Demanding Payment In Bitcoin – Bitcoin Magazine: Bitcoin News, Articles, Charts, and Guides

There is a widely held belief among Bitcoiners that a hyperbitcoinized future, one in which bitcoin fulfills the three characteristic functions of money for our global society (store of value, medium of exchange and unit of account), is inevitable. All that remains to be seen is how and when this will occur. In this piece I will contribute to the discussion regarding hyperbitcoinization by examining Gresham’s and Thiers’ laws as they relate to the global adoption of bitcoin as sound money.

To begin with, both Gresham’s and Thiers’ laws are complementary in the sense that both predict economic outcomes arising from the competition between distinct forms of money. For either law to apply, there must exist two kinds of money in an economy, with one being inferior to the other. Exactly how one money is inferior to the other influences the dynamics that are likely to result.

During an era of commodity monies, when coins were minted using precious metals, one kind of coin could be considered inferior to another when each shared an equivalent face value (i.e., the purchasing power of each coin) despite having a different underlying precious metal composition. The difference between the face value of the money and the costs involved in its production is known as its level of seigniorage.

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