The way I see it is, that the bitcoin economy is growing much faster than the money supply which leads to higher and higher prices for bitcoins, one can verify that by taking a look at mtgox. Also I think it's impractical for the bitcoin economy to stop growing when 21 million bitcoins are reached.
Very good point. Few people see this problem. It is absolutely necessary that money can be created at no cost whenever it is needed. If this is not possible, production can not be extended. Normally, money is created by credit. Bitcoin doesn't have this possibility. Whatever it is, it's not a functional currency.
I wonder how Satoshi came up with his magical number of 19% deflation p.a. Did he study some secret economics to arrive at his absurd "insight"? I guess he just set this value because he thought 19% would be a nice annual increase of his fortune.
alexk, I think the monetary system you are looking for, which has not the flaws of Bitcoin, already exists. What do you think of the
Ripple project?
Bitcoin is highly divisible, this solves the availability problem until it reaches its natural price.
What do you refer to when you say 19% deflation per annum? The decreasing rate of currency introduction?
Checked out the earliest edits on the Ripple Project, apparently it's been going since 2006, what is it's current USD exchange rate?