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AlexMennen comments on Making money with Bitcoin? - Less Wrong Discussion
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Bitcoins are awfully deflationary. This makes them a good investment, but isn't healthy for a long-term bitcoin economy. Is there any way to program an electronic currency system that will make the creation of currency dependent on recent changes in value to maintain a stable value of currency? Like the Fed, except automated?
The short answer is probably yes, but the details haven't been fully worked out.
See my old b-money proposal for some ideas on how to maintain a stable value for a cryptocurrency.
You might also be interested in a recent blog post by Eli Dourado on the economics of cryptocurrency, and my comment there.
Its called a Deflationary Bootstrapping Economy. A startup currency. A currency isnt good unless it is widely used. Bitcoins become widely used by providing the speculator reward incentive to be an early adoper and spread their use. Its a key feature that will make it successful.