If you literally just search "Gresham's law" in SN's search bar you'll get tons of posts of people talking about it. This one was the best read so far in my opinion:

This is already quite the assumption lol. If you have the mindset that the typical Bitcoiner has (after a cycle at least), you're putting your savings into Bitcoin. I would call $40k savings money for sure. It would cost more money to do the conversion to FIAT to pay this merchant because actually $0 is in savings and only $500 is in checking (depending of course on many many things). Let's say an exchange would charge 1% (not too uncommon these days) to convert to FIAT just for you to make this payment with a credit card that's going to charge the merchant 2%. Doing all of that just doesn't make sense because all of a sudden the goods or services now cost a whole 3% more than if you had just not done all of that and spent your Bitcoin instead.

While not sustainable enough to actually compete against other businesses alone, Bitcoin accepting businesses also have a "small business/local community" effect. I mean that phenomenon where people pay more for stuff because it says "Made in the USA" on it or "Environmentally friendly" or "Support small businesses here" those kinds of things. in many cases, a "Bitcoin accepted here" sign attracts Bitcoiners who notice away from competition. For example, I'm not much of a wine drinker, but I take interest in Peony Lane wine anyway.

I guess this is all just to say, the world is a little more complex than the generalizations we make of it from time to time.