Quote from: smoothie on July 21, 2011, 11:52:10 PM

Look at the long term value of the dollar. It has lost most of its purchasing power since inception. That's like comparing bitcoin to a pile of dog shit.

I'll argue your language, but the point is true. This is not unique to the US Dollar though, it is the same story for any fiat currency; I think it was Keynes who theorized that any currency that A) is not tied to a uncommon base commodity and B) can have it's quantity arbitrarily increased, is inherently inflationary.

In a strange way then, BTC is less "virtual" than $, £ or : we all know now that because the protocol that BTC operates on sets an arbitrary limit on the total number of "coins" that the currency has to (eventually) be deflationary. Obviously that was the point when Satochi set a solid limit. There has never been a commonly exchanged currency with an absolute ceiling on the number of units "floated", so it would be very interesting to see what would happen, especially if we get to the point where 8 decimal places is not enough to service all potential holders.

A true deflationary system would royally fuck the money-lending market as it exists too, since our current system of usury relies on a currency valuation being flat or inflationary.

A pure gold (or any other non-renewable commodity) standard is *theoretically* deflationary, but in practice it is almost never strictly that way since the pool of available gold is not set and new gold is mined or recovered all the time, but the same gold is also removed from the currency pool by industry.