The Relevance of Bitcoin to the Regression Theorem: A Reply to Luther

Given Bitcoin’s apparent lack of non-monetary uses, Luther (2018) argues that its emergence as a medium of exchange invalidates the regression theorem, or at least severely limits its relevance to identifying which commodities could emerge as media of exchange in the absence of State intervention. However, this view misinterprets both the regression theorem itself and the problem it was developed to address. The goal of the regression theorem was not to identify which commodities could become monies, but to provide a subjectivist explanation of the purchasing power of money. To do this, it requires only that some individuals valued the good in question before its use as a medium of exchange, not that it had some objective pre-monetary use.

Bitcoin y la teoría monetaria de Friedman y Mises. Evidencias estadísticas/ Bitcoin and the monetary theory of Friedman and Mises. Statistic evidence

Resumen Las criptomonedas, siendo un medio de pago encriptado deberían estar sujeto a alguna de las hipótesis que describen el comportamiento del dinero en la teoría monetaria. Este artículo analiza el desempeño del Bitcoin, desde el punto de vista de Friedman (1956) y Mises (1982). Utilizando datos mensuales de los últimos 67 meses desde enero de 2014 hasta julio de 2019, se desarrolló una investigación de tipo descriptiva Ex - post facto. Los resultados muestran que cuando el aumento marginal de criptomoneda emitidas disminuye, el volumen de transacciones, precios de cierre, capitalización del mercado y velocidad de circulación, aumentan, mostrando evidencias del teorema de la regresión; asimismo, se comprueba la apreciación del Bitcoin por razones de oferta y demanda (minado); y se pudo constatar el incremento constante tanto de la tasa de variación del precio, como de crecimiento de los Bitcoin emitidos. Se concluye que la teoría monetaria aceptada puede contribuir a explicar el comportamiento de las criptomonedas. Abstract Cryptocurrencies, being an encrypted means of payment, should be subject to any of the hypotheses that describe the behavior of money in monetary theory. This article analyzes the performance of Bitcoin, from the point of view of Friedman (1956) and Mises (1982). Using monthly data from the last 67 months from January 2014 to July 2019, a descriptive Ex - post facto investigation was developed. The results show that when the marginal increase in issued cryptocurrencies decreases, the volume of transactions, closing prices, market capitalization and circulation speed increase, showing evidence of the regression theorem; Likewise, the appreciation of Bitcoin is verified for reasons of supply and demand (mined); and the constant increase in both the price variation rate and the growth of the Bitcoin issued could be verified. It is concluded that the accepted monetary theory can contribute to explain the behavior of cryptocurrencies.

The Menger-Mises Theory of the Origin of Money--Conjecture or Economic Law?

In recent years some economists have begun to doubt the scientific standing of the standard Austrian theory of the origin of money. They seem to think that it is only one possible solution to the problem of accounting for money’s value. Of these economists, Gary North (North 2012b) has presented the most cogent counter-interpretation to how we should understand the theory of the origin of money as elaborated by Carl Menger and Ludwig von Mises. Unlike the rest of economic theory, the origin of money and Mises’s regression theorem do not partake of the character of a scientific law deduced from the basic principles of the science, but is rather, and is presented as such in the writings of Menger and Mises, what North terms “conjectural history.” In this essay we will respond to North’s challenge and to the economists who agree with him.