Comment Another problem: unpredictable deflation (Score 2) 332
Even if no bitcoins are lost, there are still problems. Whenever you have a fixed quantity of something, there's a real danger of deflation; if more and more people start using bitcoin, the demand for bitcoins will go up and up, the price of bitcoins will go up and up, and this provides a strong incentive for current bitcoin holders to simply hoard their bitcoins rather than use them -- further reducing supply and jacking up the price. This is all econ 101 stuff.
Deflation isn't a problem per se, as long as the rate of deflation is (roughly) constant. However, there is no guarantee of a constant rate of deflation with bitcoins; I doubt it would happen.
Deflation may sound like a good thing (yay, my money is getting more valuable!), but try holding a debt with non-constant deflation; the value of that debt will unpredictably go up and up... Uncontrolled deflation has problems just like uncontrolled inflation.
Say what you will about the Federal Reserve, but at least in principle, it's nice having someone trying to keep inflation/deflation in check (or at least at a constant rate).