Bitcoin and the Regression Theorem
Is Bitcoin money? The Mises Circle thought they settled that at the last meeting on Bitcoin, but the debate rages on among Austrian scholars. Especially in light of the regression theorem, Bitcoin’s status and potential as money remains a hot topic.
Konrad S. Graf sees no problem in reconciling Bitcoin with the regression theorem in “Bitcoin, The Regression Theorem, and That Curious but Unthreatening Empirical World”:
In other words, mere possession, knowledge, and use can carry social membership signaling functions in various sub-cultures, much as wearing certain styles of clothing does. These are also direct-consumption values to those concerned with such signaling. Direct-use values, whether psychological or sociological, do not have to be recognized by anyone other than those in a given sub-culture actually doing the valuing (according to methodological individualism and subjective value).
Patrik Korda, on the other hand, is skeptical of such claims (and plenty of others):
While it may very well be true that some early adopters valued bitcoins with what Menger described as imaginary value, the point of the most saleable good bears repeating. Gold is and has been seen as an object of beauty since the dawn of civilization. Thus, the argument that bitcoins are in accord with the regression theorem because a handful of people consume them as they would a Picasso is like saying paper money has value because John Law or Ben Bernanke really enjoy playing monopoly. In fact, we might as well say that Alchemy works, considering a significant amount of human history and energy was spent in attempting to find the philosopher’s stone. Some people may enjoy work just for the sake of working. Unfortunately, this is not a sufficient justification for slavery nor the labor theory of value.
Many Austrians, especially those in the Mises Circle, are very excited about the possibilities of Bitcoin, but does is this excitement corroborated by economic reality? Come try to figure that out.
It must happen this way. Nobody can ever succeed in constructing a hypothetical case in which things were to occur in a different way.
—Ludwig von Mises on the regression theorem
Konrad S. Graf’s “Bitcoin, The Regression Theorem, and That Curious but Unthreatening Empirical World”: http://themisescircle.org/features/bitcoin-the-regression-theorem-and-that-curious-but-unthreatening-empirical-world/
Patrik Korda’s “Bitcoin Bubble 2.0”: http://seekingalpha.com/instablog/7761841-patrik-korda/1616371-bitcoin-bubble-2-0
When: Monday, March 25th at 7pm CDT
Where: Waggener 308
If you cannot make it in person, be sure to join us online via Google+ Hangouts.