I’ve been thinking about the arguments for and against Bitcoin for quite a while, and the thing that almost always had put a wrench into my thought was Mises’s *Regression Theorem*.
This brought about the ideas that a medium of exchange must arise as a commodity, as Mises stated to be so. (that bitcoins are already a medium of exchange should be an indication that there is something else going on. My task here is to reconcile the questions that arose in my mind between the theory and reality)
This term “commodity” typically specifies a particular tangible good. But I’ve recently realized that there are also many service-based commodities (those that are intangible). The services of Dr. X or Lawyer Y are certainly commodities, though they aren’t tangible, just as are the services provided by a particular cellphone provider are intangible but able to be commodified.
All of these things require capital, labor, investment, and everything else that is found in economic action. Their limitations are often time-preference, knowledge, relative capitalization, opportunity cost, disutility, and a myriad of other things that have nothing to do with objective scarcity; these considerations are all subjective to the actor offering such services (just as the consumer of such things has his own subjective considerations). Just the same, these considerations are found in all economic actions in a world of scarcity. And because of this realization, I now realize that Bitcoin is indeed commodity, even if an intangible one.
The direct-use value of Bitcoin is that of a service–one that is entirely commodified and homogeneous (by virtue of its creation and contracted exchange), and it is supplied and demanded upon the unhampered market (but probably due the hampered market that exists today); it is scarce–thus it meets all of the requirements of Mises’s RT.
I’ve often said that a great misunderstanding surrounding Bitcoin had to do entirely with the disregard of subjective value; I now realize how much more important that statement was.
*Strange as it may seem, but this post of mine (and my understanding expressed therein) was entirely inspired by Murray Rothbard’s monopoly theory. That’s actually somewhat ironic if you think about it …