This seems like a fundamental flaw in the currency that makes it's deflationary properties worse.
Let's say bitcoin is to last a century, over time, there will be gradual losses to all kinds of problems, like hardware failures, owner errors, etc that cause lost of wallets, and thus, coins, forever.
There's no way to replace these, so over time, the total number of coins it not only limited, but after the last bitcoin is mined, it must decrease.
This suggests to me that bitcoin is a marvelous experiment that finally proved that such a currency is possible on a wide scale, but as a foundational currency, it has serious flaws, and it sounds like it needs to ultimately be replaced by a Bitcoin 2.0.
However, creating a new Bitcoin that is incompatible with the old would massively destroy value in the old system, so it's an interesting proposition as to how you can 'version' the Bitcoin protocol over time while not causing great upheaval.
In theory there's no limit to how much a bitcoin can be divided. Currently 0.00000001BTC is the smallest amount possible. But if there's only 0.00001 bitcoins left in the world then the program can be easily updated to allow 0.00000000000000000001BTC to be sent and used.
Bitcoins are a bit like gold, you can just keep dividing a bar up smaller and smaller into dust.
Of course if all bitcoins in the world vanished after the last block (with a reward) had been mined then that would be the end of bitcoins but that seems pretty unlikely right now.
Creating a new Bitcoin that is incompatible with the old would NOT massively destroy value in the old system. Look at Litecoin and other forks. Bitcoin holders collectively add value to Bitcoin (by simply willing to hold them and willing to pay slightly below the market price to add to their holdings), there is no single person who can change its fate. Even big rich guy's wealth depends on many poorer people to accept his BTC for the service they provide him with.
To switch to Bitcoin 2.0 all holders need to see no future in Bitcoin 1 and panic-sell into Bitcoin 2. If this happens, it's another huge bet (like going from USD to BTC), but the prerequisite is to Bitcoin 1 really be in trouble. Divisibility problem is not a fatal flaw, it can be patched, worked around, or counted in as an extra cost.
On the other hand, USD has tons of fatal flaws: it's being printed like crazy and it needs to be stored in banks that easily freeze, tax and censor accounts. Essentially, USD is not even an asset. It's always a chain of promises by bankers and presidents, who brake them constantly in various ways. Compared to USD, Bitcoin is infinitely better, so people are willing to make a bet that Bitcoin can replace USD. Imbalance like that is the requirement to start discussing a jump from BTC1 into BTC2.
Well, we just use fractions of the one remaining. While the protocol currently supports 8 decimals, there isn't any hard limit; we can continue dividing forever as needed.
Are there any studies on the rate at which physical money disappears from the system? I know physical money can be printed to make up for it, but like all things the electronic counter part of physical money will become much more reliable than physical money over time. Do you worry about google corrupting a digital file you emailed to yourself?
Let's say bitcoin is to last a century, over time, there will be gradual losses to all kinds of problems, like hardware failures, owner errors, etc that cause lost of wallets, and thus, coins, forever.
There's no way to replace these, so over time, the total number of coins it not only limited, but after the last bitcoin is mined, it must decrease.
This suggests to me that bitcoin is a marvelous experiment that finally proved that such a currency is possible on a wide scale, but as a foundational currency, it has serious flaws, and it sounds like it needs to ultimately be replaced by a Bitcoin 2.0.
However, creating a new Bitcoin that is incompatible with the old would massively destroy value in the old system, so it's an interesting proposition as to how you can 'version' the Bitcoin protocol over time while not causing great upheaval.