Austrian School of Economics -what is it?

The Austrian School of Economics (ASE) is a separate direction, which is based on the principle of the importance of the independent organization of power and the market price mechanism. There are many different theories that influence various areas of activity in one way or another. A certain share of the impact of this particular system affects the cryptocurrency market, the development of which is carried out on specific and unique basic principles.

ASE - key provisions

According to this concept of economic development, the following aspects are priority:

  • assessment of value based on subjective criteria in the human mind, the effort expended time during labor is not the most significant when the cost of the final product is formed;
  • the ability to predict consumer behavior, which directly affects the development of various markets but does not allow mathematical modeling of situations;
  • derivation of economic theory from the basic principles of human activity.

The basic principles of the Austrian School of Economics are ultimately formulated as reducing government intervention in the economy. The conditions of liberalism must be maintained.

The influence of the Austrian School of Economics on the development of the cryptocurrency market

Let's compare the conditions of the ASE and the cryptocurrency sector. We can clearly see the increasing importance of individual and subjective assessment by users of the prospects for making a profit. The cryptocurrency market is a priori decentralized; that is, in this niche, the interference of any country's centralized government in development is wholly eliminated. Regulation of the value of different types of digital coins is carried out exclusively commercially. This, again, does not take into account the time and labor required to create a new coin or token. In this case, anarcho-capitalism is directly visible, which is the basis of the Austrian school of Economics, combined with the autonomy of each subject - a market participant endowed with free will of choice.

Advantages of ASE

The prospects and advantages of using such an economic model are already clearly visible in the example of the cryptocurrency market. The main advantages of this scheme:

  • The value of goods is formed solely by assessing the degree of usefulness of the final product.
  • When assessing the cost of a product, the limitation factor is considered (the number of coins available for mining for any crypt is clearly fixed).
  • Defining value as a guide to commercial supply and demand.

However, the theory needs to consider the actual conditions and financial capabilities of users, under which a particular product, even in conditions of high utility, may be unclaimed due to consistency with the capabilities of consumers.