In reply to Bob Hughes:
> Unless bit coins are divisible. e.g. imagine you can get Bitcoin dimes, which are worth 0.1 bit coins. Then, with your example above, the exchange rate could be ~95 bitcoins to the pound. According to dissonance Bitcoins are divisible up to 8 decimal places.
It's possible I'm being dense today, but I don't see why that alters what I said. Yes, you can get bitcoin dimes, but if you currently hold 1 bitcoin and the scenario I described takes place, then that doesn't change the fact that you still hold 1 whole bitcoin, which is inevitably worth £1000.
Yes, that doesn't cause a problem for the currency per se, as they are divisible. The limited pool of whole bitcoins does however mean that anybody who holds a whole bitcoin now would be holding something that has appreciated in value in proportion to demand for the currency.
I know little about economics, but it strikes me that this is an interesting feature of the currency (value directly proportional to demand), which I suspect is more hidden in conventional currencies due to the ability of governments to "print money" - and which perhaps makes bc more akin to stocks and shares, albeit ones that aspire to be treated as a general purpose currency.