Mises’s regression theorem requires that for a new medium of exchange to emerge, it must first have had direct (non-monetary) use before it can become a medium of exchange.
A recent article of mine published by the American Institute for Economic Research (AIER) entitled “Mises’s Regression Theorem, Bitcoin, and Subjective Value Theory” discusses what I see as some problems with Mises’s regression theorem as well as problems with arguments from contemporary authors who have written their own views on it — namely that Mises limited the scope of his theorem to barter situations (he didn’t) and that it would be logically impossible for Bitcoin to have emerged without adherence to the theorem (it isn’t).
I find it interesting that bitcoiners and Austrian economists alike usually debate whether Bitcoin’s emergence violates Mises’s regression theorem, yet they seem to overlook that the certainty that Mises unnecessarily attaches to his regression theorem (regarding the impossibility of any hypothetical different way in which a new medium of exchange could emerge) necessarily violates the subjective theory of value (a theory to which Mises otherwise adhered). This violation of the subjective theory of value is my main critique of Mises’s theorem – although I still find some usefulness in it. I refer the reader to my article for my full argument rather than attempt to restate it here.
As to the (separate) question regarding Bitcoin’s possible adherence to or violation of Mises’s theorem, my own view is that Bitcoin could have quite easily satisfied the theorem, and a number of authors have addressed this. The below table appeared in a draft version of my article but never made it to the AIER publication due to editing requirements (no tables allowed). I found it useful to note the various direct (non-monetary) uses proposed in the literature. I also note that at least most of them, in one way or another, ultimately boil down to two major categories: signaling of values and speculation. Lastly, I must mention that Bitcoin having a native monetary unit that sits on top of an inseparable payment network complicates the issue by (to at least some degree) blurring the lines between distinct monetary and non-monetary categories.
Non-monetary uses of Bitcoin identified by various authors – each of which could satisfy the regression theorem for Bitcoin
|An “inherent geek appeal, professional challenge to specialists, curiosity, and membership signaling”||Konrad Graf (2013)|
|A “desperate need for something other than the dollar”||Jeffrey Tucker (2014)|
|Speculative value||Daniel Krawisz (2013)|
|A “digital object, a game, a cause, a badge of membership”||Laura Davidson and Walter Block (2015, p. 327)|
|“The truly unique functions of bitcoin, as detailed by Surda [sic] (2014), are non-monetary, and include the following: It it can act as an effective means of notarization, it can act as ‘smart property,’ it can perform conditional transfers, it eliminates the need for intermediaries, particularly in multi-party transactions, it can act as a form of stock ownership eliminating the need for separate stock exchanges, it can record transactions for auditing purposes, etc. etc. These factors are of course closely associated with (but not the same as) the monetary function.”||Peter Šurda (2014), as summarized by Laura Davidson and Walter Block (2015, p. 328)|
|An “ideological (e.g. libertarian, anti-fiat-money, anti-fractional-reserve-banking) bias of Bitcoin’s proponents” and speculation||Robert Murphy (2012), as summarized by Peter Šurda (2012, p. 42)|
|An opposition to fiat money and the the traditional banking system||Jon Matonis (2011), as summarized by Peter Šurda (2012, p. 42)|
|A distaste for transaction costs of sending money under the traditional banking system||jahabdank (2011), as summarized by Peter Šurda (2012, p. 42)|
|A belief-signaling mechanism for libertarians and crypto-anarchists and an opportunity to increase one’s own human capital for computer programmers||William Luther (2018, p. 19)|