I am writing this post in english because I think it might be interesting to a lot of bitcoin supporters.
One of the main bitcoins flaws that austrian economists denounce is that BitCoins don´t have a non-monetary utility, therefore BitCoins don´t have any non-monetary value. Since Mises stated this requirement on his Regression Theorem, all austrians think that this is a necessary precondition for money.
Menger observed that in a free market usually the most marketeable commodity becomes money, but he never stated that was a mandatory pre-requesite for money. Mises Regression Theorem was a very unfortunate interpretation of Menger’s observations.
For example, the discovery of gold´s excellent monetary utility could have been achieved before it had any prior non-monetary utility. In fact, in my opinion using gold as an ornament was a primitive form of minting what already was perceived as having good monetary properties. Utility is what renders value, not the opposite, and money is not an exception.
Therefore, from a theoretical point of view we must consider the Regression Theorem as unnecessary because monetary utility is valuable enough by itself. The need for liquidity is the need for certainty on future exchanges, and certainty is impossible to accomplish completely. That´s why anything that might provide us liquidity on the near or far future is valuable. So there is no need for previous industrial utility for a good to become money and the use of BitCoins is a categorical demonstration. And by any means this does not imply that any medium of exchange might be qualified as money, as we will see shortly.
The economist Carlos Bondone demonstrates how the Regression Theorem is unnecessary to explain the value of currency, pages 111 through 114 of his book Theory of Economic Relativity. Carlos Bondone provides a simpler, clearer and stronger monetary theory, following Menger´s principles which Mises, Rothbard, and Hayek did not. This is a brief summary:
Currency: Indirect medium of exchange and unit of account. Currency Types:
- Money: Present good used as currency (wheat, gold, silver, deposit certificates of gold or silver, etc.).
- Credit currency: Any currency that is not money, it can only be credit. Then there are the following types of credit currencies:
- Regular Credit currency: When the present good that cancels the debt is specified, ans so is its quality, quantity and due date. This is the case for real bills or old bank bills that where redeemable for gold or silver.
- Irregular Credit Currency: When the present good that cancels the debt is not specifed or its quality or its quantity or its due date. This is the case for fiat currencies such as dollars or euros.
As I see it, BitCoins do qualify as money when they are used as currency — which they actually are — because they are present goods, the same way that software or an mp3 file are also present goods. And they are useful as currency because they have good properties as a medium of exchange: They are scarce, homogeneus, difficult to fake, easy to identify (this could be improved), easy to transport, divisible, etc. The perceived utilitiy of these properties is what makes Bitcoins valuable. Purchasing power is a consequence of utility, not the opposite.
It would make the BitCoins value more stable if they could be used for a non monetary purpose. Maybe some cryptographic application? I think that it would be a good idea for the BitCoin community to research for a non monetary utility for the BitCoins.
As long as BitCoins don´t have a non monetary utility, Mises followers are correct when they say that if BitCoins loses its currency status, then their value would drop to zero, the question is, how much value would also lose silver or gold if they were not used as currency (store of value) anymore? BitCoins are not risk-free, as nothing in life is risk-free.