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What qualities should have an Austrian Economics compliant cryptocurrency

· 2 min read
Catallactic
Catallactic
Catallactic Team
Adolfo Rodriguez
Adolfo Rodriguez
Catallactic

There is not consensus between the authors in what a currency is, what are their qualities and funcions. Below is a list of qualities for a currency mentioned in the literature.

The intrinsic qualities as a Medium of Exchange:

  • Must be uniform

  • Must be divisible

  • Must be portable

  • Must be durable

The extrinsic qualities as a Medium of Exchange:

  • Must be scarce

  • Must be acceptable

  • Must be recognised

The qualities as a Store of Value:

  • Must have an stable price pegged to something fairly static

The qualities as a Unit of Account:

  • Needs an underlying market for price formation

  • The underlying asset must be fungible

The AE compliant currency:

  • Must comply with Mises's Regression Theorem, that is, its value can be traced back ("regressed") to its value as a commodity (value means marginal utility of the underlaying asset according to the subjective theory of value)

The advent of electronic money and crypto brings new requirements to a Quality CrytoCurrency:

  • Must be secure

  • Must be decentralized along the value chain (in network, in operation, in governance, in value)

  • Must be transparent on its operations and disclose all required information

  • Should probably comply with regulations where is deployed

  • Can probably be private

Additional qualities could be attached to additional functions, e.g. as referred by Professor David Kinley



In fact, a proper Quality Theory of Money is long overdue and should be foundation for a Currency Competition market. It is in the scope of this project to propose one. You can learn more about the Quality Theory of Money in this paper of Philipp Bagus

Without a proper Quality Theory of Money is not possible to build Quality Cryptocurrencies and have a Currency Competition. Existing cryptocurrencies do not comply with many of the functions above and so, they cannot be ranked by quality and a Currency Competition based on Quality cannot be established.

What seems clear is that, an Austrian CryptoCurrency, should be a non-fiat stablecoin, capturing marginal utility of a commodity, plus additional features.