I'm pretty sure Satoshi had heard of the Gresham's law of money. In fact, he did mention a "digital gold" metaphor quite a lot of times in this very board. What matters is that it's still used for what it was intended; cheap P2P transactions, without middlemen.

I'd say that it's only better in terms of privacy and instantaneous confirmation time, but over all, Bitcoin is better money. Easier to verify, easier to divide, easier to protect. Okay, maybe not the last one for the most part.