CRYPTOCURRENCIES IN THEORY OF MONEY AND CREDIT: AN AUSTRIAN PERSPECTIVE

Abstract

Theories of money and credit can be divided into two general categories: commodity theory of money and credit theory of money. Both categories theoretically question the acceptance of cryptocurrencies as money. The present study aimed to provide a new interpretation of the Theory of Money and Credit in relation to both theories mentioned above. First, the functions of “public trust” was taken as a commodity, which is consistent with Karl Menger’s views and the subjective theory of value. Based on this approach, the definitions of the credit theory of money will be acceptable with a new interpretation. This new interpretation also involves an extension of Hayek's definition of money, which is consistent with Mises' definition of money. Then, the concept of intertemporal preferences, with an emphasis on the barter root of money based on Mises’ regression theorem, was used to show that cryptocurrencies can be accepted as money as far as they serve as private currency and suit the computability of dynamics of “Underlying Economic Realities” with intertemporal preferences. Therefore, the main criterion for defining money is how it affects intertemporal preferences