[andrewla]

> It's inherently deflationary

I hear this argument a lot from skeptics, and even from some supporters (though the supporters often contest the "Deflation is bad" follow-up).

I think anyone who says "it's inherently deflationary" should translate that to the phrase "it will always go up in value", which is another way of saying the exact same thing.

Even as a Bitcoin supporter, I find the notion that "it will always go up in value" to be a pretty dubious claim to make, much less a more convoluted argument (that admittedly you did not make) that it cannot be successful (i.e. cannot continue to maintain value) because it is deflationary (i.e. must always increase in value), as those two things are saying the opposite thing.

Practically speaking, in the Keynsian view, any examination of the deflationary/inflationary aspect of Bitcoin has to be tied to the fact that there will be way more "Bitcoin" in circulation than Bitcoin on the blockchain, because of the multiplier effects of banking and credit markets (neither of which exist in any interesting way at the moment, but despite what some of the more fervent supporters believe, there's no reason that fractional reserve banking cannot be denominated in Bitcoin). So trying to make an argument about inflation based on M0 is a bit meaningless -- the state of the credit market is way more important than the supply of specie.