- According to Mises's Monetary Regression Theorem, the value of money today depends on its value yesterday, the origin of that value being its direct use as a commodity in barter.
- Money substitutes like the dollar can then come into existence based on actual money, which are gold and silver.
- Bitcoin's value then must be based on the dollar, which had value in the past as a gold substitute and still has value because it can still buy some gold.
- Bitcoin is not a medium of exchange at all. It's merely a new method for transacting in dollars, and we know this because Bitcoin-denominated prices change based on the dollar price of Bitcoin.
- If and when the dollar falls, Bitcoin must lose all value. People will run to gold and silver in that case, and not to Bitcoin.
For further details see:
Bitcoin's Value Depends On The Dollar, But Gold Stands Alone