>From what I've been told, there is a finite amount in Bitcoin which means there is a limit on how much one can theoretically amass.
You are not going to eat bitcoins. So while nobody will ever get more than x bitcoin, the exchange rate between bitcoins and bread can easily change, and likely will (this will also make the hidden cost of inflation public, which is likely where the biggest threat to bitcoins are).
The relative durability of bitcoin plus the fact that it becomes scarcer through time means that bitcoins have far too high a potential to appreciate in value.
From an economic standpoint, it will encourage hoarding.
One of the problems with hoarding is that people simply stop producing because there are not enough money in circulation. This is more or less like the old money days when moneyed people didn't have to work, and people who have no money could not find work.
Bitcoins also doesn't solve the problem of derivative bitcoins, e.g. futures and debts. For instance, you can "create" more money in the system if bitcoin deposit taking institutions are permitted to do "fractional" banking.
Remember, that gold itself is a finite resource. As time passes, currencies become backed by gold instead of gold, and eventually it untethers from gold.
On the good side, Bitcoins is the environmentally friendly equivalent of gold. It would make Warrent Buffett proud, since he famously remarked "People dig up gold from somewhere out of the ground, melt and forge it into shapes, dig another hole, bury it again and employ people to guard it."
>From an economic standpoint, it will encourage hoarding.
You cannot eat bitcoins, nor do they cure illness, provide you with electricity or any of the other things you want (you in the abstract).
It is true that deflation encourage people to hoard more so than does inflation but you are ignoring things like the future value of money (a dollar today is better than a dollar a week from now) as well as peoples tendency to value the things they buy more than the money they give for them (otherwise, why buy it in the first place).
Finally deflation would enable investors to wait out bad times, hopefully killing the bubbles that crop up whenever the market can't sustain the required investments.
If you still don't believe me, consider this: in the middle to late 1990ies people new that computers would get obsolete very fast and that the expensive computer today could be had for less not long in the future, but the value of having a computer today was better than paying less for a new one tomorrow.
4. Encourage the "right" economic behaviors - debatable - since we do not all share the same definition.
For instance, oil as a currency would be interesting, because much economic activity is tied to harnessing energy. Relative decline in oil reserves point to declining wealth.
The problem with a guaranteed deflation scenario is that it leads to long term economic stagnation and lack of investment activity. There will be no good times to wait for.
You are not going to eat bitcoins. So while nobody will ever get more than x bitcoin, the exchange rate between bitcoins and bread can easily change, and likely will (this will also make the hidden cost of inflation public, which is likely where the biggest threat to bitcoins are).