity and light bulbs became a common household thing. To address your points:

 

1) Paints - yes, this is true. In the past you had to unbox paint, and black and white having had the oldest crates, when there were fewer players that were around to drop crates on meant that black and white were rare. Then sales of very cheap black and white in the Mann Co Store came about, with Lime and Pink etc too. The price of paints took a sharp hit, and likewise, painted hats. The same happened with strange parts.

 

2) Earbuds had a functional purpose in the days when a trade window could only hold 8 items. They had to represent X number of keys. How did they acquire this purpose originally? I don't know, that's before my time. But when steam trades could do more than 8 items, this function was lost. Over time, this item became hat it really was - a miscellaneous all class item, and most thought it didn't look that good to occupy their cosmetic slot with nicer items around. Hence the price fell. The unusual market which the earbuds were intimately tied to remained the same as unusuals still have a functional purpose: to look good.

 

3) Say that to Geel again, I dare you. As a real response - he had to put in a shit load of work to put together scrap.tf and design everything and build everything from scratch. He and Jesse are the first in the bot market. You might think he doesnt deserve because he automates with bots. Please don't forget he actually had to BUILD the bots and learn to code it all.

 

4) If you think the dictatorship of the TF2's spreadsheet is better, versus the semi-democratic system we have here, you're preaching to the wrong crowd. The 2.49 price is for money tied to the accounts of Valve. We cannot have that money. Naturally to not have our money tied to Valve, we have to offer some kind of incentive to not buy from a reputed and reliable billion dollar corporation and instead by from each other. That is in the form of a modest reduction in price of keys.

 

5. The rising price of keys is secondary to an enlarging amount of metal as people drop weapons. The amount of metal in the game rarely drops, because there are few ways to destroy metal, and none of them are worthwhile eg. crafting hats with refined. Since it isnt worthwhile to do that, the amount of metal in the game grows and grows, but nothing really happens on the key side. If you want to know more, I'll refer you to my friend's video (Virtual Economist).

 

[Scott Bakula]

The same for strange parts. Some of these parts are going for 4 keys, however, once applied, they go for a tidy sum of 0.00 refined. RIDICULOUS!

 

 

There's a reason for that: A large amount of strange parts only have value as a strange part, not as an applied item. This is because a person can make a strange transfer tool with any two strange parts, which subsequently raised the bottom value of the parts. Before the transfer tool was released, these parts were effectively worthless, with most being valued at a reclaimed or less, and thus added nothing to the value to the item they were attached to. And this remains true today, where a bottom-value strange part adds little to the overall price of an item. Higher end parts like Damage Done or Headshots will still add value, but a person still has to remove that bottom value from the price of the part before deciding how much it adds to the cost of the item.

 

How did they acquire this purpose originally? I don't know, that's before my time.

Earbuds, as well as Bill's and Max's Heads, were selected as a placeholder item because of their promotional nature. As the items were given out only for a limited timeframe, after their promotions ended, the community had a static amount of them in the market, so there was no worry about them increasing in number and lowering in value because of saturation.

Buds also had a bit more of an inflated value because they were one of the first misc cosmetics, so people wanted them to wear as much as they wanted to use them for trading. If they weren't miscs, we probably would've had buds and bills reversed in value since buds were a free promotion, but a Bills cost the original owner $20 (Max's would still be on top as that set the person back $40).

[Maric]

I think people understand that the market has changed, not crashed. It is more important to discuss what to do on the matter then simply stating it.

[OPAF More Medic]

There's a reason for that: A large amount of strange parts only have value as a strange part, not as an applied item. This is because a person can make a strange transfer tool with any two strange parts, which subsequently raised the bottom value of the parts. Before the transfer tool was released, these parts were effectively worthless, with most being valued at a reclaimed or less, and thus added nothing to the value to the item they were attached to. And this remains true today, where a bottom-value strange part adds little to the overall price of an item. Higher end parts like Damage Done or Headshots will still add value, but a person still has to remove that bottom value from the price of the part before deciding how much it adds to the cost of the item.

 

Eh, can't say I agree with you here. Strange parts used to have value that was significant to what keys were at the time. You have to remember that when I started trading and keys were 2.33, you could get things like strange detonators for .33. From what I can tell you're saying strange parts don't add value when attached, but a strange transfer tool does. They are both tools that are based upon the same functions and fall into the same categories. For one to not be worth anything, and another to be, just doesn't make sense. But then again, I'm tired, I may not be making sense.

[Hk_Sh]

Survival of the fittest. A lot of people seems what they want get stuff by their doors by others. Just think, adapt, progress and you will find room here to profit pretty easily.

[Discovery]

 

5.) The Crash

 

This is a doozy. Surely you've heard of the Great Depression. Remember how that started? Well let me give you a refresher. The stock market crashed after growing an absurd amount. Well, in the past five years, the price of a key has gone from 2.33 to 28.33. That's over 12x the amount it used to be, all the while the prices of craft hats and the $ cost of keys has stayed the same. Picture this. 2012, you have an unusual worth 10 keys, $25, or 23.33 refined. Now, picture this. 2017 you have that same unusual worth 10 keys, $25, or 283.33 refined. CUZ THAT MAKES SENSE RIGHT GUYS?!?

 

I'm sorry, but if you don't see the problem by now, I don't think I'll be able to get it across to you. Please let me know what you think.

 

You know, people have been saying this for years now. There was even a steam guide made entirely about it, back when keys were almost 10 ref https://steamcommunity.com/sharedfiles/filedetails/?id=333389464Even I took part in spreading awareness of this.

 

Fast forward three years later, and it's still the same situation: people complaining about the inevitable "crash" of the Mannconomy. Yet it still hasn't happened. 

 

I'm may not be as versed in economics as you are, but I am certain that this crash that people love to mention is just overdramatic reaction to the ever-fluctuating key price.

 

 

 

I'd take Geel's advice if I were you if you want to make more of these outlandish claims.

 

 

[Scott Bakula]

 From what I can tell you're saying strange parts don't add value when attached, but a strange transfer tool does. They are both tools that are based upon the same functions and fall into the same categories. For one to not be worth anything, and another to be, just doesn't make sense. But then again, I'm tired, I may not be making sense.

 

A strange transfer tool is not a part you attach to a strange item; it is a single use item that allows a person to do a one way transfer of all accumulated points on a strange weapon to another strange weapon of the same make (i.e. Rocket Launcher to Rocket Launcher), as well as the counts for all strange parts if the recipient also has them attached. The only way to get the tool is to craft it by consuming two strange parts. As the parts themselves do not matter, people use the lower tier parts to make the item.

The transfer tool itself is a popular item; people want to use it to transfer their kills to an unusual or australium instead of starting again from scratch. The transfer tool is worth 1.2 keys. This means that the bottom value of a strange part is .6 keys. If a part was lower than that, everyone would just buy it up to craft the tool and get profit, which is exactly what everyone did do. That's why garbage parts like Underwater kills and Full Moon kills shot up in price: Demand skyrocketed and the supply was consumed. It wasn't because people wanted to attach them to weapons suddenly, it was because a garbage item suddenly had a valuable use.

Also, because people are buying the transfer tool to use it, the supply of the tool itself remains lowered, thus keeping the price at a higher level. And supplies of the ingredients aren't really increasing much because few people open old crates compared to the new ones.

[DanielDee]

I used to be in love with trading in 2012. Now I'm not. However, what I still am, is an economics major. Can I shed some light as to why this economy has gone down the drain? If you want the TL;DR skip down to point #5.

 

1.) Paints & Strange Parts.

 

This is one of the saddest points in the TF2 economy. When trading was good, you would could paint for 50% of it's previous value after it had been added. Now you're lucky to get an extra refined if your hat is painted An Extraordinary Abundance of Tinge (1.5 keys). The same for strange parts. Some of these parts are going for 4 keys, however, once applied, they go for a tidy sum of 0.00 refined. RIDICULOUS! You know why this has come about? Scrap.tf and similar sites, primarily. Their craft hat banking system is severely flawed in the way that they give no additional value for paints. Unfortunately, traders have copied this style and have begun to dismiss paint as an additive value/asset. The same with strange parts. This is most depressing as it used to add such immense variety to the game and everyone had different colored cosmetics. Now no one will apply paints/strange parts to an item because it goes down the drain and loses all potential value.

 

2.)  Buds

 

Buds. In 2012 if someone had buds you knew they knew how to trade. They were worth ~30 keys and they were considered pure. Now they're considered items and aren't even worth 2 keys. It disgusts me. No one even wants them any more because you can literally get them for $5. Whereas they used to be $75. It's just so sad to see this economy dwindle.

 

3.) Site/bot Reliance

 

Don't get me wrong, these are amazing tools, when used CORRECTLY. For things like trading a Winger for a Chargin' Targe, not for buying and selling mass amounts of items. It's frustrating to go to backpack.tf and look in the classifieds to see absolutely nothing except bots buying items for under their worth, and selling for more. Why? Just why? What is the purpose of having a cool backpack if you had a computer do it for you? It's like using cheats in a video game. I'm sorry, but you don't deserve the backpack you have if you used a bot to get it.

 

4.)  Backpack.tf (Ironically)

 

I gave this it's own paragraph to stress it's importance. This website has had the biggest negative impact on the TF2 economy than EVERYTHING ELSE COMBINED. Don't get me wrong, it's classifieds are about 100 times better than TF2outpost's, but it's voting system is immensely flawed. First off, there shouldn't be a voting system! Keys are worth $2.49. That doesn't change, so why should the in game currency change? This website has ruined the economy along with many other things and it drives me crazy. Yes, it has many good features, but not all should exist.

 

5.) The Crash

 

This is a doozy. Surely you've heard of the Great Depression. Remember how that started? Well let me give you a refresher. The stock market crashed after growing an absurd amount. Well, in the past five years, the price of a key has gone from 2.33 to 28.33. That's over 12x the amount it used to be, all the while the prices of craft hats and the $ cost of keys has stayed the same. Picture this. 2012, you have an unusual worth 10 keys, $25, or 23.33 refined. Now, picture this. 2017 you have that same unusual worth 10 keys, $25, or 283.33 refined. CUZ THAT MAKES SENSE RIGHT GUYS?!?

 

I'm sorry, but if you don't see the problem by now, I don't think I'll be able to get it across to you. Please let me know what you think.

 

I agree totally. Newcomers to this game now have no chance as poor beginners to make profit of any means. I mean its pretty obvious the ONLY people who truely benefit from this site, the price voting and scrap.tf are the donators/vips/staff themselves.. of said sections and sites etc etc. Quickselling cancer has also reduced the prices of alot of hats so you cant even sell a hat for its normal price anymore. The situation Reminds me of the american stock exchange/housing market when it crashed. Insider dodgey dealing, false forecasts etc sums up this declining economy, and you are correct, the blame can be placed at the staff and devs from here and at scrap.tf .

 

/claps, your analysis of the trading community and staff seems very on the money. excuse the pun

[Happysedits]

I'm sometimes regretting choosing IT instead of Economics. I love both but I discuss economics more in free time. Dunno.

I agree with everything that MCAwesomecoolname and Hugh said.

 

 

 

4.)  Backpack.tf (Ironically)

 

I gave this it's own paragraph to stress it's importance. This website has had the biggest negative impact on the TF2 economy than EVERYTHING ELSE COMBINED. Don't get me wrong, it's classifieds are about 100 times better than TF2outpost's, but it's voting system is immensely flawed. First off, there shouldn't be a voting system! Keys are worth $2.49. That doesn't change, so why should the in game currency change? This website has ruined the economy along with many other things and it drives me crazy. Yes, it has many good features, but not all should exist.

And you have any idea for better pricing system? This is the best it can get. How ld a newbie in trading know for example price of merc's muffler? That thing is not on SCM so it has basically no price. Before backpack.tf and spreadsheets people used to trade those hats randomly, wanting the fancies since none has their prices. Now its better when community and market decides its prices, how would you achieve that differently?

[fisk]

i hear gender studies is highly lucrative

[Foamy the Fearsome]

[Happysedits]

 

Well for TF2 it's currently like this

 

[Mag!cGuy]

I studied a bit of economics, nowhere near being my main subject though. And, I dunno, feels like people are overcomplicating it.

 

The game itself is dying, that's not a question. A dying game means less players, so less people that are going to buy costly items for keeps. These types of players are what were "feeding" the economy, enabling the traders to sell back at a profit. Now that a lot of these players are gone, it's kinda only traders remaining, so one would mostly be dealing with other profit-driven people, leading to a dead end for everyone. 

 

Even more simply put, less demand = decrease in price. Except a few exceptions, all the unusuals are decreasing in price. So, yes, the economy is dying. Slowly, but surely. 

 

By the way, one item =/= the economy. The buds were always completely overrated. At some point, the economy "realized" it, and the price started falling a little bit. Then, human irrationality, one of the reasons perfect equilibrium market can't really exist in practice, kicked in: seeing something is going down, you want to get rid of yours as well. I remember, I was there when it happened. So when everyone wants to sell theirs, you have a huge surge in supply, obviously not met by a demand that is actually rapidly decreasing. That happens a lot in real life, just like it did at a tremendous extent with the Great Depression. However, just because it happened wth the buds in particular, doesn't mean the economy was suffering the same fate. As a matter of fact, it really did not.

[Tobbby92]

I still want to know who said in the beginning that buds now represent 30 keys and how the community accepted that. And when was that? After they became limited? Who was crazy enough to make the first trade. Well, maybe not crazy, but still risky.

[AwesomeMcCoolName]

I still want to know who said in the beginning that buds now represent 30 keys and how the community accepted that. And when was that? After they became limited? Who was crazy enough to make the first trade. Well, maybe not crazy, but still risky.

They didn't just start at 30 keys. They started out cheap, then they stabilized at two painted bills (around 11 keys)  for the longest time (and maxs at 4.5-5 buds). Then they slowly increased over time to about 30 keys, then back down to like 16 keys, then back up to 26 keys and then down forever.

[Happysedits]

I studied a bit of economics, nowhere near being my main subject though. And, I dunno, feels like people are overcomplicating it.

 

The game itself is dying, that's not a question. A dying game means less players, so less people that are going to buy costly items for keeps. These types of players are what were "feeding" the economy, enabling the traders to sell back at a profit. Now that a lot of these players are gone, it's kinda only traders remaining, so one would mostly be dealing with other profit-driven people, leading to a dead end for everyone. 

 

Even more simply put, less demand = decrease in price. Except a few exceptions, all the unusuals are decreasing in price. So, yes, the economy is dying. Slowly, but surely. 

 

By the way, one item =/= the economy. The buds were always completely overrated. At some point, the economy "realized" it, and the price started falling a little bit. Then, human irrationality, one of the reasons perfect equilibrium market can't really exist in practice, kicked in: seeing something is going down, you want to get rid of yours as well. I remember, I was there when it happened. So when everyone wants to sell theirs, you have a huge surge in supply, obviously not met by a demand that is actually rapidly decreasing. That happens a lot in real life, just like it did at a tremendous extent with the Great Depression. However, just because it happened wth the buds in particular, doesn't mean the economy was suffering the same fate. As a matter of fact, it really did not.

But the amount didnt change in years? http://steamcharts.com/app/440(avarage players always about 50k, it was 40k in 2013

[Fire ̷̨●̷̨°]

I disagree with pretty much everything you said.

 

The reason buds died is because of the Steam Community Market and CS:GO. People have no use for buds in CS:GO and keys are something CS:GO traders are familiar with. That's the reason they are gone. Keys going up in price metal wise is the same reason and also because you can't trade metal on the SCM. The TF2 economy has been dying because of people's lack of interest in the game. Bp.tf and Geel's sites have very little to do with anything, all they do is help to stabilize prices for items and make it easier to find items you want.

 

 

But the amount didnt change in years? http://steamcharts.com/app/440(avarage players always about 50k, it was 40k in 2013

 

Those numbers are inflated because of the amount of bots in the game. I estimate at any given time there is around 25,000 bots farming weapon drops in TF2.