I recently heard about "Gresham's Law" in a conversation about Bitcoin.
Basically Gresham's Law says that: "Bad currency tends to drive good currency out of the market."
The law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves. Legal tender laws act as a form of price control. In such a case, the intrinsically less valuable money is preferred in exchange, because people prefer to save the intrinsically more valuable money.
This situation sometimes occurred when the money in circulation was made of valuable metals (gold, silver and bronze). People preferred to spend coins with a lower metal value, to save those with a higher metal value. With inflation, coins with a higher metal value began to have a nominal value lower than the value of the metal they were made with, causing people to start melting these coins to obtain the metal. Thus, bad coins ended up dominating the market, and good coins disappeared.
Could something like this happen to Bitcoin?
In other words, are people starting to want to save their BTC coins so much that their value is lost?
I think that Gresham's law will not easily apply to Bitcoin because, unlike traditional metal currencies, Bitcoin is entirely digital and has no intrinsic value tied to a physical material. It's true that I don't have much experience, but with the little I have and based on my research, I can tell you that while users may choose to hold onto their BTC due to its long-term appreciation potential, this does not mean that it loses value. In fact, this trend could even increase demand for Bitcoin, thereby enhancing its value in the market. Furthermore, the diversity of wallets and digital platforms provides users with more options to manage their assets, allowing them to adopt varied investment strategies without being forced to spend or hold onto their Bitcoins.