You are correct, the HYPE around Bitcoin is built around a broken idea, but Bitcoin is built around a good idea. Indeed, the main purpose of Bitcoin is in fact to be a medium of exchange and as a unit of account. Bitcoin will be highly profitable for those who treat it as a store of value, until the market gets saturated, but the fact that they treat it as a store of value and hype it up will only expedite the market saturation process.
When that happens, then Bitcoin will maintain a steady price and it will serve its purpose as an efficient medium of exchange on the Internet without the need of a central authority. Until, of course, something better comes and replaces it.
Deflation is easily negated by the natural rate of inflation, which will always occur simply because of supply/demand economics. Natural inflation is actually healthy for the economy. Artificial inflation forces people, businesses and governments to depend on lending a lot more than on the money they earned. Note that lending will still continue with natural inflation, but the interest rates won't have to be kept artificially low (like they are now).
When that happens, then Bitcoin will maintain a steady price and it will serve its purpose as an efficient medium of exchange on the Internet without the need of a central authority. Until, of course, something better comes and replaces it.
Deflation is easily negated by the natural rate of inflation, which will always occur simply because of supply/demand economics. Natural inflation is actually healthy for the economy. Artificial inflation forces people, businesses and governments to depend on lending a lot more than on the money they earned. Note that lending will still continue with natural inflation, but the interest rates won't have to be kept artificially low (like they are now).