I had said: Will see if bitcoin faces inflation or not.  If it actually does, then either the infrastructure that runs bitcoin is broken, or that the arguments for what causes inflation are wrong, particularly among those who argue for gold standard.

The way Bitcoins work is there is a system where people can run a coin generator and circulate it into the economy.  There will eventually then be a set amount and that is that.  The mining is running servers to generate the coins, and it is called "mining".  And, in regards to what I was saying, I was saying that either Bitcoin is going to remain inflation free, or if it shows inflation, it is because either the network set up to generate them doesn't limit the number of coins, or finiteness of a resource, like Bitcoin promises, is fundamentally broken, and even finite resources can be subject to inflationary trends.  I didn't say this would happen, but those are the only two options.  In short, there will eventually only be a set amount of Bitcoins ever produced, unless the server technology breaks. 

I had studied Bitcoin some, back when I was doing Occupy stuff actually, and even prior, when I was studying the nature of currency and the issues with it.  

For myself, I have issues with those who want metal based currency, because they are declaring by fiat a certain metal as what backs it, not determined by markets, but by presumptions of past history of it, presuming the future will be so.  I do have HUGE problems with the current fractional reserve system we have today, because it is impossible to close the debt loop and service the debt, plus it projects needed levels of growth that the barter side of the economy (the real economy of exchanging goods and services) may not be able to match at certain times.  The core of any economy is there is real demand for real items and services.  Anything else is presumptions and based around bubbles.  Rareness alone doesn't mean squat either.  And you can't base it upon presumptions you want it, because other people want it, because that is what fuels bubbles.  Debt free fiat currency is better than what we have now, but that can be said to also have issues.

If you asked me what I would go with for currency, I would trade micro ownership in different resources that produce things, and also promises of future delivery of certain goods, and use a computer system to settled these accounts.  It is fairly close to what the Money as Debt series gets into.  Markets would govern what is really of value in this, rather than declare item X as a currency.  And I consider gold to be pretty dirty anyhow.

The problem with oil is that it gets consumed.  If you were to use oil as a currency, then you would watch you amount of currency in the economy shrink, which would cause deflation.  People could also end up hoarding the oil in hopes of it being worth more later and thus decrease the value of its usage in the economy.  Currency, by default, ends up needing to be circulated (see that currency has the word "current" in it, thus it circulates).  Because of this, the item used as the currency can't be consumable.  It should also have some degree of durability also.  And then, people have to want it, so they give it up.  And Bitcoin can be seen is having this to, complete with ZERO intrinsic value (even less intrinsic value than gold).

Problems with a single item as currency is that it isn't universally demanded, and then you get bubbles where people end up buying it, hoping to flip it later for gain.  But the price of it, and its future value, is dependent upon demand for it also.  And what can kill demand is excess production of said item, or people valuing other things.

You see one side of this in the Twilight Zone episode "The Rip Van Winkle Caper".

http://en.wikipedia.org/wiki/The_Rip_Van_Winkle_Caper

Imagine they then be able to manufacture gold.  The rareness goes out the window.

The magical property of gold is ... trust, the same property that decides over the value of a fiat currency. As gold is limited and fiat can be made infinite, people tend to trust fiat less. But if people would suddenly lose trust into gold, it's value would be gone. It has uses besides object of value, but the need in electronics and jewelry are far below the amount of gold available. So the value of gold really is trust.

 The value of gold has changed in history a lot. The value of gold is increasing compared to dollar over the course of years, but that is also a result of inflation of the currency. Look at Wikipedia, these graphs adjusted for inflation. One covers a shorter timeframe, one many centuries (and therefore not only Dollar as reference):

http://en.wikipedia.org/wiki/File:Gold_price_in_USD.png

http://de.wikipedia.org/wiki/Datei:Historico_ouro.gif
Gold isn't completely stable in value, but historically it has gained more trust than currencies that were under control of the powerful people of the time. Also there is one thing to notice: if economy is good, the interest in gold is usually low, the price is also low. If an economic crisis is in place, many people try to invest in gold, the value increases. The value of gold will decrease again, if the crisis is over. But sometimes an economic crisis crashes the currency, so keeping your values in fiat currency isn't safe either.

If a gold-bound currency is better ... who knows. It is an artificial boundary on the amount of money that exists in the currency. Problem is usually, the powers that can mint money, have often also the power to lift these boundaries. But the current system is not sane: banks (not government) can create money for debts. So that every money that exists also is creating a debt in the same amount. That system has to crash sometimes.

For Bitcoins: no, the amount of miners doesn't increase the amount of Bitcoins created. It only increases the difficulty. There is an absolute maximum for existing bitcoins, around the half is created so far. but the economy connected with Bitcoin is small. At it's maximum it barely broke 2 billion dollar in size - that sounds much, but that is the value of all existing Bitcoins. At such small size it's value is easy to manipulate through speculation. The value should be 10000$ per Bitcoin or more to give the currency more stability.

The strong increase was clearly a bubble. Bitcoin should grow slow in value, that has to be connected to real stuff you can buy for the currency, that would lead to a substantial grow.

I though we didn't use the gold standard anymore, just ordinary currency on its own. But, anyway all this takes alot to understand. 

The Magical Property is called "Inert", it doesn't decay or dissolve at least not very easily, it is actually possible with human interference.

The magical property would be the missing element added to just inert that would make it worth something.   Even rarity added to it isn't enough.  There are a number of inert and rare things that aren't worth as much as gold.