Of course they arose out of barter. Bitcoins were traded for their novelty, and value as a decentralized system. People thought "Oh hey, this is a cool idea, lets try it out." "Oh hey, send me 5 bitcoins so I can check it out." etc. Then, as it became more widespread, merchants began providing goods and services for it.
Granted, the evolution of Bitcoins is quite unique compared to other currencies, but I still say misers theorem holds here.
Topic: Mises' Regression Theorem. - page 2. (Read 12985 times)
... money must originally be some desirable good that is subject to barter ...
I bartered for them with my computer, in exchange for electricity.The OP brings up a point that I had originally when I saw this (though not quote Mises' regression theorem). It is a real issue b/c money is not an intellectual process. Your property is a physical extension of your efforts and as such any mucking with it promotes a visceral response. I'm not sure that the act of bartering clock-cycles for digits constitutes a large enough opportunity cost to satisfy most people's definition of property. It may. We're too early in this cycle to determine that yet. But, if Bitcoin's acceptance rate never really takes off, this problem will be a contributing factor; likely a big one.
... money must originally be some desirable good that is subject to barter ...
I bartered for them with my computer, in exchange for electricity.That's really not barter. If you strapped some logs together with some vines would you say you bartered them for a raft? Someone else has to get something in order for it to be barter.
We could say that we build coins because they are valuable to us.
IMO, the value could be attributed to the way the Bitcoins are both created and distributed - it is completely decentralised and anonymous. People value fairness and their anonymity, so it should hold that Bitcoins gain value from this.
That said, it is reason to doubt adoption. Time will tell.
That said, it is reason to doubt adoption. Time will tell.
Speculative buyers can give an unbacked currency an initial market value.
I think an unbacked currency such as bitcoin might arise in a free market through speculative buyers trying to make a profit by supporting some exchange rate, and then promoting the adoption of the currency in order to drive up the value of their initial investment. As long as the reasons for adopting the unbacked currency are compelling enough, and the exchange rate that the speculators initially support is reliable enough, I don't think this scenario is at all far-fetched.
Furthermore, purely ideological support also plays a role in initial adoption.
I think an unbacked currency such as bitcoin might arise in a free market through speculative buyers trying to make a profit by supporting some exchange rate, and then promoting the adoption of the currency in order to drive up the value of their initial investment. As long as the reasons for adopting the unbacked currency are compelling enough, and the exchange rate that the speculators initially support is reliable enough, I don't think this scenario is at all far-fetched.
Furthermore, purely ideological support also plays a role in initial adoption.
It's an interesting question, but I can already get many things for BitCoins, everything really, since I can get USD for them. I love some Mises, but if things happen that a theory says don't happen then the theory is wrong, not reality.
I don't think it's to much of a stretch to say that some people started offering valuable goods for coins because of a future expectation that the coins would be a money. I mean they are limited in quantity, easily transferable, and private. They have desirable attributes. Okay, my final (for now) answer is that they actually were a valuable thing as soon as they were created. They have properties people want therefore they have value.
I don't think it's to much of a stretch to say that some people started offering valuable goods for coins because of a future expectation that the coins would be a money. I mean they are limited in quantity, easily transferable, and private. They have desirable attributes. Okay, my final (for now) answer is that they actually were a valuable thing as soon as they were created. They have properties people want therefore they have value.
The theory essentially says that money has an expected purchasing power tomorrow because of its actual prior purchasing power. Regressing this idea to infinity means that money could not have been "invented" out of nothing, because it would have no known prior purchasing power. The inventor would have to also set the exchange rates between money and all other goods. To the extent that these rates differed from market expectations, they would not be followed, being perceived as harmful to the individual traders. Thus, money would not be used.
Rather, money must originally be some desirable good that is subject to barter. The market, over time, recognizes some goods are more widely accepted in barter than others, due to certain properties, like being easily exchanged, durable (in composition and relative value), portable, etc. Eventually, these goods become marketable for any other product. Thus, they become money.
This is important because often those who advocate government intervention in the name of economics believe that money does not conform to economic laws that hold for other goods. This theorem partially shows that money has always conformed to the same laws as other goods and did not require government intervention to function economically.
Rather, money must originally be some desirable good that is subject to barter. The market, over time, recognizes some goods are more widely accepted in barter than others, due to certain properties, like being easily exchanged, durable (in composition and relative value), portable, etc. Eventually, these goods become marketable for any other product. Thus, they become money.
This is important because often those who advocate government intervention in the name of economics believe that money does not conform to economic laws that hold for other goods. This theorem partially shows that money has always conformed to the same laws as other goods and did not require government intervention to function economically.
So, bitcoins didn't gets it value from barter. Gold, and other traditional money have industrial or decorative functions.
But bitcoins seem to have no previous application whatsoever and thus doesn't satisfy Mises' regression theorem. Is this a problem that bitcoins doesn't arise out of barter?
If it is a problem, what people can do to fix this?
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