Gresham's Law and Bitcoin | Bitcointalksearch.org

davis196

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Quote

In other words, are people starting to want to save their BTC coins so much that their value is lost?

The topic about Gresham's law has been discussed more than 1000 times on the forum. Just search for old forum threads instead of posting another one.
Saving BTC so much that the value of BTC is lost? What does that supposed to mean? If the value of BTC is lost, saving BTC becomes pointless. The people are saving a currency or an asset because the future value/price of that currency/asset would be higher than the current price. If there's an expectation that the future price/value would be lower than the current price/value, nobody would start saving that particular currency/asset.

joker_josue

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Quote from: Synchronice on November 05, 2024, 05:58:39 AM

I think that Lighting Network and manual CoinJoin is the best safest possible method available right now. I can't trust any CoinJoin coordinator and mixer anymore. Yes, years ago it was a pure result of innovation and wish of development (and making money of course) but after so many years and so many hunts, I think that many of them are honeypots and it's difficult to guess which one to trust.

But for you to use manual coinjoin, you have to have confidence with the people you are going to do coinjoin.
Or do you do coinjoin with you? This will not bring great advantages to the medium term.

fikrett

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Quote from: Synchronice on November 05, 2024, 05:58:39 AM

Quote from: NotATether on October 31, 2024, 05:16:27 AM

Quote from: FortuneFollower on October 31, 2024, 04:44:12 AM

Never truly digged into how the "bad" becomes "good" after going through the mixers and such.
Who would be an auditor in such a case, or it's better just to find the articles and threads on that matter myself? (if the processes we are regarding a pretty webbed into one another)
Would be much appreciated if you have an idea of how it usually is.

With mixers it's usually* the other way around.

They do an excellent job at obfuscating the origin of bitcoins through several coinjoins, but this comes at the cost of "risk assessment programs" blacklisting them.

Same deal with Wasabi coordinators.

Exchanges really really do not want you to send them funds from a mixer, they don't like those funds because it gives them legal headaches and regulatory problems. If they could accept them, they would, as it's good for business. But they can't, so that's why they freeze them all the time.

*There is one family of mixers that do give you "good" coins all the time, by giving you coins that investors sell to them. They are listed here.

I think that Lighting Network and manual CoinJoin is the best safest possible method available right now. I can't trust any CoinJoin coordinator and mixer anymore. Yes, years ago it was a pure result of innovation and wish of development (and making money of course) but after so many years and so many hunts, I think that many of them are honeypots and it's difficult to guess which one to trust.

By the way, you are right. Binance is the perfect example of such an exchange. If there was not a law, Binance wouldn't care and accept absolutely every transaction, even if they knew it was illegal. They also have been helping to Chinese users to bypass KYC restrictions till they could.

I think that any exchange, in fact, would be happy for the volumes and money flowing - however, the reality is harsher than that Grin

If you are a CEX - you abide, of course.

Synchronice

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Quote from: NotATether on October 31, 2024, 05:16:27 AM

Quote from: FortuneFollower on October 31, 2024, 04:44:12 AM

Never truly digged into how the "bad" becomes "good" after going through the mixers and such.
Who would be an auditor in such a case, or it's better just to find the articles and threads on that matter myself? (if the processes we are regarding a pretty webbed into one another)
Would be much appreciated if you have an idea of how it usually is.

With mixers it's usually* the other way around.

They do an excellent job at obfuscating the origin of bitcoins through several coinjoins, but this comes at the cost of "risk assessment programs" blacklisting them.

Same deal with Wasabi coordinators.

Exchanges really really do not want you to send them funds from a mixer, they don't like those funds because it gives them legal headaches and regulatory problems. If they could accept them, they would, as it's good for business. But they can't, so that's why they freeze them all the time.

*There is one family of mixers that do give you "good" coins all the time, by giving you coins that investors sell to them. They are listed here.

I think that Lighting Network and manual CoinJoin is the best safest possible method available right now. I can't trust any CoinJoin coordinator and mixer anymore. Yes, years ago it was a pure result of innovation and wish of development (and making money of course) but after so many years and so many hunts, I think that many of them are honeypots and it's difficult to guess which one to trust.

By the way, you are right. Binance is the perfect example of such an exchange. If there was not a law, Binance wouldn't care and accept absolutely every transaction, even if they knew it was illegal. They also have been helping to Chinese users to bypass KYC restrictions till they could.

PepeLapiu

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Here is my take on all of this.

If you hold a soft money (fiat, diluted gold/silver, shaved coins) and a hard money (pure gold, bitcoin), you will want to keep the hard money as a store of value and you will want to spend away the soft money as a means of exchange.

Merely using fiat as a means of exchange doesn't really give it any value. If the mere action of passing a buck around gave it any value, we would just sit in a circle jerk and pass around a $1 bill until it gains more value.

Value is based on demand and supply. Changing hands does not increase the value of anything. If so, my ex wife would be worth millions.

People will stash away hard money, and spend away soft money. It's simple logic. Fiat will keep being used as a means of exchange until we run out of idiots to accept it from us.

Bitcoin will only gain in price as more of use store our value into it, and save it away in cold storage. Not being used as a means of exchange is only a testament to the value of bitcoin. It's not detrimental to bitcoin.

If useage as a means of exchange was required to remain valuable, gold and bitcoin would drop in price as fiat would gain value. The other way around is happening.

FortuneFollower

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Quote from: NotATether on October 31, 2024, 05:16:27 AM

Quote from: FortuneFollower on October 31, 2024, 04:44:12 AM

Never truly digged into how the "bad" becomes "good" after going through the mixers and such.
Who would be an auditor in such a case, or it's better just to find the articles and threads on that matter myself? (if the processes we are regarding a pretty webbed into one another)
Would be much appreciated if you have an idea of how it usually is.

With mixers it's usually* the other way around.

They do an excellent job at obfuscating the origin of bitcoins through several coinjoins, but this comes at the cost of "risk assessment programs" blacklisting them.

Same deal with Wasabi coordinators.

Exchanges really really do not want you to send them funds from a mixer, they don't like those funds because it gives them legal headaches and regulatory problems. If they could accept them, they would, as it's good for business. But they can't, so that's why they freeze them all the time.

*There is one family of mixers that do give you "good" coins all the time, by giving you coins that investors sell to them. They are listed here.

That's just wonderful, much appreciated for putting such a big work through!
On a side note and being off-topic a bit, when I went to your website, downnnn below, there are - two - donation buttons. And they lead to the same place.
Is it supposed to be that way?

NotATether

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Quote from: FortuneFollower on October 31, 2024, 04:44:12 AM

Never truly digged into how the "bad" becomes "good" after going through the mixers and such.
Who would be an auditor in such a case, or it's better just to find the articles and threads on that matter myself? (if the processes we are regarding a pretty webbed into one another)
Would be much appreciated if you have an idea of how it usually is.

With mixers it's usually* the other way around.

They do an excellent job at obfuscating the origin of bitcoins through several coinjoins, but this comes at the cost of "risk assessment programs" blacklisting them.

Same deal with Wasabi coordinators.

Exchanges really really do not want you to send them funds from a mixer, they don't like those funds because it gives them legal headaches and regulatory problems. If they could accept them, they would, as it's good for business. But they can't, so that's why they freeze them all the time.

*There is one family of mixers that do give you "good" coins all the time, by giving you coins that investors sell to them. They are listed here.

FortuneFollower

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Quote from: NotATether on October 31, 2024, 04:37:49 AM

Quote from: legiteum on October 27, 2024, 01:55:59 PM

As others seemed to have mentioned here, you are misunderstanding this law.

It applies to the the same currency in two different physical forms e.g. US dollars denoted in copper coins vs. silver coins, wherein the latter would have more value (in USD).

That means it can also be applied to "good BTC" (UTXOs that exchanges consider clean) and "bad BTC" (coins that are tainted somehow).

People are eager to dump their bad BTC, and keep the good BTC for themselves.

So you'd think that this would have to come crashing down eventually, and damage bitcoin, right?

Well, not really.

For one thing, the regulated centralized services hold and deal with more Bitcoin than the darknet does.

Another thing to note is that seized BTC magically becomes "good" again as if an auditor just flips a switch and suddenly all of the bad traces are gone.

Never truly digged into how the "bad" becomes "good" after going through the mixers and such.
Who would be an auditor in such a case, or it's better just to find the articles and threads on that matter myself? (if the processes we are regarding a pretty webbed into one another)
Would be much appreciated if you have an idea of how it usually is.

NotATether

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Quote from: legiteum on October 27, 2024, 01:55:59 PM

As others seemed to have mentioned here, you are misunderstanding this law.

It applies to the the same currency in two different physical forms e.g. US dollars denoted in copper coins vs. silver coins, wherein the latter would have more value (in USD).

That means it can also be applied to "good BTC" (UTXOs that exchanges consider clean) and "bad BTC" (coins that are tainted somehow).

People are eager to dump their bad BTC, and keep the good BTC for themselves.

So you'd think that this would have to come crashing down eventually, and damage bitcoin, right?

Well, not really.

For one thing, the regulated centralized services hold and deal with more Bitcoin than the darknet does.

Another thing to note is that seized BTC magically becomes "good" again as if an auditor just flips a switch and suddenly all of the bad traces are gone.

FortuneFollower

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Quote from: goldkingcoiner on October 30, 2024, 07:49:14 PM

Quote from: mindrust on October 28, 2024, 11:02:07 AM

1 btc is indeed 1 btc as long as the exchange doesn’t seize your funds. Then 1 btc equals to zero btc.

Same goes for fiat, if the bank decides to freeze your bank account. The solution to having 1 BTC = 1 BTC is to avoid giving the cryptocurrency exchanges a reason to freeze your account. Or better yet, do not use centralized exchanges.

Agreed.
Or only accept those who are probably not interested to have money with a black mark on em Grin

mindrust

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Quote from: goldkingcoiner on October 30, 2024, 07:49:14 PM

Quote from: mindrust on October 28, 2024, 11:02:07 AM

1 btc is indeed 1 btc as long as the exchange doesn’t seize your funds. Then 1 btc equals to zero btc.

Same goes for fiat, if the bank decides to freeze your bank account. The solution to having 1 BTC = 1 BTC is to avoid giving the cryptocurrency exchanges a reason to freeze your account. Or better yet, do not use centralized exchanges.

I agree we shouldn’t be using centralized crypto exchanges but sadly they are the FIAT gate keepers so we don’t really have much alternatives in reality. P2P isn’t always the most convenient solution.

You are also right with your FIAT example however, the exchanges lock the crypto accounts much more times than banks lock their customers FIAT accounts so again, the reality is somewhat different than what people want to believe.

In the end sending crypto to a crypto exchange is dangerous especially if you are not sure about the origin of your funds.

Try it and let us know the results if you like.

SamReomo

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I don't think that Gresham's law is applicable on Bitcoin because as we all know that 1 Bitcoin is always going to be one Bitcoin, due to market conditions Bitcoin might lose its current value but that thing will apply to all Bitcoin not just 1 Bitcoin or in simple words there's no concept of good or bad money when it comes to Bitcoin. If someone still wants to apply then concept then in laymen terms bad Bitcoin might be the ones with high AML score and the good one might be the ones with low AML score, but I guess there are services that can lower that AML score of Bitcoin.

goldkingcoiner

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Quote from: mindrust on October 28, 2024, 11:02:07 AM

1 btc is indeed 1 btc as long as the exchange doesn’t seize your funds. Then 1 btc equals to zero btc.

Same goes for fiat, if the bank decides to freeze your bank account. The solution to having 1 BTC = 1 BTC is to avoid giving the cryptocurrency exchanges a reason to freeze your account. Or better yet, do not use centralized exchanges.

mindrust

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Quote from: FortuneFollower on October 28, 2024, 11:27:29 AM

Quote from: mindrust on October 28, 2024, 11:02:07 AM

I think this law applies to almost everything in life.

When you mix clean shirts with dirty shirts, dirty shirts don’t come up clean. It is the clean shirts that become dirty.

In a healthy population, when corrupt people don’t get punished hard enough, they keep spreading, affecting the honest law abiding individuals and in the end, everyone becomes a criminal.

So, bad money drives away good money.

That’s also the reason why many nations are embracing protectionism lately. Trump wants to stop illegal immigrants coming to the US because illegal immigrants raise the crime rates. Bad people drive away good people. Vote Trump and stop this madness.

Don't want to keep the vector you've got for it regarding Trump - but in general, for now, crypto is now used for some transactions for some services. Does it make the overall process dirty or different? (the idea of being rewarded for some service) No. Does it change because of the blockchain and the benefits of different coins for different reasons - yeah Grin

It doesn’t make it any different for me unless there will be some consequences but there will be some consequences if the coins I have in my wallet came from a blacklisted wallet. The exchange will freeze my deposit immediately if I send any coins to the exchange so in the end it makes a difference. I wish that wasn’t the way how things are but the reality is very different than what people would like it to be.

1 btc is indeed 1 btc as long as the exchange doesn’t seize your funds. Then 1 btc equals to zero btc. You are free to try.

joker_josue

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Quote from: goldkingcoiner on October 29, 2024, 03:11:15 PM

There is no such thing as a bad Bitcoin. And Bitcoin is also a new type of money, so a law based on the observation of ancient physical coins being melted down, might not even have an effect on BTC. How would you melt down a Bitcoin?

This is an interesting point. Bitcoin really is something new and different from everything that has been done throughout history in relation to money.

But society continues to apply traditional laws and rules associated with fiat. This should be stopped doing now.
Should we, as Bitcoin users, stop using these ideas in all scenarios?

goldkingcoiner

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1BTC=1BTC.

There is no such thing as a bad Bitcoin. And Bitcoin is also a new type of money, so a law based on the observation of ancient physical coins being melted down, might not even have an effect on BTC. How would you melt down a Bitcoin?

If governments start implementing "bad and good" Bitcoin, then they will have a problem trying to confiscate and stop the transactions of "bad" Bitcoin. In fact, they will find it an impossible task, since Bitcoin is decentralized and non-custodial(as long as you maintain control over your own personal, decentralized and non custodial wallet).

Smartprofit

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Bad money does indeed push good money out of the market. But this does not mean that good money disappears from our world. Gold bars and gold coins, for example, have not disappeared.

They are stored in the vaults of central banks of all countries of the world (since their value is generally recognized). This is what will most likely happen to Bitcoin over time. Bitcoin is an ideal reserve asset. Bitcoin will become part of the gold and foreign exchange reserves of central banks. To do this, it is enough to make changes to the documents of the Basel Committee.

At the same time, people will very rarely use Bitcoin in everyday transactions (instead of Bitcoin, digital currencies of central banks will be used for these purposes).

dezoel

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This isn't some method where you could end up with terrible results based on currency part, it's something about how it could be great for the asset part of it. The Gresham law idea is because fiat is worse than bitcoin, that means we are going to use to pay for stuff, and we are going to keep our bitcoin to ourselves, which isn't wrong and I believe that is why the price of bitcoin went up.

After all, people wanted to keep their coins, and didn't want to use it as a currency, which made the market have less liquidity, and this is why the price went up when buyers couldn't find cheap coins. So, this makes bitcoin a bad currency to spend, but a great asset to keep hold of and that is how the past has happened so far. I am not saying we are going to end up with terrible results at any given moment, we could definitely see better results for currency part too, but that is not just because people think it's good, that part also is mainly because its expensive fees for tx and slow to move around.

FortuneFollower

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Quote from: mindrust on October 28, 2024, 11:02:07 AM

I think this law applies to almost everything in life.

When you mix clean shirts with dirty shirts, dirty shirts don’t come up clean. It is the clean shirts that become dirty.

In a healthy population, when corrupt people don’t get punished hard enough, they keep spreading, affecting the honest law abiding individuals and in the end, everyone becomes a criminal.

So, bad money drives away good money.

That’s also the reason why many nations are embracing protectionism lately. Trump wants to stop illegal immigrants coming to the US because illegal immigrants raise the crime rates. Bad people drive away good people. Vote Trump and stop this madness.

Don't want to keep the vector you've got for it regarding Trump - but in general, for now, crypto is now used for some transactions for some services. Does it make the overall process dirty or different? (the idea of being rewarded for some service) No. Does it change because of the blockchain and the benefits of different coins for different reasons - yeah Grin

Kelward

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Quote from: stadus on October 27, 2024, 03:11:32 AM

Quote from: joker_josue on October 27, 2024, 03:04:27 AM

Could something like this happen to Bitcoin?
In other words, are people starting to want to save their BTC coins so much that their value is lost?

This could happen to Bitcoin, and I believe we need to distinguish between bad money and good money.

For me, Bitcoin is the good money, while fiat is the bad money. Why? As stated in "Gresham's Law," bad currency tends to drive good currency out of the market. When we refer to the market, it could mean investment, which means Bitcoin gets pushed out so people can use it primarily as a store of value, while fiat is used for daily transactions.

However, this doesn’t mean Bitcoin will become obsolete or lose its value. Just like gold, it’s not used for daily transactions, but its value appreciates over time.

I can liken the concept to your narration, Bitcoin is the good money because it's a store of value and that is why people hodl it. Fiat becomes the bad money that is commonized and people prefer to use it for the payment of their daily needs. Most people that holds Bitcoin will rather not spend it because they know that the value will continue to increase in the future, so they'll rather spend fiat that can be vulnerable to inflation. Although in practical the high value of Bitcoin is making it to deviate as a digital cash that it was created to be. I however don't believe that the value of Bitcoin will be lost because people will rather hodl it than use it for p2p transactions. It can be likened to a valuable asset like gold, despite not using it for payment, it's value still retains.

Topic: Gresham's Law and Bitcoin (Read 494 times)