Bitcoins, the regression theorem, and that curious but unthreatening empirical world

This is a particularly well-written and thought-out piece, makes some clean insights on bitcoin. In fact, this is the article that will finally make Smiling Dave recount, see the light, apologize to everyone for his mistakes, and buy some bitcoin ;)

http://konradsgraf.com/blog1/2013/2/27/in-depth-bitcoins-the-regression-theorem-and-that-curious-bu.html

A taste:

"Some observers of the bitcoin phenomenon have been puzzled that it does not appear to conform to the monetary regression theorem, an explanation for the initial origin of the value of money as money. This has led to various claims and counterclaims. In essence, one camp claims that bitcoins are not "really" money (and will probably fall apart any time), while the other counters that bitcoins actually are here, and most likely here to stay, adding that if anything is broken, maybe it is these stodgy theorems, which we might have to revise.

In addressing this, I will attempt to account for the emergence of bitcoins in terms of the monetary regression theorem. In doing so, I will argue that 1) the existence of bitcoins does not and could not challenge the regression theorem and 2) the regression theorem does not constitute any particular problem for bitcoins in terms of economic theory. That said, 3) the investment analysis of bitcoins is a separate matter from the economic-theory analysis and is a good (but separate) topic for vigorous debate..."

Nothing new there. Same ole mistake I've seen here dozens of times. Graf fails to understand the significance of sheer numbers with respect to this topic.

To be a medium of exchange one time, such as swapping a horse for a cow in order to swap the cow for a piano, makes the cow a medium of exchange in that set of transactions. But that is not what is meant by a medium of exchange that has a chance to turn into money. A one-off event is not meaningful here.

Similarly, for an object to have the intrinsic value Mises is talking about in the regression theorem, it isn't enough for one person to like it and want it. One person liking, say, some garage band's awful sounding CD will not make that CD satisfy the regression theorem. Same thing with a few nerds who will pay to have a bitcoin icon on their computer to brag about.

Why is this so? The answer is already at your disposal right here: https://smilingdavesblog.wordpress.com/2011/12/21/one-more-detail-about-bitcoin/

And here: https://smilingdavesblog.wordpress.com/2012/10/07/bitcoin-and-the-numbers-game/ [in the part that begins with a 2.]

About the numbers, how many people are using bitcoin as a medium of exchange, we have: https://smilingdavesblog.wordpress.com/2013/04/06/four-facts-that-destroy-bitcoin/

And here: http://smilingdavesblog.wordpress.com/2012/10/07/bitcoin-and-the-numbers-game-part-2-in-which-we-shew-that-bitcoin-has-never-not-even-once-been-used-as-a-medium-of-exchange/

To slake your thirst for knowledge, here's the link to most of my articles about bitcoin: https://smilingdavesblog.wordpress.com/2012/08/03/bitcoin-all-in-one-place/

I know the routine by now. Pete will chime in with some meaningless chatter, Malachi with some sociopathic abuse. So regard this post as my last one here. if you have any questions, send me a polite private message.

Smiling Dave,

please provide a quote to support your definition of a medium of exchange.

Smiling Dave:

So regard this post as my last one here.

Well that is a bummer!

Peter, Smiling Dave has defined it in his blog posts. I'm pretty sure that he has done so many times on this message board as well.

I thought the most interesting part of the piece was his explanation of bitcoin's commodity value. It would be interesting to see you, SD, address that explicitly.

In reaction to that point of his you point us to this link: https://smilingdavesblog.wordpress.com/2011/12/21/one-more-detail-about-bitcoin/

Which doesn't address commodity value at all but rather changes the subject and pivots to the widely-accepted malarky.

To be a medium of exchange one time, such as swapping a horse for a cow in order to swap the cow for a piano, makes the cow a medium of exchange in that set of transactions. But that is not what is meant by a medium of exchange that has a chance to turn into money. A one-off event is not meaningful here.

argumentum ad no me gustatum, aka "its wrong because I dont like it"

Similarly, for an object to have the intrinsic value Mises is talking about in the regression theorem, it isn't enough for one person to like it and want it. One person liking, say, some garage band's awful sounding CD will not make that CD satisfy the regression theorem.

for a good to have industrial value like mises is talking about in the regression theorem, it has to have industrial utility, like a bitcoin or piece of gold. one person not having, say, an industrial use for silver doesnt somehow mean it violates the regression theorem.

jmorris84:

Peter, Smiling Dave has defined it in his blog posts. I'm pretty sure that he has done so many times on this message board as well.

 

jmorris84,

 

Dave uses a flowery writing style that may sound pleasant to some, but is very loose formally. I've been trying to get Smiling Dave to formulate his definitions coherently for over a year. I got back a lot of evasion and finally a bunch of sentences that I was kind of able to abstract into a definition. I explained that I cannot find a reference for that definiton. Dave, in a manner consistent with his prior behaviour, ignored my objection and did not provide a reference.