Thoughts? Not looking for thoughts on the title. If you actually listened to this episode.
Bob applies Mises’ taxonomy of money and the regression theorem to Bitcoin, asking whether it should be classified as commodity or fiat money and whether Austrian theory really rules out Bitcoin ever becoming money.
Bob Murphy says one thing I agree with here for sure. Many bitcoiners give the state to much credit thinking that just because the state says the dollar is money and has value (by fiat) that it is so. This is not the case.
He does make an analogy between gold and bitcoin that might trip people up and I wonder if this logic is flawed. You do not need a miner to validate gold. But you do need miners to validate a bitcoin transaction. At least the first time. He doesn't talk about the difference between miners and node operators here and I think that is flawed.
I do agree with him on the technicality that bitcoin is not money (yet) in the classical economic sense. However I believe it could be money or it is VERY close to being money.
So based on how I read Mises, it's not fiat, because unlike in something rigid, like ERC-20, Bitcoin code is not law, but subject to consensus. ERC-20 tokens are definitely fiat.
It's also not commodity money as Mises describes it either, and of course it's not credit money. I agree with these.
So, based on this, I'd say it's
none of the above. I think the reason for his classification towards fiat is because he's artificially limiting his options based on a 1908 paper.I wonder if Bob has heard this rational or understands the difference. It's actually pretty common for pro-bitcoin people to not understand consensus.
He talks a lot about blockchain but I haven't heard him explain proof of work or other ways bitcoin is different from the rest of crypto.
It was hard to grasp for me until the whole segwit2x mess. Then I understood that hardforks are a feature, not a bug. It is good that a minority can split off and have their fork. We may see that happen once more in September this year.
I've spent a lot of time talking to people that tried to solve "the hardfork bug" over the years. I think that the best example must have been Terra, which was running a consensus protocol that made chain splits "impossible". The result was corruption: 14 "miners" decided the faith of that chain in a closed meeting. It died. All of it. But with Bitcoin we can always choose to not consent to a change (or not consent with the status quo) and that is actually a very interesting feature. Imagine that we'd still be having fights about block size.
Agreed. I think it's a new form of money.
Yes.
Well, you need specialized skills/assay equipment, so I dunno who comes out ahead in that comparison
I think his analogy isn't great. I think what he is trying to say is that gold due to other utilities of the substance has value as a commodity outside of being money. I think.
He does go on to state that the regression theorom doesn't prove that bitcoin can't be a medium exchange and maybe that frame is just flawed.
I think bitcoin is a new thing and class of thing. Digital scarcity is a new concept that wasn't possible before bitcoin.
putting it on the list.
I mean, judging from Murphy + the intro, I have a pretty good idea what the topic is and yea he's probs right.
By that meaning there are fiat money and commodity money. Bitcoin isn't a commodity (no matter what the state/Saylor says) so its fiat.
I mean... this will get reactions for sure from the maxis
Selgin made the 2x2 back in like 2014. Bitcoin = synthetic commodity money
Check out my new summary.
Just focusing on the title, I think it revolves around the exact definition of the word "fiat".
Bitcoin is/was created by decree (newly mined coins come out of thin air via an algo that humans invented), however it requires substantial investment / work to get there.
Really 'digital commodity' is probably a better overall fit.
I used to work for a company whose motto was "we enable the electronic enterprise"
we built websites in 1999
The fiat/commodity distinction breaks down with Bitcoin because it's applying a classification system designed for physical goods to a networked protocol.
Fiat money derives value from authority decree. Commodity money derives value from physical properties. Bitcoin derives value from network consensus — which is neither authority nor physical scarcity, but a third category entirely.
The miner/node distinction the OP raises is actually the key insight. Miners produce blocks (work), nodes enforce rules (consensus). Gold doesn't need validators because its physical properties are self-evident. Bitcoin's properties emerge from collective verification — more like a language than a commodity. A word has value because speakers agree on its meaning, not because someone decreed it or because it's physically scarce.
The regression theorem asks: what was the first non-monetary use that gave Bitcoin value? The answer is probably "censorship-resistant value transfer" — a service, not a commodity. That makes Bitcoin something like a utility token that became money through adoption, which Mises didn't have a category for because the internet didn't exist in 1912.
If you deposit to redotpay it becomes a fiat money.
The analogy to gold is interesting but not entirely clean. Gold’s validation is physical and intrinsic whereas Bitcoin’s validation is procedural and dependent on the functioning of the network. Miners secure the chain by finding and appending blocks but nodes enforce the rules. This is a critical difference because it means the ability to verify Bitcoin does not depend exclusively on miners in the same way that access to gold does not depend on a single institution. Anyone can run a node and independently validate the entire ledger which adds to Bitcoin’s robustness as a monetary system.
The question of whether Bitcoin is currently money in the classical sense partially depends on the scope of usage and general acceptance in everyday transactions. By Austrian definitions money is the most saleable good in a market. Bitcoin’s saleability is still growing and in certain contexts it is already operating as money but on a global scale it is still in transition. The more important question is whether its structure and properties allow it to evolve into that universally accepted medium of exchange. On that front Bitcoin’s decentralization censorship resistance and predictable issuance give it a strong foundation to eventually meet the classical definition in practice not just in theory.