Wildbits

**Wildbits** are currencies issued by privately owned banks, uncontrolled by a central banking system. This is a major selling point as they are advertised as being resistant to debasing as they aren't affected by national monetary policy.

Wildbits are almost always issued as paper bills. When wildbit coins are issued, these are mostly forged out of copper and contain no precious metals. They typically have a legit-sounding name, such as "bit coins" instead of "bits".

## History

Wildbits first appeared in frontier cities of the Buffalo Nation where Equestrian banks had little presence and law enforcement were poor.

New banks were founded that invested heavily in the nascent stone oil extraction industry. As they gained ownership on stone oil wells, oil extraction enterprises began using these wildbits to pay their employees. Local Buffalo and recent immigrants who weren't as familiar with Equestrian currency were particularly vulnerable to being misled into believing that it was equivalent to government-backed Equestrian currency.

However, businesses rarely accepted wildbits as payment as they lacked the same backing and widespread acceptance as Equestrian bits. Bank runs where creatures demanded to have their wildbits exchanged for Equestrian bits became common and more creatures demanded to be paid in Equestrian bits instead, crashing the value of wildbits.

To keep the value of wildbits up, a change of approach was necessary. Banks began buying stores, bars and other businesses in mining towns and making them accept their wildbit currencies, similar to what they did with stone oil wells.

As a baseline demand was established for wildbits, banks then began advertising them as an investment in itself rather than a currency, promising everlasting returns on investment fueled by increases in adoption, effectively making wildbits a pyramid scheme. A common claim was that wildbits would go on to replace the Equestrian bit.

Wildbits were also presented as independent from the Equestrian government and its monetary policy as wildbit banks tried to attract customers untrusting of the Equestrian government, which were common in the Buffalo Nation where a significant part of the population consisted of native Buffalo who had been invaded by Equestria and creatures who moved there because of its status as a frontier with weaker government presence.

Some of the bigger wildbit currencies spread to other regions of Equus, especially in the Crystal Empire where the narrative of government independence rung popular. During this time, oversight on wildbits was limited as growing adoption kept their value increasing which maintained confidence in the currencies as an investment.

As wildbits struggled to find new adopters and the necessary growth needed to sustain the expected increase in value, their attractiveness as an investment disappeared and their value crashed. This led to riots against the banks and government, especially in the Buffalo Nation as many lost their savings.

After the riots almost threw the region into anarchy, the Equestrian government passed legislation heavily regulating wildbits effectively constraining them to be used only as a proxy for Equestrian bits.

## Criticism

Wildbits are supposed to be backed by bullion or other valuables held by the issuer. However, the backing is often found to be insufficient to sustain the value of issued currency. While this is also true of fractional reserve banking, the result of this is that wildbit issuers can't replace issued currency with assets of equivalent value when they are dissolved, resulting in losses for users of their currency even when the issuer's assets are seized and distributed.

The value of wildbits is supposed to be stable and backed by the issuer's assets, but in practice it's volatile as it's vulnerable to how trusted the issuer is. It's common for wildbits to not be accepted as payment in lieu of Equestrian bits and for fears of possible bankruptcy of the issuer to dent the value of a wildbit currency.

Often, the selling point of wildbits as resistant to debasing and inflation is taken to the extreme and wildbits are sold as investments rather than currencies. These wildbits are plagued by an unsustainable growth in value powered by speculation which collapses as the currency runs out of buyers.

A phenomenon that plagues wildbits is issuers exchanging different wildbits to use as backing for their own wildbits. This enables the creation of artificial backing for these currencies as they're backed by each other, but it turns bankruptcies contagious as a bank run on a wildbit currency will also affect the value of other wildbit currencies backing it.

## Legislation

### Equestria

Under Equestrian law, all forms of currency issued by private entities within Equestria must be backed by Equestrian bits and allowed to be exchanged on demand at a fixed rate.

### Crystal Empire

Crystalline legislation sets no requirements for the backing of wildbits, but forbids them from being advertised as an investment after legislators found it to be an unfaithful mischaracterization.