Bitcoin cannot be ideal money. Economists know this because money stable in value needs to be able to expand and contract with its underlying economy.
False.
Here is the thing. Ideal Money is money that has stable value over LONG periods of time.
A deflationary currency does not have that quality.
There isn't any conflict here because there have always been two types of money to satisfy each of these requirements respectively.
Consider an economy which varies in size. There is clearly a conflict between 2 interests:
commerce (in particular manufacturing) has an interest in keeping prices stable so they don't go bankrupt during their time-to-market period (Projected income at the start of the budgetary cycle has to match real income at the end of it, otherwise they'll constantly trade at a loss in an expanding economy)
savers need a store of value which means they are interested in the exact opposite - a deflationary monetary medium which accrues as the economy grows (e.g. gold)
There are therefore 2 types of "ideal money", one variable supply which is used for price denomination and one fixed supply which is used as a store of value. (When I say "one" fixed supply type, I'm using that as a collective term to cover all commodity money such as precious metals, equity shares, whatever). People switch between these according to their prevailing priorities.
By current definitions, Bitcoin is most definitely of the "type 2" category - fixed supply commodity money who's monetary design priority is as a store of value modelled on gold. It therefore definitely does not represent "ideal money" from a price denomination point of view and should not be used as such.
However !
Bitcoin *could* be used as a price denomination/inflationary world reserve currency *if* an almighty great derivatives market was created on top of it to vary the effective money supply, even though the actual blockchain token supply stayed fixed. In other words, if countries started denominating their prices in Bitcoin en-masse then the credit markets would do the same and before you knew it the blockchain supply would only represent a tiny portion of the BTC denominated commercial trade volume in the world.
This is what currently happens with fiat. A government issues the "base" money supply by issuing debt which backs the central bank printing presses. Then the credit markets multiple that base money supply several times.
Conclusion
So bitcoin is currently ideal "type 2" store of value money. It is definitely not ideal "type 1" price denomination "currency". Whether it becomes ideal type 1 price denomination currency isn't in the hands of the bitcoin devs, it's in the hands of credit markets and governments.
