Gresham's Law

[de Heydon]

How will Gresham's Law operate in the 'Bitcoin Age' ?

[Jarcin]

For those curious: Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." It is commonly stated as: "Bad money drives out good", but is more accurately stated: "Bad money drives out good if their exchange rate is set by law."

I'd say it depends on what currency is viewed as the good and the bad, and if we are restricting ourselves to actual "government" or just a collective people.

Until it's more recognized on a national scale, I don't think it'll matter. The people seem to know what they want, and that's fine enough right now. Being non-centralized gives bitcoin a bit of freedom that it other currencies don't really have. Also because there is a set "end amount" that is actually known and not a limitless supply or and unknown supply (gold/silver/other precious metals), it gives it the advantage of knowing what could be in the future a lot easier.

[de Heydon]

Thank you Jarcin, very intelligent answer.

[cr1776]

That is a nice explanation.  I think most here would agree that the good money is the money that won't have its value inflated away.  The thing that will interfere are any actions that the governments around the world attempt to take regarding bitcoin.  The power-hungry do not like things that can undermine their power.

For those curious: Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." It is commonly stated as: "Bad money drives out good", but is more accurately stated: "Bad money drives out good if their exchange rate is set by law."

I'd say it depends on what currency is viewed as the good and the bad, and if we are restricting ourselves to actual "government" or just a collective people.

Until it's more recognized on a national scale, I don't think it'll matter. The people seem to know what they want, and that's fine enough right now. Being non-centralized gives bitcoin a bit of freedom that it other currencies don't really have. Also because there is a set "end amount" that is actually known and not a limitless supply or and unknown supply (gold/silver/other precious metals), it gives it the advantage of knowing what could be in the future a lot easier.

[NewLiberty]

The hoarding vs Spending question
https://bitcointalk.org/index.php?topic=210102.new#new

Spend with those whom you cherish.
Spend to grow the community.
Spend to show a special sense of honor.
Spending bitcoins deserves thanks.

The Liberty Dollar faced this problem.  The spending was thereby encouraged by the acquisition of the currency at a lower cost than the spending.
We have that today with the miners, but there is no "gain" in the spending as there was with the Liberty Dollar model.

So the problem we face is that if we do as benefits us most, the community does not grow swiftly, because even if more merchants want to accept them, they will not get many in their sales.

Though public about accepting bitcoin for New Liberty Dollars, it is very rare that any get offered.