False.

Deflation of currency occurs when the money supply shrinks. Economy growing =/= money supply shrinking. In relative terms, there is less money per good, but that just means prices adjust accordingly. It is a vast myth that a growing economy needs a growing money supply. It does not.

People tend not to lose things of value. And if/when they do, it harms nobody but them. An economy cares not how much money it has, for prices adjust accordingly. So long as the quantity of money doesn't drastically change in one direction or another in a short timeframe, the market will be just fine.

I think when the "underground" bitcoin economy flourishes, while the "legitimate" socialist economy perpetuates in mediocrity, you might find people make interesting decisions.

Falseness.

Groceries = http://www.bitmunchies.com/
House = http://www.builditbb.com
Car = I'll sell you my 2010 Impreza for 550 Btc right this instant. PM me if interested.

And the government can never stop people from buying pre-paid visa debit cards with btc. Thus, with a bit of effort, one can buy all of one's groceries with Bitcoins already. Regarding rent, give it some time.

Remember also that creating a business is hard, and takes a while. It's to be expected that Bitcoins will skyrocket before the vendors have the time to create the businesses. There is a lag. But, you can bet there are hundreds of new businesses being created right this moment. I'm making one myself

...but proportionally good for both commercial and consumptive imports. The average icelander would be wealthier in terms of foreign products she could buy, though the Iceland exporter would be angry. Markets can be chaotic, but it's foolish mercantilism to deny/prevent the economic values which Bitcoin could bestow upon Iceland merely in order to protect a certain set of interests (the exporters in this case).

With that said, I don't think Bitcoin is quite ready for national adoption. More incubation is required =)

I'm defining it as, something that is commonly accepted as a medium of exchange. With this definition, dollars are money, euros are money, precious metals are money, bitcoins are money, etc. The debate is over the issue of what ought to be used as money, and why.

Now this I'm sympathetic to, so long as we all know the truth 

It's not the "goldsmith-illusion" and mankind didn't fall for anything. Gold is not valuable because goldsmiths first figured out people might want to keep their money safe (after all, they wouldn't haven't been using gold as money before the goldsmith offered a safe, according to your theory).

It's extremely important to understand why gold is valuable if one is to understand why Bitcoin may be even better. Gold's value comes from its physical properties - it's divisibility, durability, homogeneity, scarcity, etc.  Think of all things out there in nature... few offer all the same attributes as gold. Iron is divisible and durable, but it's not scarce enough. Wooden sticks are divisible, but not able to be recombined. Food can be used as money, but it spoils when saved and two pounds of food are not identical - not homogeneous. Cows make a poor money because dividing one in half would kill it. Gold, and other precious metals, are the only things mankind has found that work extremely well as a money. Anything CAN be used as a money, but some things are much better than others for this purpose. We use fiat paper now, of course, only because governments backed with violence and guns have forced us to do so.

Bitcoin's properties similarly make it incredibly useful as a money. Is it even better than gold, or may it exist alongside to serve different purposes? The market will have to decide.

It's smart to own all real monies. Gold, silver, Bitcoins, I'll take them all, because markets seem to like them.

What is money if not a "good, traded/bartered as a medium of exchange for other goods"?  Bitcoin is true money precisely because it is used in this way. And it is indeed a store of value so long as it retains a market price. Similarly, gold is a store of value to the extent that its market price against other goods is maintained. Similarly again, fiat dollars are a store of value only to the extent that their market price in terms of goods is maintained.

The fact that Bitcoin is not "backed by any issuer of authority" doesn't mean it's not a money. Again, gold is not backed by authorities, either, and it is the longest running money in human history. Both gold and Bitcoins are money because the marketplace has chosen them as such. Fiat dollars are money because the government has chosen them as such.

I trust the market more than the government to decide what is real money.

Hmmmm I just read the comments and they looked totally reasonable to me =)  The readers seem curious and cautiously supportive, actually.

Maybe this is nitpicky, but I don't like the term "virtual currency."  It suggests that Bitcoin is not real in some way. WoW gold is more like a virtual currency. A better term is "digital currency," because it is indeed a real money, it just happens to be digital.

I would also argue that Bitcoins are more of a "real currency" than fiat digital dollars flying around from account to account. Both are digital, but one cannot be created at whim. So what's more "virtual," Bitcoins or dollars?

Thus - I'd politely ask all of you to use the term "digital currency" instead of "virtual currency," if you please 

If bitcoin never develops mature capital markets, which would necessarily include "hyper-trading", "middlemen," "banks," and "interest" then it is doomed.

Efficient markets demand all these things, in one form or another. Hyper trading will provide liquidity and price discovery. Middlemen will provide various services from fraud protection, to insurance, to education, to a host of other value-added activities. Banks would certainly look different, but when used to pool resources for capital investments, or to protect wallet files effectively, they are very important. And interest?? If I loan money to someone, whether it's gold, fiat paper, or bitcoins, it sure as hell better carry interest.

There is nothing wrong with the above institutions.... what's wrong TODAY is that these institutions have grown up around a fraudulent fiat money system. It's the US fiat currency and fractional banking system that is the problem, not the banks, or hyper trading, or interest per se. Fix the money, and the institutions will be fixed eventually as well.

It's hard for there to be middle ground on a question like, "should people be free or enslaved?" and that is at the core of Bitcoin, believe it or not. 

I'm a global warming denier. I also think Stossel is fantastic, because he doesn't believe in using coercion to force his opinion on others.

That's not quite true. Gold has value because it's useful as money (this is why Bitcoin has value as well). Cactuses and sand are poor money, and thus not valuable for that purpose. Gold is excellent for that purpose. Society didn't arbitrarily select gold to be money, it was borne of the market's need for a useful medium of exchange. The Native American "market" seemingly hadn't come to the same conclusion, and that's fine.

Dude, if you're going to spout elitist snobbery, at least be correct. You sound like a 12 year old that just found his father's macro-economics textbook.

Let's get some things straight. The bitcoin decimal cannot be moved by infinite places to the right, there are only 8 decimal places.  However, even if there were infinite decimal places, and Bitcoin kept moving the decimal over to the right, that is not inflation - it's pie cutting. So don't bring up Zimbabwe like you're the only magical person who's heard they have an inflation problem. The location of the decimal point is a notational issue, it doesn't change the quantity of money. Or thinking about it another way, it does change the quantity of "money" but it does so equally to all people instantly (rendering it meaningless apart from the notational difference). All accounts rise in perfect proportion. All prices rise in perfect proportion. In this way, the increased quantity of money is meaningless, and is vastly different from a Zimbabwe type situation, where money is printed in one location, but not instantly notated across all accounts and prices in the economy.  See the difference? Fiat money printing is economically disruptive because it devalues the units of currency already in circulation and does so asymmetrically. Adding zeroes to bitcoin does not devalue the currency because all accounts and prices rise in perfect proportion, instantly.  When Bernanke prints, your bank account doesn't increase. When Bitcoin changes the decimal, you bank account does. Big big difference.

And don't ask rediculous questions like "have you not watched whats happening to the dollar?"  Why do you think we are all so excited about Bitcoin?  We're actually getting out of the dollar, and I hope you are as well. You think I care about cryptography? I'm here because the monetary economic concepts of Bitcoin are, as far as I can tell, sound, and it's very exciting.

In summary this "currency modus operandi" (nice vocab there  ) is the complete opposite of a central bank/fiat system. The "central regulation" that you desire is the algorithm itself, and it's at the behest of no individual. That's a good thing.

I run two of these. Overclocked both moderately and have never had problems, could likely push them up quite a bit more. They're not ideal for mining, but the two I have reach 420 megahashes/sec on avg combined.

Looks great, I signed up for an account. I'm basically a noob with e-commerce stuff, but would love more information about how your site works. What does it allow me to do?

LOL @ sent from his iPad hahaha. What a tool.

Just tell him Bitcoin isn't a "currency," it's just math. I don't think math is yet illegal, save within the borders of DC. For you to be prosecuted, the state would then have to prove that Bitcoin was indeed a currency, and wouldn't that be fun?