Bitcoin's Structural Position as Money: A Contested Synthesis of Post-Keynesian and Austrian Critiques

Hamoon Soleimani

Papers from arXiv.org

Abstract: Since its inception, Bitcoin has been positioned as a revolutionary alternative to national currencies. This paper evaluates that claim against two competing theoretical traditions -- Post-Keynesian monetary theory and the Austrian School -- while evaluating the strongest counter-arguments within each tradition rather than treating either verdict as settled. From a Post-Keynesian perspective, Bitcoin lacks the debt-based IOU architecture and state-enforced fiscal acceptance mechanism that anchors sovereign currency (Vianna, 2021), though this framework faces definitional circularity when applied to non-debt commodity monies such as gold. From an Austrian viewpoint, Bitcoin's consistency with Mises's Regression Theorem remains deeply contested: while early-adopter subjective utility can theoretically resolve the regression problem (Davidson and Block, 2015; Peniaz and Kavaliou, 2024), a strict reading demonstrates that it lacks an independent, non-monetary commodity anchor (Hazlett and Luther, 2020; Umlauft, 2018). These theoretical frameworks are tested against empirical evidence across settlement throughput, Layer-2 Lightning Network routing dynamics, 51% attack economics, market microstructure, and sovereign adoption in El Salvador. We demonstrate that while Lightning Network routing reliability has expanded via Pickhardt-Richter multi-path flow allocations, this performance gain is structurally concentrated in well-capitalized custodial liquidity hubs -- confirming the game-theoretic centralization predicted by Avarikioti et al. (2020). The paper concludes that Bitcoin's architectural trade-offs, rather than superficial operational metrics, systematically impede its capacity to function as a sovereign monetary standard.

Date: 2025-11, Revised 2026-09
New Economics Papers: this item is included in nep-fdg, nep-fmk, nep-hme, nep-mon, nep-pay and nep-pke
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