The Regression Theorem, first proposed by
Ludwig von Mises
Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
in his 1912 book ''
The Theory of Money and Credit
''The Theory of Money and Credit'' is a 1912 economics book written by Ludwig von Mises, originally published in German as ''Theorie des Geldes und der Umlaufsmittel''. In it Mises expounds on his theory of the origins of money through his regres ...
'', states that the value of money can be traced back ("regressed") to its value as a commodity. The theorem claims that at a point in time there was a good with intersubjective exchange value based on the value of it as a commodity (i.e. silver, gold, etc.), which lead to the good's capacity in given circumstances to procure a specific quantity of other goods as an equivalent in exchange and is derived from the human process of valuing individual goods not granted from nature, based on emotion which was then gradually adopted as money.
Recently, there has been a debate about applying Regression Theorem to
Cryptocurrency
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...
such as
Bitcoin
Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
. Since Bitcoin (for instance) is not backed by any commodity, it appears to fail the definition of a currency according to the Regression Theorem. Others hold the view
that Bitcoin does fit the definition as it is at once a payment system and money, with the source of value being the payment system.
References
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Money