Thats exactly what would make logical sense.

However, data shows such assumption to be wrong.

Recent bug report = people cashing out = more BC transfered.
Why did BC price drop by ~$4???

When same quantity of product cost more and more, thats inflation!

Example: Im holding $, you BC.
Assuming that $ is ~constant and BC value continue to increase:
From my perspective thats inflation, from your - deflation.

vipes2010, Now Im more confused - I though that bitcoin's value doubling meant that more people were using it.
If $500K were stolen (lots of transactions) = bitcoin value drops a lot
report about software glitch = many sell = decrease in bitcoin value

So, the more popular it becomes, the less its worth...?
Thus, when/if I decide sell stuff on my sites for bitcoin, i directly reduce value by small fraction?

I cant make sense of it. Kill me now.

Stopping no, but limiting YES.
Consider usually normal idea: you buy domain on your name, set up site on server located near you, and publish useful content. You could possibly get some cash from ads to cover expenses and make a little extra. Now imagine how comfortable you would feel managing torrents site that way.

Whats with that kind of deflation?
Edited: Previously I improperly used term "inflation" while I was actually addressing concerns about deflation.

Once inflation bubble bursts, most get burned and product's market value declines below perceived bottom.
Prices then stabilize until more and more new participants enter the market... that can potentially create new bubble and cause it to happen all over again....

History chart shows that Bitcoin value crashed during ~Jun 2011

Can it crash that same way again?
Is it likely to happen?

Do we need alternative virtual currency?
If converting Bitcoin into real product (such as groceries) become very difficult, that would make Bitcoin quite useless.

So do I, but US has far reaching influence.
It affected me when I kept virtual gold in supposedly trustworthy e-gold account on correct assumption that gold's value will rise.
But eventually I got stuck with ~$4500 in e-gold that i couldnt out exchange...

As I understand it, bitcoin is decentralized, thus cant be directly closed down by any government.

In the past government of free country such as US brought up charges about money laundering (or something like that) and closed down E-Gold (e-currency that was backed up by actual gold bars and successfully operated for ~decade) while "temporally" freezing accounts of all customers during investigation (~5 years now without any option to cash out, so actually stealing/confiscating gold).

Bitcoin's anonymity makes it perfect victim to be accused of permitting everything illegal from fraud to terrorism.
History clearly shows that governments are keen to implement restrictive measures in the name of preventing theoretically possible problems.

I would like to know educated predictions about:
What will happen to "bitcoin <-> bank/debit card" exchange service providers when (if) Bitcoin becomes globally recognized and relatively popular payment method?

Today i downloaded bitcoin-0.8.0, installed it and it has been synchronizing for ~3 hours already.

To my estimate it will download ~1.3GB data of "blocks" and it saves that info at C:\Users\*******\AppData\Roaming\blocks
 
My C: partition is running out of space. Is there a way to specify other location for "blocks" to be saved at?