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" The narrow interpretation of Gresham's Law is valid only when currencies are legally pegged, which is not the case for bitcoin." However: The principles of Gresham's law can sometimes be applied to different fields of study. Gresham's law may be generally applied to any circumstance in which the "true" value of something
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A. "Potentially missing step 1.5: Buyer, knowing bitcoins appreciate, will seek to trade MOST OF his dollars for bitcoin..." B. "If the buyer believed that, chances are he would've already traded MOST OF his fiat for bitcoin up-front. In fact that's the only way we can be certain the buyer does believe that. " C. In making
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"Granted the conclusion follows from the assumption...." Assumptions: 1. Merchant will accept either bitcoins or dollars at their current exchange value. 2. Buyer believes the future exchange value of dollars will be lower and the future exchange value of bitcoins will be higher. Then in trade, the buyer will tend to relinquish (pay with)
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"I just find it hard to fathom that people A (merchants) will be, as a whole, more ignorant on monetary matters than people B (consumers). Your scenario only applies if buyers are more informed than sellers. It is possible to have a thought experiment like this but I don't see how it could apply to the real world." ***** I'm not referring
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"Edit: Bitcoin supporters always say that bitcoins lower transaction costs. This is an obvious reason why merchants will prefer bitcoins." **** There are at least two distinct entities: 1. The Bitcoin payment system as that was designed by Satoshi Nakamoto: http://bitcoin.org/bitcoin.pdf I will refer to this by writing "Bitcoin"
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"A lot of the stuff you quoted from wikipedia supports the idea of a reverse Gresham law situation happening which is the opposite of the thesis in your original post. For some reason you assume that the consumer has superior knowledge to the merchant. The buyer has a better understanding of the monetary situation than the seller. What if mister
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"There was a conversation about this on another thread but no this is absolutely not true because you don't take into account the merchant himself. In fact on the free market good money drives out bad money..." ***** My original post didn't say anything about a "free market." It assumes the market situation and political
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"Only if the party receiving this depreciating currency is either (1) an idiot or (2) being coerced by law to accept it. Gresham's Law is only valid under (2)." ***** From the article about Gresham's law on Wikipedia: The principles of Gresham's law can sometimes be applied to different fields of study. Gresham's law may be
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Peter: From Wikipedia: Reverse of Gresham's Law (Thiers' Law) In an influential theoretical article, Rolnick and Weber (1986) argued that bad money would drive good money to a premium rather than driving it out of circulation. However, their research did not take into account the context in which Gresham made his observation. Rolnick and Weber
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A lot has been written about Bitcoin and the regression theorem, but I haven't seen much written about Bitcoin and Gresham's Law. The thought occurs that if a person is faced with the choice of paying with a depreciating currency or an appreciating currency, he/she would likely pay with the depreciating currency and choose to keep the appreciating