Rationality is beside the point. The point is that people prefer greater satisfaction of their wants over less satisfaction of their wants. Even “stupid” and “irrational” people prefer greater satisfaction of their wants over less satisfaction of their wants. They may poorly calculate how to achieve satisfaction of their wants but that does not alter one iota the fact that - by acting at all - they are always striving towards the satisfaction of wants.
By trading away something of higher market value for something of lesser market value, a person is calculating poorly. He is not necessarily stupid or irrational. He may be calculating poorly because of an exaggerated sentimental attachment to the thing he is exchanging for - as in the case of Ithaca HOURS or Bitcoins. Both Bitcoins and Ithaca HOURS have more in common with subway tokens or casino chips than money per se. Neither are banked. Neither are used in the extension of (white market) credit nor will they ever be short of being adopted by a government. Since they are clearly not money, Bitcoins and Ithaca HOURS cannot possibly disprove the Regression Theorem.
Now, let’s say - for the sake of argument - that Bitcoin was actually being used as money - to calculate profits, to store savings, to secure credit, and so on. Would this disprove the Regression Theorem? No, it would not because the RT does not deal with how money is selected to begin with, it deals with the question of why money - particularly fiat money - is valuable. Fiat money - which has no commodity value on its own - is extremely valuable and this is truly puzzling since it is very strange to think that people would give away real goods for unbacked slips of paper, yet they do. Mises’ RT answers the question, “How can this be?” It does not say “only gold can be money.” It’s gold bugs who say the RT says that.
But would it affect Austrian monetary theory at all? I think the answer is yes since we’d have to wonder how it is that a good which is far from being among the most marketable goods has come to be generally accepted in indirect exchange. That is, in order to have become useful in indirect exchange, the good must have first been demanded in direct exchange. So how is it that a good like Bitcoin - which has no demand in direct exchange to speak of - has come to be used in indirect exchange? In this hypothetical scenario, I would look at the fiat money regime and ask how that may be distorting people’s perceptions of marketability of monetary goods, either as a result of the success of government propaganda or simply as a result of an unmet demand for a good which governments cannot tax, regulate or audit. I’m throwing the Bitcoin fanatics a free hint on how to make their case stronger, let’s see what they do with it.
Clayton -