I see the 21 million limit on coins to be ultimately stifling to the economy. If more people get interested in bitcoin there will be more demand and exchange rates will rise. As rates rise people start to look at bitcoin as an investment. There is a strong motivation to hold onto whatever bitcoins you get, because of the "buy low, sell high" investment mentality.
The problem is, bitcoin will never be widely used if there is not a growing base of people using it actively for commerce. People will hold their bitcoins and spend their deflationary dollars instead. Dollars are always slowly losing value. There's no motivation to hoard.
What bitcoin needs is a parallel currency that slowly deflates so people will be motivated to get rid of it. Let's call it Newcoin for the sake of argument. Newcoin would be identical to bitcoin but with a slowly increasing yield from mining instead of a decrease. When people want to buy something they spend Newcoins. When they want to set aside money for the future they'll trade newcoin for bitcoin and hold it in an offline wallet.
Bitcoin is the virtual equivalent of gold. People don't spend gold. We need the virtual equivalent of cash.
I see the part about people hoarding could be a problem, but I think they will realize that the community needs to grow, and will do what they can to encourage it.
The comparison to gold breaks down when we talk about breaking gold down. If gold were as convenient as bitcoins it wouldn't be a problem, and people would use it and invest it. You are right that there are 21 million, but not JUST 21 million. Being able to divide them infinitely with no cost is an amazing benefit. Currently the true cap is 21,000,000.00000000
That's 2.1E15 possible bitcoins. That could be expanded if needed.
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