If BitCoins only ever go out of circulations past 21 million, What do we do when all coins are stored in dormant, idle or otherwise inaccessible wallets ?
Each "active" bitcoin will be worth more. So in 2013 a sack of potatoes may be priced at 1BTC, but if by 2113 half the bitcoins in existence have been "lost" (and all other things being equal, including the amount of worth attached to a potato) it would be priced at 0.5BTC.
Example; Lets say a person has accumulated 10,000 BTC over their lifetime...and then...they die. There computer is formatted and either resold or passed on to a relative. Either way the wallet.dat and the private keys are gone.
Thats 10,000 BTC that will never be circulated again.
It that occurred only 21,000 or so times. That would the whole of BitCoins in circulation would it not ?
Assume the extreme case where all but one satoshi (=0.00000001BTC i believe?) of the 21M BTC have been lost. The world would probably get its act together and change the subdivision limit. So that one satoshi can be subdivided into a trillion subsatoshis and everyone can carry on.