Home › Forums › Discuss Austrian Economics, Step by Step › Bitcoin
- This topic has 2 replies, 3 voices, and was last updated 10 years, 1 month ago by jmherbener.
April 25, 2013 at 11:38 am #17793gborrego1991Member
Should Bitcoin be considered money? Has it fulfilled the Mises Regression Theorem? If it’s not currently, then could it ever become money?April 25, 2013 at 3:44 pm #17794swalsh81Member
Mises’ regression theorem explains the origin of money. I am going to argue for and against the original understand of the regression theorem at the same time here.
Mises’ regression theorem explains the origin of the CONCEPT of money. original money came into use because it was a universally accepted commodity that fit a basic set of physical characteristics: divisibility, transportability, durability, etc. Bitcoin fits all of these characteristics but it has basically no value outside of exchange. This is where I think that perhaps the regression theorem might get clarification. Going from barter to a money economy instilled in society the conceptual benefits of money over barter. Now, fast forwarding n millenia, we understand the values of money. From that point, new types of money need not necessarily arise from a commodity as long as it is universally trusted and accepted as 1/2 of every exchange. The creators of bitcoin created it in such a way that it met all of the practical physical qualities of money but that it was still a scarce resource. Hard coded into the code that now resides on many millions of interacting computers is the limit of 21 million bitcoins to ever be created.
I dont see why the regression theorem must necessarily apply to all forms of money ever to be used as much as it is a historical account of the origin of the concept of money and an account of why various commodities have, in the past, come to be used as money. But I dont think that being a previously used commodity must necessarily be a requirement of all things that ever become a “money”.April 25, 2013 at 8:45 pm #17795jmherbenerParticipant
Money is the general medium of exchange. It is the most widely-traded good in the economy. Because of this, economic calculation, i.e., accounting, is done in money. Bitcoins, then, are not money.
Money substitutes are at par, on demand redemption claims for money. Banks that issue checking accounts will redeem them at par (i.e., at the fixed, face value of the claim), on demand for cash. That’s why merchants throughout the economy accept them in lieu of money itself. Bitcoins, then, are not money substitutes.
In a market economy, people are free to try new mediums of exchange, If BTC is such an attempt, it is not the first and, presumably, will not be the last. Here are few articles giving economic analyses of bitcoins:
- You must be logged in to reply to this topic.