Discover Mises' science of human action — a revolutionary approach to understanding economics through the logic of choice. Learn why this framework explains Bitcoin better than any mainstream theory.
In 1949, Ludwig von Mises published Human Action — one of the most important economics books ever written. In it, he introduced praxeology: the science of human action.
"Praxeology is the science of purposeful human behavior. It studies the logical structure of action — what all humans must do whenever they act."
— Ludwig von Mises
Praxeology doesn't study what people want or why they want it. It studies the logic of choice itself — the unavoidable truths that apply whenever a human being acts.
Praxeology begins with one undeniable starting point: humans act.
This sounds trivial. But from this single axiom, Mises derived the entire structure of economic theory — through pure logic, without needing data, experiments, or statistics.
To act means:
Every action, everywhere, by anyone, exhibits these properties. This is not a hypothesis — it's a logical necessity.
From the axiom of action, praxeology derives:
Bitcoin makes sense only through the lens of praxeology. Mainstream economics cannot explain why Bitcoin works. Austrian economics can.
Austrian economics and mainstream economics are fundamentally different. They ask different questions, use different methods, and reach different conclusions.
Mainstream economics treats humans like physics objects — predictable, measurable, controllable. It tries to model economies the way physicists model planetary motion.
Austrian economics recognizes that humans are not billiard balls. We act with purpose, adapt to circumstances, learn from mistakes, and create new knowledge. No equation can capture this.
Mainstream economists have consistently failed to understand Bitcoin:
They all made the same mistake: treating Bitcoin as a static object instead of understanding it as a product of human action.
Austrian economists, by contrast, immediately recognized Bitcoin's significance:
Praxeology explains Bitcoin not by modeling it, but by understanding the logic of human action that makes Bitcoin necessary.
When you understand why people act, why they choose, why they value scarcity — Bitcoin becomes inevitable.
Value is not objective — it exists only in the minds of acting individuals.
For Bitcoin: Critics ask "What backs Bitcoin?" Austrian economists reply: "Human valuation backs Bitcoin — the same thing that backs gold, art, or any money."
Humans make decisions at the margin — comparing the next unit, not the total stock.
For Bitcoin: Early adopters valued the marginal bitcoin very highly (breakthrough technology). Late adopters value it less per unit (already established). This explains the price discovery process.
All action takes place across time. People prefer satisfaction sooner rather than later — this is time preference.
(We covered this in depth in Time Preference Fundamentals.)
Every choice means rejecting alternatives. The value of the next-best alternative is the opportunity cost.
For Bitcoin: HODLing bitcoin means forgoing present consumption. This is only rational if you expect future purchasing power to exceed present opportunity cost. Sound money rewards this choice.
The future is genuinely uncertain — not just risky, but unknowable. Entrepreneurs act despite uncertainty, betting on their judgment.
For Bitcoin: Early adopters were entrepreneurs. They couldn't "calculate" Bitcoin's odds — they acted on insight, conviction, and skin in the game. This is praxeology in action.
Every one of these concepts explains why Bitcoin works:
Praxeology predicted Bitcoin before Bitcoin existed.
Bitcoin is not just software. Bitcoin is a coordination tool that respects the logic of human action.
Nobody is forced. All coordination is voluntary — pure praxeology.
Bitcoin uses scarce resources (energy, time, capital) to achieve an end valued by millions. This is the essence of economic action.
Bitcoin is designed for low time preference actors:
Fiat money punishes savers. Bitcoin rewards them. Praxeology explains why Bitcoin attracts the most patient, disciplined actors.
Every bitcoin transaction is voluntary. Both parties expect to benefit, or the trade doesn't happen.
Contrast with fiat:
Bitcoin is pure market money — chosen freely, not mandated by law.
If Mises were alive today, he would recognize Bitcoin as the practical application of his life's work:
Bitcoin is Austrian economics in code.
Mainstream economists analyze Bitcoin using models designed for stocks and bonds:
Bitcoin is not an investment asset. Bitcoin is money. You can't analyze money the same way you analyze a company.
Mainstream economics assumes value is determined by production costs or utility functions.
But Bitcoin has minimal production cost (after mining) and no physical utility. Its value is purely subjective — people value it because other people value it, creating a network effect.
Austrian economics explains this perfectly. Mainstream economics can't.
Mainstream models assume markets reach static equilibrium where supply equals demand.
But Bitcoin is a dynamic discovery process. Price volatility isn't a "market failure" — it's the market searching for the correct valuation of this revolutionary technology.
Austrian economics embraces disequilibrium. Mainstream economics fears it.
Critics endlessly ask: "What backs Bitcoin?"
Austrian economists reply: "What backs gold? What backs art? What backs any money?"
The answer: Human valuation. Money doesn't need "intrinsic" value — it needs market value, which emerges from voluntary exchange.
Praxeology understands this. Mainstream economics does not.
1. If economics is the study of human action, why do mainstream economists rely on models that assume humans behave like machines?
2. You can't prove the axiom "humans act" is true — but can you deny it without acting to deny it? What does this tell you about praxeology?
3. Gold has been money for thousands of years. What "backs" gold? If gold needs no backing beyond human valuation, why does Bitcoin?
4. Mainstream economists predicted Bitcoin would fail. Austrian economists recognized its importance immediately. Why the difference?
5. If you choose to HODL bitcoin, you forgo present consumption. What are you betting on? Is this rational under praxeological analysis?
6. "Bitcoin has no intrinsic value, therefore it's worthless." How would a praxeologist respond to this claim?
Praxeology is the theoretical foundation that explains why Bitcoin works.
When you understand that:
...then Bitcoin becomes inevitable.
Mises gave us the theory. Satoshi gave us the code. Together, they changed the world.