[bisq-network/bisq-website] Add manuel's post on source of bitcoin's value (#183)

John Forsyth notifications at github.com
Fri May 31 18:16:14 UTC 2019

Mycelial1 commented on this pull request.

> +
+We would deal separately with the concept of Unit of Account because this function fulfills the need for economic calculus which is an extremely important need, but different than fulfilling the need for exchange. Regarding the store of value function, it is not exclusive to money or proto-money, as all economic goods are by definition a better or worse store of value.
+So going back to Menger, we find that to overcome the problems of direct exchange (barter) humans began to use some goods for indirect exchange, that is, demanding or hoarding a good not for consumption but for exchanging it for other goods in the future. For example, if I have the possibility to decide on hoarding cereal or eggs, it is reasonable that I choose cereal as it is more durable and divisible. As the concept of medium of exchange is still not imaginable for me, I wouldn't even assess how cereal would be demanded by others to use it also for indirect exchange. I would just rely on others demanding it as food in the future (durable) and that I can use it for several different exchanges (divisible). **Once this experience is repeated, the concept of medium of exchange clearly reveals itself and it is immediately picked up by human entrepreneurship to be further exploited.**
+Each individual might choose completely different goods for indirect exchange depending on what they have available and when they are expecting to need them for exchange, so a convergence between individuals to choose the same good for this purpose is initially not necessary. The convergence would come naturally afterward, once humans have discovered the concept of medium of exchange, and that's when the most salable goods begin to compete for being a generalized medium of exchange (i.e. Money). The game theory concept of [focal point](https://en.wikipedia.org/wiki/Focal_point_(game_theory)) kicks in at this stage reinforcing the demand for the most salable good.
+A key concept in this debate is the term of the exchange. For a good to be money it is implicit that it serves well its purpose in the short term, which is also implicit in the words "most salable" within Menger's definition of money "the **most salable** of commodities", which [Carlos Bondone](http://www.carlosbondone.com/en/theory-of-economic-time/economic-theory/development-of-concepts.html) has generalized to "the most salable economic good". If it only serves its purpose in longer terms it might not be money but, it would still be a medium of indirect exchange.
+But, in this post, we are interested in the bootstrapping process to achieve that salability.  Let's refer back to the stage of goods being just a medium of indirect exchange. I stated above that I would rely on cereal's utility as food to foresee its future demand because the concept of medium of indirect exchange would still be an unknown abstraction for me. If we fast forward to the context where humans already grasp the concept of medium of exchange, why shouldn't they be able to foresee the monetary demand of any good regardless if it has other uses or not? That is to say: easy to transport, divisible, durable, difficult to fake, etc. This is clearly the case for Szabo's "collectibles" and also Bitcoin's case.  From a historical point of view, I find it rather unlikely that humans used otherwise useless goods as a medium of exchange without first having discovered the medium of exchange concept through other consumptive goods, but it is certainly theoretically possible.
+In the same way that discovering the concepts of adding and subtracting quantities is more natural through comparing physical quantities (i.e. beads, as in an abacus), that does not necessarily prevent humans to skip that step and directly invent written numerals and ledgers.  Or, if for example, the standard within the abacus was the sexagesimal numeral system, that does not mean that is mandatory to go through an abacus stage of the decimal system in order to be able to adopt the written representation of the decimal numeral system. We must not confuse the supporting medium by which we historically experiment and discover a concept (i.e. beads or commodities) with the concept itself (arithmetics or Money).
+If something arises (bitcoin) that can fulfill the sole use case of a medium of exchange better than the incumbents (barter, salt, gold, fiat etc.), then that is where the demand can be found. Can this demand can be speculative? Yes, it is speculation on the possibility of the good becoming money in the future.
+Regarding completely new monetary goods and the fact that they don't have any other use than being a medium of exchange, Mises had the following concern (_Human Action_ - Chapter 17 section 4 – "The determination of purchasing power of money"):

Reword to "Mises had the following concern regarding new monetary goods that have no other use than a medium of exchange....

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