[dragonwriter]

> If a physical currency like physical gold or paper experienced the kind of deflation bitcoin currently is, it would be problematic because those things are difficult to subdivide into (effectively) arbitrarily small pieces.

Its actually pretty trivial to issue new paper currency in smaller denominations and exchange existing currency for it; the problem with deflation is that it creates a disincentive to spend or invest, not that there is a logistical difficulty in subdividing currency.

[defen]

Has there been a currency (assuming bitcoin is a currency) that's deflated by 2000x in a few years? Not saying it can't be done with paper money, but it's less convenient than it is with bitcoin.

[dragonwriter]

> Has there been a currency (assuming bitcoin is a currency) that's deflated by 2000x in a few years?

Not a major one recently, because considerable effort is expended to avoid that for reasons which have nothing to do with the logistical difficulties of subdivision.

> Not saying it can't be done with paper money, but it's less convenient than it is with bitcoin.

It could be done with paper money, but nobody involved in managing currency wants it to be done. People managing currencies for use as exchange media don't want the currency to be an attractive investment. But the logistics are pretty obvious; paper money in circulation is already replaced regularly, all you have to do account for deflation is print bills with smaller denominations on them, and replace bills coming out of circulation in appropriate ratios. If the value of the currency is appreciating and you do this at a ratio which keeps the smallest new bills being currently issued at the same value, the ratio of the cost of printing money to the value of the circulating money remains the same as if you had a relatively-constant value currency and were just replacing bills 1:1. Its not really a logistical problem.

Having a rapidly deflating currency, if it was a main currency rather than a novelty currency operating at a trivial scale compared to the whole economy, may produce economic problems for the economy as a whole, but its not really a logistical problem for the currency issuing system with paper currency. So Bitcoin "solving" the logistical non-problem is a non-accomplishment.