Bitcoin is fundamentally sound

Bitcoin is a fundamentally flawed currency. If I understand the use of sound currency correctly, then it is being used in reference to hard currency that is backed by a commodity like gold. If I'm not mistaken, and feel free to correct me, but the concept behind calling it "sound" is that an ounce of gold would buy the same today as it would during the Great Depression, or a hundred years in the future. On the surface, bitcoins share many of the features of a hard currency such as a Gold Certificate. It even shares many of the strengths, and weaknesses of its gold counterpart. However, by its very design, it is fundamentally flawed, and will be unlike any hard currency in existence. Bitcoins are bad because they follow a deflationary model,they are unstable, favor black market transactions, and do not provide market stability necessary for a free market, or a real economy. Maybe it's todays world where we're so fearful of inflation that some people equate deflation with being good. However, deflation is infinitely worse. Lets say I'm a retailer, and I need to purchase a Nex-7 to stock my store. I spend on February 23rd 35.7 bitcoins, or the equivalent 1000 USD. The camera doesn"t get to me until the 2nd, and now will only sell for 29.5 bitcoins. If the camera doesn"t sell until today at noon it"ll only sell for 15.5 bitcoins. As a retailer, if I used bitcoins, I would have lost 20.2 bitcoins. You can look up the prices over the last month on mtgox.com This is the textbook definition of deflation, and this is feared because it hurts everyone that participates in the supply chain, from manufacturers to consumers. In a deflationary model, you're only rewarded for being a miser, and refusing to participate in the economy. The last time the US had any deflation at or near -10% was the Great Depression, and the last major economy to be hurt by deflation was Japan in their Lost Decade. It is no wonder why people familiar with deflation will move Heaven and Earth to keep it in the box. Unlike any other hard currency model, bitcoins will have a permanent money supply choke. In all of human history, we've never run out of minable gold. Also, with asteroid mining a few centuries away, it's hard to say we ever will. With gold, we can very slowly increase the money supply to have it grow with an ever larger economy. Bitcoins, on the other hand, have a maximum of 21 million coins that can ever be made, and can't be modified to generate more bitcoins after that. Taking the worse aspect of the gold standard, the slow growth of the money supply, and magnifying it to create hyper deflation is hardly an advantage. Other issues arise when you compare it to the current fiat banking systems, because it is uniquely vulnerable to loss, and presents no options for recovery of stolen coins. On the one hand, if I used a bank and my account is hacked, I have options to recover my funds. However, if some hacker steals my bitcoin wallet, then they have free reign over my funds, and I have no options for recovery. The ultimate transaction cost is currently unknown, and will increase as the burden of maintaining the transactional database grows beyond the capabilities of your average user. In a way, it has married the weaknesses of physical currency to the actual banking system, and vise-versa. The anonymous nature of bitcoins only enhances the black market. They can be used for corporate bribes, money laundering, and deprives local governments from taxes that help build our roads, and schools. It presents no added benefit for the legitimate free market that the current system does not already address. As bad as inflation may seem, deflation is infinitely worse because it encourages hoarding, and prolongs the recovery period from even the simplest economic recessions. When controlled properly, inflation encourages spending, and discourages hoarding. The current system controlling the USD, the Federal Reserve, can even change monetary policy if it's prudent. If any of the policies controlling bitcoins are determined to be bad at a future date, they cannot be changed, or adjusted, by anyone. By its very nature, bitcoins lack the ability to evolve that has made our current economic system strong.