Wild Turkey
On July 10, I answered a question about libertarians’ love for bitcoin. The author of the question sent their objections to this answer.
Mises, in creating the theory of money, formulated the regression theorem, according to which today’s value of money is determined by its value yesterday, and this can be traced back to the point when money was an ordinary commodity having only simple consumer value. The fact that gold specifically became the sole standard for backing money by the 20th century was the result of government regulations; in a free banking system before that, a bimetallic standard took hold, which is described in sufficient detail by the aforementioned Rothbard.
These are details; the history of bimetallism is a separate topic. Either way, money consisted of either precious metals themselves or obligations to issue them with varying degrees of reliability.
Cryptocurrency lacks this property, as does any other modern fiat currency.
Another classic of libertarianism, Hayek, openly advocated for private money…
He advocated for private money issued by banks with an obligation to quote its value pegged to a declared basket of goods. Obviously, bitcoin lacks this property.
In order to understand exactly how and thanks to what bitcoin acquired its value, I recommend reading the classic article by Jeffrey Tucker, kindly translated in 2014 by the Bitnovosti resource.
Tucker completely forgot about the subjectivism of value and sought the notorious intrinsic value, finding it in the properties of the blockchain as a payment system similar to PayPal, and the value of crypto-coins as virtual shares of such a system. A beautiful solution, but not in the spirit of the AEL and contradictory.
Thus, bitcoin, acting as digital peer-to-peer gold, does not contradict economic theory as presented by both the classics of the AEL and their modern followers.
The comparison with gold remains problematic, because gold is a unique commodity, whereas an infinite number of crypto-algorithms can be invented, and the value of any one of them is ultimately given only by novelty or the hype caused by distrust in the modern financial system.
