It seems you’re slipping in between two different definitions of the words “good” and “bad”. At one point you correctly define “good” in the context of the logic of Gresham’s Law as “mandatorily overpriced”, and thereby implicitly “bad” as “mandatorily underpriced.” But then you slip into using “good” as if it were defined as “superior in its money-ish qualities” and “bad” as if it were defined as “inferior in its money-ish qualities.”

But according to the latter definition, a sort of reverse-Gresham’s Law would be true: good money would tend to drive out the bad, as Menger explains in his essay on the origin of money. Legal tender laws favoring the “bad” money may mitigate or overwhelm this, but it wouldn’t invert the phenomenon, turning “goodness” into a liability.

For example, say cattle was favored by legal tender laws. According to your theory, silver’s superior money-ish qualities would be a liability in such a situation, and that it would fare worse as money, even than say jade. People would be less likely to spend silver than to spend jade, because it’s fantastic money-ish qualities are too great to ever want to let silver go, while jade, with its middling money-ish qualities would not be reserved so jealously. Obviously, that doesn’t make any sense.

To the extent that silver (or bitcoins) have money-ish qualities, they are more likely to be able to overcome the disadvantages of legal tender laws favoring another currency. To the extent they have more money-ish qualities, they will tend to be more liquid. To the extend they are more liquid, vendors will be more eager to accumulate them in cash balances. And to the extent that is true, vendors will be more willing to offer silver/bitcoin prices attractive enough to make the buyer willing to spend silver/bitcoin instead of the legal tender money.

Devil’s Advocate: Ha, did you fall on your face this time, Dave! What a clunker of a mistake you made.

Smiling Dave: Allow me to reply.

DA: Sure, what can you possibly say?

SD: