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GregL's avatar

“The ledger is valuable due to its intrinsic properties, such as censorship resistance, speed, cost-effectiveness, divisibility, and immutability. “

Well said. Maybe it’s already subsumed in what you said, but I would add the property of transportability especially when it comes to crossing state borders.

I used to see arguments that bitcoin couldn’t be money because it didn’t satisfy Mises’ regression theory and couldn’t trace its value back to its value as a commodity. But this never really made sense to me. If you think of bitcoin as a commodity, the things you mentioned are properties that gave it value from the start, so bitcoin as money could trace its value back to its useful properties.

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THulsey's avatar

I follow David Veksler. But I am puzzled by his statement that "It's the intrinsic properties of the Bitcoin protocol, not the scarcity of bitcoins, that make the token valuable." This can't be true. Certainly there would be no Bitcoin if the protocol did not enforce its properties; but one of its essential properties is its scarcity: No more than 21 million can ever be mined. Would gold lose its value if suddenly no more of it could ever be found? No. Would gold lose its value if it could be created as easily as summer daydreams? Yes. Scarcity is an absolutely essential property. Also, I think that David should avoid applying the word "token" to Bitcoin; that word should be reserved to describe artifacts created on a non-native blockchain with no inherent check on the number created (e.g., memecoins, memorabilia, etc.).

It's the Austrian Regression Theorem that insists that money must have an original commodity status before it can become money. These economists maintain that its "direct use" as a commodity provides the "objective" counting value of its "subjective" or "indirect" monetary value. The "direct/objective" value and the "indirect/subjective" value are linked by being traceable to some historical acts of barter. Konrad Graf tries to place this original commodity value of Bitcoin in its "geek value" (in its being "cool"). Any theorem that needs such contortions is certainly suspect. Laura Davidson (https://mises.org/library/bitcoin-regression-theorem-and-emergence-new-medium-exchange) offers a solution to this problem (assuming that it is one), by saying that some price structure, and not commodity status, has priority. Her argument is compelling.

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