Congratulations, you've just described/proven Gresham’s Law

We aim to explain things simply here so let’s give an example where you have two monies:

You notice that the 1 bitcoin buys more and more each year while the USD keeps being inflated away and buys less and less. When you go to the store to buy your food for the week which money should you use?

If you said the USD cash then congratulations, you’re a person doing the rational economical thing!

As the purchasing power of the USD is falling, it makes sense to spend it as fast as possible. It also make sense to hold onto the bitcoin for as long as it’s going up in price as that’s essentially free money.

This pretty straight forward logic of not wanting to spend a “good” money (bitcoins) that is increasing in value is what’s called Gresham’s Law. Officially it states that “bad money drives out good” meaning that in an economy with two monies, the good one will be held as savings (bitcoins) while the bad one will be spent day to day (USD).

We dive into a lot more details in our piece: Is Bitcoin A Medium Of Exchange And Why No One Buys Things With It… Yet :)