Most of these arguments apply if you are going to be using a finite supply of money as your "main" currency. I agree that not having an inflatable supply is bad in such situations. However it is incredibly unlikely that bitcoin will ever occupy this niche(I highly doubt anyone is going to ever pay taxes in BTC). For what it is, an easy and quick way to transact payments anonymously* and securely online, it is incredibly valuable and I hope it caches on.
*How anonymous it is obviously depends on how sophisticated you are at using it.
It will still be bad for the adoption of Bitcoin as a trading currency. If I have a Bitcoin that is worth $1 today but will almost certainly be worth more than that in a month, what is my incentive to give you the Bitcoin? Wouldn't it be smarter for me to just give you $1 directly via PayPal?
As it stands the only reason to use Bitcoin currently is for shady deals, novelty, and speculation. I find it laughable that Bitcoin advocates laud the increase in the currency's value as a good thing. It is most certainly not a good sign for a currency when it's value increases dramatically over time such as the Bitcoin has.
>Wouldn't it be smarter for me to just give you $1 directly via PayPal?
Which you would get by... selling some amount of bitcoins to an exchanger. And the person you give $1 to would turn around and buy the same amount from another exchanger, less overall fees both ways.
It amounts to the same thing, unless you view bitcoins as a dead-end worthless location to put money in, because you never use them. Which is irrational - it's pure loss for you if you never use them.
But we're speaking hypothetically as if they were actually buying bitcoins, but not withdrawing them, because it's cheaper in the long run to pay with other currencies.
But if you never withdraw them, they have no value at all. Therefore some are withdrawn, and at least some of that $1 came from bitcoins. If you even withdraw one penny worth, you have added one penny to your net bank account, which has influence on your account forever.
The simpler hypothesis is that they intended to show the uselessness of a deflationary currency by infinitely hoarding. But that's completely irrational, so an alternate, simple hypothesis is that they are using bitcoin, so any money they have is influenced by bitcoins they exchange.
*How anonymous it is obviously depends on how sophisticated you are at using it.