So bitcoins will never go passed 21mil coins...

but what happens when data is loss? the money in someones wallet is lost?(yeah, yeah, back ups)

if you take into account that wallets can be lost, that means the total bitcoins count will lower and never recover...

Does this mean bitcoins can slowly go out of existence? maybe to a point that it needs to be restarted with new algorithm?

it's like pebble money really, you can pick up alot at the beginning but it slows down in finding them. throw some pebbles into the ocean, the total pebble count lowers, over time pebbles can be lost by people. then they may have to move to shells.

am i understanding this right? or am i missing something

ahh, that's right, the bitcoins can go like 8 decimal places, it takes a very long time for what i said to be any actually issue.