Sir Thomas Gresham was an English economist in the 16th century. He worked closely with Queen Elizabeth I, and is widely known for founding the Royal exchange in the City of London.
However, Sir Thomas is most widely known for discovering an economic law that is as relevant today as it was in the 16th century. During the 16th century Britain was at war with the French, Spanish and Dutch at various times. A favoured method of financing said wars was to debase each issue of new currency by putting slightly less gold and silver in each coin issue. After some time, Sir Thomas noticed that the coins with a lower precious metals content were widely in circulation, but the coins issued with a higher gold and silver content had all but disappeared, being hidden and stored by the general population. Even though the coins had equal face value, the population considered some currency to hold more value than others. Hence Gresham’s law states ‘bad money drives good money out of circulation’.
Fast forward to today and many fiat currencies have come into, and faded or exploded out of existence. For reference the average life span of a fiat currency is 115 years. Given that gold has held its value for over 2000 years, and the US dollar has lost over 80% of its purchasing power in the last century, we can easily see Gresham’s law in action as fiat currency is dumped in favour of gold and to an ever-increasing extent, cryptocurrencies.