When a really rich person doesn't have to do anything at all to keep getting richer, what will he do? If he hoards until he dies, how will that affect the economy?
I too want to see empirical data on this.
Money is not a store of value. It is currency, for current exchange.
I think the argument is a sufficiently deflationary currency creates an investor's dream: once you get enough of it, you can spend just what you need and what you have left gains value just sitting there. You don't have to work anymore or invest in anything besides the currency itself. If that becomes the most profitable investment strategy, it's in each individual's best interest to hoard money, but if enough people do that the economy collapses.
If one person "cheats" the system by hoarding money and gets to spend less and less of it every day because it's actively gaining value, that person gets something out of the deflation. If everyone tries it, the system's in deep trouble.
That seems to be the argument, anyway.
What would actually happen? I don't know… I'm a programmer, not an economist.
My bet is that some people will hoarde money, but it doesn't really matter. There will always be people who will use bitcoins for real economic activity, and 'speculators' will keep the value inline with other currencies. Prices will be adjusted for deflation just like they're adjusted for inflation.
Saying that the rational action is to hoarde the money until it rises in value is like saying that the rational action when buying computers is to wait an infinite amount of time, since you're always going to get a better computer by waiting 6 months.