Nick Szabo  🔑

I can explain this: Rothbard, speaking in rather broad theoretical terms, said that money arises from goods that have commodity trading value. It was thought by many Austrians looking at Bitcoin early on that with no commodity price, it could have no monetary value.

I remember the debate very well since I sided with Rothbard on this point and didn't buy any Bitcoin in 2010.

To put it simply, that interpretation requires a "base trading price" for the commodity upon which a money price can be based. It was believed that without this "base price" Bitcoin would be impossible to price. Now we understand that yes it's hard to price but it is not zero.

Yes this was always a fallacious argument that comes from taking economic theories too dogmatically. It's like arguing that an insurance contract can't be useful as an insurance contract until it's useful for something more concrete, say generating power or growing food.

It also helped me, when designing bit gold, that I studied the actual archeology and ethnography of the origins of money, and knew that money or something very much like it rose millenia before the dawn of spot commodity markets and widely respected property rights.

Would love to know any sources you might remember off hand on this topic of the origins of money. Thanks.

This is precisely why even Austrian economists continue to produce bogus analysis of Bitcoin. The most prominent error being the idea that Bitcoin will operate as a global reserve currency, essentially backing the existing financial system. Bitcoin is a new security model.

Alas most crypto startups also tacitly make poor security assumptions: it's secure if our biz controls it; if we get hacked call the cops. This has been & will be a source of ongoing struggle, as the dominant value add of crypto remains trust minimization not any other features.

Do you think that there is a cultural argument to be made at all? Cryptographers are probably more experimental as it relates to owning and holding cryptocurrency from the beginning whereas Economists would be inherently more risk averse to storing meaningful funds in early days.

Depends on the economists. I am one, I evaluated Bitcoin from an economics and business aspect very early on, and as a result decided that the risk of not investing was way greater than the risk of loss. I actually saw it as a "sure thing" and moved all my savings into it in 2011