The latest claim is that bitcoin is ALREADY a money, or a medium of exchange at the very least, and so of course bitcoins very existence proves Mises wrong. Take that, Mises, with your stuffy old logical thinking, Mike is saying. Your regression theorem claims to prove bitcoin cannot exist as a money, because it is a money coming into existence with no intrinsic value, but here it is, existing and a money.
Here’s what these guys don’t get. To be a medium of exchange, and certainly to be a money, a thing has to generally accepted by a wide audience. Now ecoomists have not given precise numbers for this, but bitcoin certainly isn’t acepted enough, as I will make crystal clear.
I guess the best way is to just copy what I wrote in the forums. So here it is:
Time to spell out what people don’t seem to grasp.
Pete thinks 10,000 people owning a bitcoin makes it a medium of exchange. Sorry Charlie, and no way Jose.
And why not? Let’s go back to first principles.
A man works hard and produces something, say he’s a carpenter. He wants to buy all kinds of stuff in exchange for the chest of drawers he has built. There is a mortgage to pay, food to buy, cable TV bills, dozens and dozens of things he needs and stores he will have to go to.
Along comes Pete and offers to buy his work for 30 bitcoins.
“What the heck can I do with this garbage?” says the carpenter?
“Plenty,” says Pete. “If you go to the bitcoin convention we had a month ago, you could have bought a beer. Even now, there is a store in NYC that will sell you a pizza, and hundreds of tiny online stores you never heard of and have no reason to trust that will sell you flawed software and crappy trinkets. There are 10,000 people all over the world who will buy your bitcoin at widely fluctuating prices, maybe. We’re talking about the most versatile medium of exchange in the history of the world.”
What will the carpenter say, if he is polite? “I don’t need that right now, thank you very much. Come back when I can buy anything with it, from anybody. Or at least from enough people that I can buy whatever I want. Until then it’s not a medium of exchange, but a fraud. Have a good day.”
Generally accepted. Widely used. Write it down.
The above scenario also refutes Mike’s claim that bitcoin has already done what Mises claimed was impossible, to wit, become money. No. It hasn’t done anything. It’s current situation is not one of being money.