This law seems to imply that people will hoard Bitcoin. This is based on my understanding of Gresham’s Law. If there are two kinds of money, bad money is the unlimited supply of Fiat, and good money is Bitcoin with its limited supply.
In terms of this, I hope that more people will save their Bitcoin and want it so that it won’t lose value. There are a lot of factors simply because I think of legality with the government as well, so maybe there would be a different thing for it, like a tax.
I think there are still a lot more things to consider.
Topic: Gresham's Law and Bitcoin - page 3. (Read 527 times)
I saw this fun post that strips Gresham of credit for this concept: https://stacker.news/items/738907
Thus, bad coins ended up dominating the market, and good coins disappeared.
Could something like this happen to Bitcoin?
I don't really get the ideas of bad coins and good coins here from Gresham's Law. Bitcoin is magic in a way that if you have private key, you can spend bitcoins belong to that private key. Bad or good coins, you all can spend it anytime by signing your transaction with private key and waiting for confirmations from Bitcoin miners.Could something like this happen to Bitcoin?
In Bitcoin, there is only tainted coin and non-tainted coin but it's vague overlap between them in practice too. Bitcoin is fungible with a smallest unit is satoshi and it's really hard to know that your bitcoin is completely non-tainted, clean and not related to any past mixing activities. In addition, as a Bitcoin user I really don't care about that too.
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In other words, are people starting to want to save their BTC coins so much that their value is lost?
It can help price to increase, not to decrease. Principle of Supply and Demand says it, and I agree it works for Bitcoin too.Two articles I like
Yes it applies to Bitcoin,
Many consider Bitcoin the Good money so would prefer to hoard it rather than spending
While Fiat is becoming more of as a means of exchange than a store of value.
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?
No instead the value increases
When bad money drives good money, it doesn't inherently reduce it's intrinsic value just the circulation.
This may even make it scarcer and the value would remain same or increase based on the market perception.
It's a simple reasoning. If a coin is made of silver, it is easily worth 1$, but the amount of silver that this coin has is worth 2$. It's worth melting down that coin and selling the silver, rather than using the coin to buy something for 1$.
But, it explains the theory of Gresham's Law better.
That's why Fiat intrinsic value is lower than its nominal value to prevent such actions.
When people start melting silver it is removed from the market and what remains is a currency That's perceived to be inferior.
Inflation increases the likelihood of Good money leaving the market and held while the reverse is the case of bad money.
Many consider Bitcoin the Good money so would prefer to hoard it rather than spending
While Fiat is becoming more of as a means of exchange than a store of value.
Could something like this happen to Bitcoin?
In other words, are people starting to want to save their BTC coins so much that their value is lost?
When bad money drives good money, it doesn't inherently reduce it's intrinsic value just the circulation.
This may even make it scarcer and the value would remain same or increase based on the market perception.
It's a simple reasoning. If a coin is made of silver, it is easily worth 1$, but the amount of silver that this coin has is worth 2$. It's worth melting down that coin and selling the silver, rather than using the coin to buy something for 1$.
But, it explains the theory of Gresham's Law better.
When people start melting silver it is removed from the market and what remains is a currency That's perceived to be inferior.
Inflation increases the likelihood of Good money leaving the market and held while the reverse is the case of bad money.
I recently heard about "Gresham's Law" in a conversation about Bitcoin.
Basically Gresham's Law says that: "Bad currency tends to drive good currency out of the market."
This situation sometimes occurred when the money in circulation was made of valuable metals (gold, silver and bronze). People preferred to spend coins with a lower metal value, to save those with a higher metal value. With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
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?
Basically Gresham's Law says that: "Bad currency tends to drive good currency out of the market."
Quote from: https://en.wikipedia.org/wiki/Gresham%27s_law
The law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves. Legal tender laws act as a form of price control. In such a case, the intrinsically less valuable money is preferred in exchange, because people prefer to save the intrinsically more valuable money.
This situation sometimes occurred when the money in circulation was made of valuable metals (gold, silver and bronze). People preferred to spend coins with a lower metal value, to save those with a higher metal value. With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
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?
Yes of course this is the case. Which is why right now, few will "spend" BTC, other than exchanging it for fiat to spend if really needed.
With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
It seems to me that you have not understood it well. Where did you get that from?
It's a simple reasoning. If a coin is made of silver, it is easily worth 1$, but the amount of silver that this coin has is worth 2$. It's worth melting down that coin and selling the silver, rather than using the coin to buy something for 1$.
But, it explains the theory of Gresham's Law better.
With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
It seems to me that you have not understood it well. Where did you get that from?
Could something like this happen to Bitcoin?
I myself have cited this law to defend that I do not believe that bitcoin will become a widespread means of payment, technical problems aside, because if you have a thousand ways to pay with fiat, which is inflationary, and shitcoins, that tend to go to 0, what sense does it make to pay with bitcoin?
In other words, are people starting to want to save their BTC coins so much that their value is lost?
Same as before, I think it's something you've misunderstood.
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 recently heard about "Gresham's Law" in a conversation about Bitcoin.
Basically Gresham's Law says that: "Bad currency tends to drive good currency out of the market."
This situation sometimes occurred when the money in circulation was made of valuable metals (gold, silver and bronze). People preferred to spend coins with a lower metal value, to save those with a higher metal value. With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
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?
Basically Gresham's Law says that: "Bad currency tends to drive good currency out of the market."
Quote from: https://en.wikipedia.org/wiki/Gresham%27s_law
The law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves. Legal tender laws act as a form of price control. In such a case, the intrinsically less valuable money is preferred in exchange, because people prefer to save the intrinsically more valuable money.
This situation sometimes occurred when the money in circulation was made of valuable metals (gold, silver and bronze). People preferred to spend coins with a lower metal value, to save those with a higher metal value. With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
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?
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