This is what I hoped to see from you, good points! Yes there may be some sort of equilibrium once deflation hits because it may be a 0 sum game (never though of this)... however resources we know are not 0 sum for out intents and purposes, they will always seem like they are in abundance until we learn that we only have so much left (oil, water). The system needs to be able to cope with this in some way, and I'm not sure which method will help with this regard and provide a more smooth transition between running out of the resource and being replaced through innovation or something.

Yes no backing at all is not the way to go because of the mess we are in now, but no a total hard cap is also just as bad, this is why i'm a proponent of a no cap but controlled supply increase which will fight deflation issues but not introduce the same inflation problems. In 100 years there will be something like 200 billion dvc? compared to 21 million btc? Does it matter, in 100 years alot of things will have changed, and we have far more usd in our system than dvc would at that point, so the fact that it is uncapped should not hinder the viability of adaption as a medium of exchange. Infact I would say it would provide smoother responses to external pressures that we do not control, and a more stable currency rate over the long term.