> Bitcoin is, by design, deflationary.
No, they have a very carefully controlled (and diminishing) inflation of the money supply.
>> they have a very carefully controlled (and diminishing) inflation of the money supply.
With a fixed total amount and no magic bullet to wean us off our addiction to growth. It's deflationary by design.
As more BTC are mined, the difficulty of finding new ones increases and the reward decreases. Once the difficulty goes up, only those hashes that begin with 8 zeroes will be considered valid, so it will take twice as much effort to find a valid one. Currently, a successful block nets 25 BTC to the miner, down from 50 a while back. Soon, it will drop to 12.5 BTC.
Bitcoin is, by design, deflationary. All other things being equal, the value of a Bitcoin will continue to rise as the pool of unmined coins shrinks. There is no central authority, rather inherent scarcity and the effort required to mine the coins gives value. The exchange rate of BTC -> fiat is determined by the market, operating on exchanges such as Mt Gox. There is no mechanism for anything outside of market effects to alter the price or availability of Bitcoin.