I feel as though I should point out an important point about macroeconomics here.
Inflation is really bad for the economy. It makes it hard for business to predict the prices they should charge, and puts the squeeze on average workers when their salaries don't keep up with inflation. Periods of high inflation are associated with economic instability and political unrest.
But as bad as inflation is for the economy, there is something far worse than inflation: deflation.
Deflation, in short, is a total disaster for an economy because every consumer will suddenly be incentivized to stop spending any money, leading the a massive contraction in GDP.
This is why no country in the world is on any sort of "gold standard" or anything equivalent.
And I get that we're just talking theoretically here when discussing replacing sovereign currencies with Bitcoin (because I think we all know it would never happen for a number of reasons), but if by some miracle a country tried it, they would instantly wreck their economy.
Now, lets be clear: most people don't envision replacing a sovereign currency with a digital one, but rather they usually mean to use a digital currency as a more streamlined means of transacting in their sovereign currency. (For the Haypenny system, we actually just let people trade in "USDE" or "USD equivalent" to make it easier for them to work with).
But make no mistake, if a country switched to Bitcoin to replace their own currency, it would be an absolute disaster.
Honestly you are misunderstanding some things there. The idea that deflation is disastrous comes from the fact that deflation happens BECAUSE OF economic collapse. If there is an economic collapse that means people don't have money to spend, so they spend less, so there is less demand for things, so prices go down (and therefore the value of the currency goes up in relation to consumer goods) and you get deflation. But its the result of an economic collapse, not the cause.
Also, to point out the obvious, the reason money being linked to gold is called a "gold standard" is because many nations did this! You act like it never happened. The gold standard ended, which means it used to literally be the standard. It never caused economic collapses simply by existing, otherwise it never would have become the standard. The reason why no country in the world is on a gold standard ANY MORE is because politicians realized they have far more control and power when they are literally in charge of the monetary supply. I'm not saying I know what would happen economically if say countries started adopting a bitcoin standard (and I don't think that is something that will ever actually happen), but the idea that using a hard currency rather than a weak inflationary currency would cause economic collapse is honestly just modern monetary propaganda to make people think having a weak currency that gives govt/central bank tons of extra power is the only sort of monetary standard that could work. When obviously history shows that claim to be a complete lie.
There are some things that are better about being on a hard currency standard (like all nations used to be), and some things that are better about being on a weak currency standard (like all nations are today). It's not that one is good and one is bad. They each have good parts and bad parts. I think the main problem is that since the gold standard was abandoned the world hasn't had a hard currency to use as an outlet for the good things it provides. Once Bitcoin becomes massively widespread globally so anyone can save and spend it with ease that's essentially, as someone people have called it, an escape hatch that people can choose to get away from weak currencies.
There would be bad economic consequences if either inflation or deflation got out of control. But while hyperinflation occurs due to horrible monetary policy by the politicans and central bankers who just keep printing money because they have to in order to stay ahead of their debt, I believe a deflationary spiral would only happen if an economy fell into a depression that it just couldn't get out of. Because think about it, the only reason people are going to not buy goods is if they literally can't because they don't have jobs. People having jobs is going to balance out a deflationary currency because people want to buy things and they are not just going to stop buying things when they have the money to buy things. So it isn't deflation at all that is the problem. It is economic collapse that is the problem. Whether a currency is weak (fiat) or strong (bitcoin) people are going to spend money they have. I think the main difference is that with fiat currency the economy is debt driven because printing money and handing it out as debt is how the economy grows, while with a hard currency the money is limited so there is slower growth because its much riskier to take out debt when the currency is strong.
I'm no expert in these things but it seems to me inflationary currency leads to high growth but very unstable economies, the must eventually collapse because govts are by human nature going to print more money and continuously wrack up more and more debt until its unsustainable and the economy reaches a break point (which is what a lot of people are afraid is going to happen in the coming decades, which I beleive people refer to as the "great monetary reset"). While being on a deflationary currency standard would mean less growth but a much more stable economy. People taking far fewer risks, so slower growth, but also much fewer monetary-related problems because the base monetary unit increases in value so saving is possible without taking on risk, and things can actually stay affordable rather than being destined to become more and more unaffordable.
That's my take, which may or may not be totally right. But for sure your statement that a deflationary currency would automatically cause economic collapse is totally wrong, as explained at the top of this comment.
