Exponential deflation is not a problem when the factor is relatively small (say, 3% or so). The crude death rate, according to Wikipedia, is 8.37 per 1000 per year, or 0.837%. If dying people have 3.58 times as many Bitcoins in their wallets than living people on average, we would see 3% deflation due to deaths. I don't think that's too unrealistic of a figure.
Then again, I would speculate that most people of advanced age or otherwise anticipating death soon would have a will to pass their Bitcoins to their descendants, which would mitigate this effect. I also think that other economic factors would have a much larger impact on prices than people taking their Bitcoins to their grave, so to speak.
Besides, we already have exponential inflation with USD of about 3% over the last 100 years, and it hasn't been a massive problem.
I wasn't talking about other economic crisis, I am talking about the future of the virtual currency. Also, you can make as much USD as you want, until we run out of trees that is, but
BTC has a definitive cap of 21mil. Nothing more. Ever. Slowly this could cause problems, not in the foreseeable future (
BTC is not suppose to reach the cap till sometime in the 2100's) but it is still a possibly problem to be faced.
Stop comparing USD to BTC. In the later stages, if we get there, there will be no comparison. Now THAT I am just speculating upon.
Again, I want to reiterate I have never studied econ except in college while studying computer science so I just didn't care about the subject while there were more interesting things happening that haven't been done before. So I am in no way a good source of information on these subjects. I just saw a potential flaw, even though small now, which could jeopardize BTC in the far future to a bitter end within its very early stages (now). If this is true, and not fixed, that means that BTC will have a very short lifespan. I would rather take the future with
BTC than with USD.