Mises’s Regression Theorem, Bitcoin, and Subjective Value Theory

Source: American Institute for Economic Research
by Emile Phaneuf III

“On the face of it, Bitcoin’s existence seems to violate Mises’s theorem, unless a preceding non-monetary use can be demonstrated. That is, Bitcoin would have to be first valued for its direct utility before it could hold indirect exchange value. So have the criteria been met, or does Bitcoin violate the theorem? It isn’t that difficult to satisfy the theorem if we consider that Bitcoin isn’t just a monetary unit in isolation; it exists on top of a Blockchain with a sophisticated payment network, handles final settlement in a matter of minutes (if the seller is willing to pay a high enough mining fee), makes cross-border payments with ease and in a permissionless way, solves the double-spend problem without the use of a centralized third party, and so on. As such the non-monetary use cases of Bitcoin satisfy the theorem.” (11/14/21)