dvide,
I hereby welcome you to the forums. I read your post with great interest, and am impressed by its clarity and logical reasoning.
First the little things.
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I have no dog in this race. There is no ideology that makes me think bitcoin is doomed according to the regression theorem. More important, as Mises pointed out, ones motives for presenting an idea neither strengthen nor weaken the idea itself, which must be examined on its own merits, not the motives of the writer.
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I’m glad you bothered to read my blog and indeed understood what I was saying. Delve deeper, my son, to another post there, where I quote Mises in Money and Credit. You will see that he is just as confident etc. in that work about the consequences of his theorem as he is in HA.
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OK, now to the part of your post I found very refreshing and intellectually stimulating. Your argument, as I understand it, is that Mises found ONE OF MANY POSSIBLE EXPLANATIONS for the initial evaluation of a medium of exchange. It is the simplest, maybe, the most elegant, perhaps, but our man Mises has not proven that every other possible explanation is wrong.
For example, he did not disprove that perhaps aliens from another planet with mind control abilities zapped the planet at some moment and hardwired everyone to think “Gold is worth $25 an ounce.” You grant this is a silly explanation, but not one that is logically disproven by Mises’ reasoning.
Similarly, the argument that a small group decided to arbitrarily give some value to a valueless thing to facilitate trade among themselves, and then more wannabees joined the fun, until the inherently useless object takes over the world and everyone uses it as money, has not been logically disproven by Mises.
And indeed, I admit that the article I wrote, Bitcoin Takes a Beating, did not address this and neither did Mises in the section I quoted there. He polishes off all alternative explanations, Martians, etc. in Money and Credit, where he writes [and I quoted him here]:
If the objective exchange-value of money must always be linked
with a pre-existing market exchange-ratio between money and
other economic goods (since otherwise individuals would not be in a
position to estimate the value of the money), it follows that an object
cannot be used as money unless, at the moment when its use as
money begins, it already possesses an objective exchange-value
based on some other use. This provides both a refutation of those
theories which derive the origin of money from a general agreement
to impute fictitious value to things intrinsically valueless, [like those stupid bitcoins]…
There you have it. [Note that it is basically a restatement of the very problem the regression theorem tries to answer, so it’s not really some new assumption].
Now we get to deep waters. What did he actually mean in that little parenthesized phrase? I confess that until now I thought he meant one thing.
You can read this or this [don’t forget the comments], where I expand on what he meant, restricting myself to the case of bitcoin.
Or you can read on and let me lay out the syllogysm yet again:
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People work hard for their purchasing power, and do not like to get tricked into handing it over for something they will not be able to buy anything with.
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Therefore, faced with the option of being paid in something newfangled that is intrinsically valueless, or just trucking along with whatever they did until now, they will go with the latter.
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No Martian or religion will change this feature [=1. above] of human nature.
That’s what I thought he meant. And it may indeed be what he meant. But let me mull over another possibility. To be continued.