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Firstly, I will be referring to Bitcoins the application/currency, not Bitcoin the payment protocol. More importantly, I will be discussing them as one example of a deflationary currency, which in and of itself is preferable to an inflationary currency. Inflation is defined as an increases in the money supply, while deflation is defined as reductions in the money supply. In order for money to neither inflate, nor deflate, it must be a scarce resource that can neither gain, nor lose units in any manner (in addition to fulfilling other requirements of money). To my knowledge, no such resource exists. These are my basic premises, which you may or may not challenge. Bitcoins today are inflationary, and will remain so until they are lost at a faster rate than they are mined. At some point before they have all been mined, but not after, a deflationary trend will occur, without regard to price, and continue in perpetuity. It is possible, that by some means, lost coins could be recovered in the future and potentially result in inflation. This inflation would forever be limited by the upper bound of finite supply and would likely occur in brief flashes of time, as the technology which enables it is instantly capitalized on, and discounted by the market. As each new generation of encryption is employed, deflation is assured until the new encryption can be broken. Just as fiat currencies experience periods of deflation, they are by historical records, inflationary, and without upper bounds. Similarly, Bitcoins may well experience flashes of inflation, but by and large, would trend in a deflationary manner, quickly adjusting to shocks (too strong a word) of inflation. In trying to make the case that Bitcoins are deflationary, I'll try to summarize in this way; When all "coins" have been released, the upper bound of monetary units is inviolable. Surely it is easier to lose a private key, than it is to find one. The only means to find lost "coins" faster than they are lost, is to break the encryption, at which time markets rapidly respond, and bring back deflationary trends. Hopefully, I've made a decent case that Bitcoins, fully implented would be deflationary, as the most commonly accepted medium of exchange. I'd also like to make the case that deflationary money is preferable to inflationary money. Bitcoins may very well be overtaken by an altcoin (or something entirely different), but personally speaking, the altcoin would have to provide value that Bitcoins do not, and also be limited in supply, beyond human control. It's important to understand, I'm not making the case that Bitcoins will be the currency of humanity for the next 12 million years. -Money must be either inflationary or deflationary -It is preferable to have money that cannot be stolen over money that can be stolen. (As we know, Inflation=Theft) -Therefore deflationary money is preferable to inflationary money -Future money supply must either be determinable, or indeterminable -Determinable future money supply is information about the future, while indeterminable future money supply is a lack of information about the future. -To allocate resources, it is preferable to have information about the future supply of money. -Therefore a determinable money supply is preferable to an indeterminable money supply. If these two arguments hold, it must be true that the deflationary money is superior to inflationary money, and a determinable money supply is superior to an indeterminable money supply. Hereafter, I hope you can challenge these premises or conclusions; I'm a bit weary of fighting off too many consequentialist arguments. From this point on, understand that I'm not making any arguments. I will however describe/entertain a few effects of a deflationary currency for discussion. To start, I reject the deflationary spiral theories of economics; If you'd like to make that case, I'd be interested in the challenge of poking holes in it. I should have said this earlier, but I'll say it now; Price appreciation/depreciation of money does not, in my view, necessarily describe inflation/deflation. Bitcoins have not inflated because the price has gone up relative to any particular metric; the supply was provided and met with demand. If I buy 3 Bitcoins today, and in ten years I use them to buy a new house, who dare say they were inflated when I bought them? This point is one I expect might be contended and I'd also be interested in challenging the contentions. It's commonly argued that inflation is preferable because it helps people/governments get out of debt. This is at the expense of savers and lenders. Why is it preferable to incentivize debt financed consumption at the expense of production derived savings/lending? I don't think it is. A deflationary currency turns this on it's head. The incentive to delay consumption/gratification, rather than disincentivized savings, has the potential to drastically change the way we think about allocating resources. I think this would change the way we think about spending/saving and risk taking/credit/interest rates, and by extention, how we allocate another finite resource: time. I may be off base here, but I don't think it's too far fetched to say that a monetary system that encourages immediate gratification in "economic" matters, also trains us to an extent to expect/desire immediate gratification in all other matters of life. In order to maximize the purchasing power of an inflationary money, you must spend it as quickly as possible because it loses value over time. In order to maximize the purchasing power of a deflationary currency, you should spend it on your own most extravegant funeral . Of course this is tounge in cheek; the spending mechanism becomes such that you only spend money when you percieve the value you recieve to be greater than, or equal to, the slightly greater value your money would command in the future, rather than it's diminished value. In other words: If I don't buy it today, I won't be able to buy it tomorrow-> becomes -> If I don't buy it today, I can buy two tomorrow. To have a given unit of currency be worth more tomorrow, rather than less, and "governed" by mathematics with relative certainty represents a fundemental change. One earns a return by not consuming, rather than being required to take risk to avoid a loss. Having written a novel, I'll shut up now.