Why Bitcoin Will Never Have A Problem With Deflation
There's a lingering misconception out there that deflation will be a problem for Bitcoin, and that will prevent it from widespread use.
The argument (which, full disclosure I used to believe) basically goes like this: Because there's a fixed amount of the coins, people will horde them on anticipation of rising prices, and this hording will prevent the actual spending of currency, and therefore Bitcoins can only be speculative tools.
This argument stems from the correct argument that economists make about national fiat currencies, which is that when you're in a period of deflation (characterized by falling prices and a rising currency) economic activity slows down, because you'll have more buying power tomorrow than you did today, and so what's the rush to spend?
Read more:
http://www.businessinsider.com/bitcoin-doesnt-have-a-deflation-problem-2014-2#ixzz2sUf2O4DP