Regression Theorem is Mises’s account of continuity in money’s purchasing power: what it can buy. People’s expectations draw on earlier purchasing power; tracing this connection backwards, Mises reaches a time before the item was first used as money. In his account, it already had exchange value because of another use. This is an argument within his economic theory, not statistical regression or a forecast of the price of bitcoin (BTC).
Imagine Eva selling a table. She accepts money because she can later buy food or pay rent with it. But how does she decide what to ask? Mises separates the experience of earlier prices that Eva draws on from the new valuation emerging in the exchange. He is not explaining today’s price with that very same price. Eva looks ahead, but she does not start without an idea of what money has bought so far. [1]
In our example, bread cost 10 units yesterday and costs 12 today. Eva budgeted using the old price; now she must adjust. Experience helped her make sense of the amount, without guaranteeing the same purchase. Bread supply, demand or other circumstances may have changed. Regression Theorem does not calculate how far a price will move or explain an individual change without further evidence. [1]
Tracing further back from yesterday eventually raises the question of origins. Mises ends the chain with a good that had exchange value from nonmonetary uses before becoming a medium of exchange. Think of metal bought for jewellery: people valued it without intending to pass it on in payment. This illustrates the argument’s logic; it does not prove that every monetary system followed the same historical story. A particular beginning needs its own evidence. [1]
Carl Menger explored a related question. In our example, a potter needs shoes, but the shoemaker wants no pots. The potter can accept another good that is easier to trade onward and use it to obtain shoes. This is indirect exchange: acquiring the intermediate good for a further trade. Menger explains the advantage and spread of this practice. Regression Theorem focuses on the related question of what people draw on when valuing money. [2]
For Mises, whether we hold metal, paper or a claim to receive payment is not enough to distinguish kinds of money. In The Theory of Money and Credit, he distinguishes commodity, credit and fiat money while emphasising actual use in exchange. For readers, this suggests a practical question: what do people really do with the item? Printing “money” on a newly issued token does not show what anyone will accept it for. [3]
Regression Theorem does not require today’s money to remain redeemable for metal forever. Mises also discusses claims that continue to circulate after redemption stops, and money without nonmonetary uses. Asking how the first point of reference for valuation emerged is different from asking why people accept that money now. Its origin cannot simply establish a requirement for present commodity backing or guarantee continued acceptance. [1]
The Bitcoin Whitepaper tackles a different problem: transferring BTC while preventing the same funds from being spent twice. Satoshi Nakamoto describes digital signatures, which provide a mathematical way to verify payment authorization, transaction history and Proof of Work, the computational work that helps secure the shared history. Yet a successful transaction alone does not reveal what the recipient provided in return. It could be a test or a gift. A technical transfer record is therefore not automatically evidence of a trading price. [4]
When applying Regression Theorem to Bitcoin, distinguish the network’s launch, a transfer between addresses, a quoted rate and a completed exchange. They are not the same. Anyone arguing that a particular nonmonetary use explains the initial valuation should establish the participants, timing and reasons. Today’s valuation or the electricity used back then cannot prove this alone. Theory supplies questions for analysis; it cannot fill gaps in historical evidence or promise a future price. [4] [1]
For the clearest picture, read this entry together with Fiduciary Media, Fiat money, Medium of Exchange, Ludwig von Mises, Bitcoin. The reverse links also lead from Commodity Money, Ludwig von Mises.