[alexmingoia]

Economists (notably Ludwig von Mises and Carl Menger) attempted to answer the question, "Why does money have value?" with the explanation that people have a desire for goods (including money) because of what they use them for. With money, they expect to trade it for other goods in the future. But the problem is that argument is circular when using it to explain the market origination of money: Why did people originally want to trade other goods for money before it was money? Mises' regression theorem is to answer this by using Menger's explanation for the origin of money. That is if we take time into account, people expect money to buy stuff in the future because they have memory of what it was traded for in the past, and if you keep going into the past with this logic money must have originated from having some other value. For example, people start trading things for butter because they like to eat it, and when everyone ends up with butter they start trading other things for butter solely because of what they can trade for butter in the future (Money), because many people both have and want butter.

Bitcoin doesn't seem to have originated this way. It doesn't appear to have been originally valued for its own sake (like Gold or butter). So Mises' regression theorem seems to fall apart when applied to Bitcoin.

[RealityVoid]

I've seen this point refuted as bitcoin having value because it is value able as a transfer of value medium. The same way an armored truck would have value because you can transport valuable stuff with it so does bitcoin.

[abecedarius]

That's interesting. A quick search didn't turn up any math in the first few hits, but https://mises.org/library/cryptocurrencies-and-wider-regress... discusses this application to bitcoin somewhat skeptically.

Without more detail, https://wiki.mises.org/wiki/Regression_theorem seems to be saying that non-money uses of a currency set a floor on its value. If there are no such uses, the floor is zero. If there used to be such use-value, the past floor can bootstrap an equilibrium with a nonzero value in the present. Is there more to this theorem?

[Shorel]

Good explanation.

Twenty years from now we will know which one has passed the test of time, Mises theorem or Bitcoin intrinsic value defying it, which I postulate is a consequence of their money-like characteristics instead of the correspondence to any physical goods.

This of course also applies to other crypto-currencies. May be any cryptocurrency that's not premined and is owned by a big enough network of people has some intrinsic value > 0, and it may be more related to the network size than to the underlying crypto-algorithm.

[kristianp]

Can't we say that originally someone bought a pizza with Bitcoin, and that the induction started from that point?