With all these choices I have trouble deciding the best territories for some of my posts. This one could be in bitcoin, econ, or libertarian. I picked libertarian for the hell if it. This article is a good discussion of bitcoin and Austrian economics. It discusses the Austrian Business Cycle Theory and the preference for commodity based money over fiat. Vin Mises's Regression Theorem is discussed, and subsequent dismissal of bitcoin by some libertarians as "magic internet money."
Many Austrians initially criticized Bitcoin because they felt it came out of nothing and had no use as a commodity in of itself, thus breaking the Regression Theorem and rendering its value baseless. However, Jeffrey Tucker has shown that the value of Bitcoin derives from itself, in the sense that it is both a technology and a currency at the same time. While this was perplexing for many economists, especially those that did not understand the technology, Bitcoin was the first currency to be both a payments solution and unit of currency at the same time. As such, the utility of the blockchain provided it value before it ever became a medium exchange, which was months after its launch, and thus actually confirmed Mises’s Regression Theorem in real life.
The article is lengthy, but worth your time if you are interested in a good analysis of bitcoin from an Austrian perspective.
this territory is moderated
I also tend to spread my posts over multiple territories.
Bob Murphy had such a great takedown of the Regression Theorem critique of Bitcoin. By the time Austrians were using it, the Regression Theorem no longer even applied to Bitcoin, since Bitcoin already had accumulated a non-zero monetary value.
In a truly Austrian fashion, Bob reminded his colleagues that value is subjective and if a couple of nerds just think it's neat to buy a couple of pizzas for thousands of Bitcoin, that's good enough to start the process of price discovery.