BitCoin should not aspire to replace money (what is money: gold, fiat?), but aspire to replace what works as money (= the money supply, which includes credit).
Money is whatever people agree to use as a medium of exchange. Thus, bitcoins are money.
The problem is that credit constitutes the vast majority of the (fiat) money supply, not cache. BitCoin should not be overwhelmed by the same issue (because that credit is a centralized monetary mechanism).
What is being destroyed right now is credit, but not money. The AMB and M1 are rising, meaning the Fed has increased the size of the base money supply it is doing so to reflate the credit markets, but those markets are not needed right now, hence the value of them is falling and the price of commodities is rising in relation to its supply.
Right. The important point here is that it was the central bank (= Fed) who create the bubble by having those credit mechanisms, and now the market has to correct it.
So, why allow credit in the first place in BitCoin, when the cache itself can inflate as the economy's needs grow.
My point is, implement in BitCoin the mechanisms which allow the majority of peers to control the supply. (Not so that things would get out of control, but some leeway.)