The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

While a staunch defender of the role of gold as money during his time, Ludwig von Mises understood that this monetary role was not something inherent or intrinsic to gold. As one of the deans of the Austrian tradition in economics, Mises well understood that value does not exist outside of human consciousness, and that metals and substances had nothing inherent to them that could assign to them a monetary role. For Mises, gold's monetary status was due to its fulfillment of the criteria for sound money as he understood them: [T]he sound money principle has two aspects. It is affirmative in approving the market's choice of a commonly used medium of exchange. It is negative in obstructing the government's propensity to meddle with the currency system.24 Sound money, then, according to Mises, is what the market freely chooses to be money, and what remains under the control of its owner, safe from coercive meddling and intervention. For as long as the money was controlled by anyone other than the owner, whoever controlled it would always face too strong an incentive to pilfer the value of the money through inflation or confiscation, and to use it as a political tool to achieve their political goals at the expanse of the holders.