Nick Szabo  🔑

Most Austrian economists, like economists generally, operate at a layer of society's "protocol stack" that assumes security is already solved. But it was security/trust minimization that had to be solved to provide sound money not dependent on government for its security.

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.