But in the end, there will simply be no competing against a deflationary currency. When you throw a deflationary currency among inflationary currencies, it starts acting as a black hole absorbing all the wealth in the world.
Exactly, just like how fiat lost out to the gold standard and we're all on the gold standard now.
Fiat didn't "win" over the gold standard. We were all using the gold standard, and then whoever was issuing those gold backed notes for us just decided to break his promise. The "win" was based entirely on fraud.