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Austrian school invalidates the theories of Bitcoin supporters
Austrian school invalidates the theories of Bitcoin supporters
Blockchain

Austrian school invalidates the theories of Bitcoin supporters

By Lorenzo Dalvit - 22 Apr 2020

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The Austrian school inspires many Bitcoin supporters.

Also known as the Vienna School or the Psychological School, it is an unorthodox school of economic thinking that proclaims a close adherence to methodological individualism. On a political level, it originated and influenced libertarian theories and movements and, to a lesser extent, liberal movements. 

One of the community’s most promoted books, The Bitcoin Standard by Saifedean Ammous, was also presented at the Libertarian scholars conference in 2019 and published in the Mises Institute.

The Austrian School and Bitcoin Cash

Roger Ver is known to refer to libertarian economic theories. His fascination with Bitcoin is summed up by the phrase in Satoshi’s whitepaper that he repeats to the point of exhaustion during any debate: 

“Bitcoin is peer to peer electronic cash”.

Beyond the beliefs and attachments of any community to the blockchain in which they are invested economically or professionally, what is interesting in Roger Ver’s latest video is the reference to the founding fathers of the Austrian school

The internal struggles between those who wanted to keep a small block in the Bitcoin code and those who preferred a version with a scalar block are ground for discussion about the effect that this parameter is having on the development of Bitcoin and the function that is propagated by its promoters.

Those who prefer to keep a small block (max 2.3 MB if everyone used SegWit) had to postpone the Bitcoin role as a means of exchange. The BTC protocol is now seen as a store of value which, thanks to different technologies applicable to the first level, can one day be used as a means of exchange.

Currently this does not happen because of a low propensity of the ecosystem to meet this function, coupled with some difficulties in the adoption of the technologies aimed at scaling (speed up the network or create alternatives to speed up exchanges at low cost). 

In addition, there is also a speculative attitude that leads to the accumulation of Bitcoin to be spent through traditional payment systems that convert them into fiat when needed (debit cards or similar). This limits the need to make acceptable and mainstream Bitcoin that thus assumes the function of digital gold on large exchanges. 

Roger develops his concepts starting from a comment by Dan Hedl.

Dan works at Kraken and is very active on social media, in 2018 he said in response to Vinny Lingham:

“The ‘Store of Value’ IS its utility”.

According to Ver, this statement does not make economic sense, to substantiate his thesis he recommends everyone to read books referring to the Austrian school such as: Man, Economy and State by Murray N. Rothbard, of which there is a free pdf version.

Carl Menger, founder of the Austrian school says:

“It appears to me certain that the functions of money being a ‘measure of value’ or a ‘store of value’ must not be attributed to money as such, since these functions are of merely accidental nature and are not an essential part of the concept of money.”

Ludwig von Mises, Austrian sociologist, historian and economist well known for having contributed to the classical theories of libertarianism: 

“Many textbooks say that money has several functions: a medium of exchange, unit of account, or “measure of values” a “store of value” etc….. But it should be clear that all of these functions are simply corollaries of the one great function: the medium of exchange”.

The function of money as a value transmitter through time and space must be traced directly back to its function as a medium of exchange.

The message linked to this stream of thought seems to be clear, but not fully aligned with the evolution of Bitcoin.

Roger Ver, promoter of Bitcoin Cash, is also known as “Bitcoin Jesus” for being considered as a messiah in promoting what appears to be religious faith.

His concern is that the dominant narrative and developments in the BTC protocol will meet with a predestined failure

For this reason, his great battle revolves around the promotion of Bitcoin Cash, the 2017 Bitcoin fork, as “peer to peer electronic cash”, in its function, ecosystem and technological developments. 

BCH has succeeded in allowing the block to grow and scale Bitcoin at its base level, not worrying about the effects on the centralization of mining, a problem about which there is much to discuss for both sides.

 

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Lorenzo Dalvit

Blockchain enthusiast tutor, expert in sales and marketing, social community manager, artistic director, musician, lover of disruptive paradigms and life. All my skill are about human interaction and connection

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