A Game-Theoretic Approach to Bitcoin’s Valuation in Equilibrium

The necessity of an independent unit of account, referred to as a "Hayek," under perfect capital market assumptions is a critical concept that merits further exploration. This idea posits that for a perfect capital market to function, there must be a constant fraction of total wealth that acts as this unit of account. Such a framework challenges academics who rely on these assumptions for valuing real-life assets like stocks and bonds but simultaneously dismiss Bitcoin, which currently stands as the leading real-world candidate for fulfilling the role of a Hayek.

The contradiction arises when the same set of assumptions used to validate traditional financial instruments is not consistently applied to emerging digital currencies. Bitcoin, by its nature, represents an independent unit of account that could theoretically maintain a constant fraction of total wealth, aligning with the requirements of a Hayek in a perfect capital market. The inconsistency in academic acceptance suggests a need for a reevaluation of how these principles are applied across different asset classes.

In essence, if the premise holds true that a perfect capital market necessitates an independent unit of account to facilitate accurate value measurement and exchange, then the academic community must reconsider its stance on digital currencies like Bitcoin. By applying the same evaluative standards and assumptions to all forms of assets, both traditional and digital, scholars can ensure a more equitable and logical assessment of their role and potential within the global financial ecosystem.