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This is Gresham's law, in reverse. Gresham's law: "bad money drives out good". Meaning when two forms of commodity money are in circulation, the more valuable

This is Gresham's law, in reverse. Gresham's law: "bad money drives out good". Meaning when two forms of commodity money are in circulation, the more valuable commodity will gradually disappear from circulation. This appears to be another step forward for cryptocurrencies, but consider paying with shitcoin and fiat before you liquidate the good stuff. It's never been wise, so far, to pay in Bitcoin for pizza.

chrisco255 6y ago
Why is this not true of the US dollar? In many countries with awful inflation rates, the government has to enact strict fines to prevent the dollar from taking the local currency's place.
- tgb 6y ago
  I think this is key to Gresham's law: government regulation of the value of the bad currency is what makes the bad currency be used. Without that legal protection, the bad money wouldn't be accepted. If it's required to be accepted, then you'd be a fool to not spend the bad money whenever you have it. So it seems that your observations are just an example of Gresham's Law.
  - stblack 6y ago
    Gresham's law: https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law In many countries, you can exchange US$ for local currency, but not the other way around. That's by government decree. Yet the dollar is prized even though the decree says otherwise. In any case, there's much more than government decree factoring in what's bad money.
    - tgb 6y ago
      What's the counter example here supposed to be? Gresham's law says that people want to get rid of (spend) their bad money and get paid by the good money (US dollars, here). But government regulations mean they have to take the bad money and so therefore only the bad money gets used. You're describing the same situation where bad money gets used even though everyone would prefer to take USD.
- stblack 6y ago
  Of course this is true of the US dollar. The US Dollar loses value over time. In this respect, it's no different than countries with awful inflation, just the inflation rate is lower. That's the very definition of bad money in Gresham's law.
ac29 6y ago
> It's never been wise, so far, to pay in Bitcoin for pizza. Given that Bitcoin is currently worth less than its highs in 2017, 2018, and 2019, I can think of at least three times in which it would have been wise to pay for pizza in Bitcoin (as opposed to holding it).

chrisco255 6y ago

Why is this not true of the US dollar? In many countries with awful inflation rates, the government has to enact strict fines to prevent the dollar from taking the local currency's place.

tgb 6y ago
I think this is key to Gresham's law: government regulation of the value of the bad currency is what makes the bad currency be used. Without that legal protection, the bad money wouldn't be accepted. If it's required to be accepted, then you'd be a fool to not spend the bad money whenever you have it. So it seems that your observations are just an example of Gresham's Law.
- stblack 6y ago
  Gresham's law: https://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law In many countries, you can exchange US$ for local currency, but not the other way around. That's by government decree. Yet the dollar is prized even though the decree says otherwise. In any case, there's much more than government decree factoring in what's bad money.
  - tgb 6y ago
    What's the counter example here supposed to be? Gresham's law says that people want to get rid of (spend) their bad money and get paid by the good money (US dollars, here). But government regulations mean they have to take the bad money and so therefore only the bad money gets used. You're describing the same situation where bad money gets used even though everyone would prefer to take USD.
stblack 6y ago
Of course this is true of the US dollar. The US Dollar loses value over time. In this respect, it's no different than countries with awful inflation, just the inflation rate is lower. That's the very definition of bad money in Gresham's law.

ac29 6y ago

> It's never been wise, so far, to pay in Bitcoin for pizza. Given that Bitcoin is currently worth less than its highs in 2017, 2018, and 2019, I can think of at least three times in which it would have been wise to pay for pizza in Bitcoin (as opposed to holding it).