Switching from the US Dollar or Euro to Bitcoin because you're worried about inflation or other kinds of volatility is like finding a scratch on your finger and then amputating your whole arm.
The big miracle about our financial system -- and why it (overall) works better than any other one in history -- is that the process of creating money is linked to economically beneficial activity.
Most people think that money is created when the government prints it.
In fact, money is created when banks lend it out. So when you build a house, start a business, get a college education, or buy a new car -- you borrow money from the bank. You now have that money in your hand to give to your university or contractor or employees and suppliers. Meanwhile, the people who deposited the money in the bank ALSO STILL HAVE IT. The bank has, in effect, doubled money (well, not exactly doubled, since they need to keep some reserves).
To control the amount of money in circulation, the government increases or decreases these deposit limits, and changes the interest rates they charge for interbank loans.
As a result, the amount of money in circulation marches -- almost -- in lockstep with the amount of money needed. It's not perfect. It's a hugely complicated system, and hard for mere humans to manage exactly, and there are a lot of mistakes made along the way. But it's a system that's helped lift over a billion people out of starvation-level poverty over this past decade around the world as almost every country has switched over to this approach.
If you look at the volatility of national currencies, they're actually pretty low compared to historical data - and ESPECIALLY low compared to Bitcoin!
And about inflation and deflation... a small amount of inflation means that people and companies are encouraged to buy things now, because they'll be more expensive later. It also means that the real value of wages drops over time, unless they're corrected for inflation. Both of these factors help balance out against the fact that everything is also getting cheaper, due to competition and technical improvements. Again, it doesn't line up perfectly, especially recently, and especially with the minimum wage not keeping up with inflation.
Deflation, however, is an economic nightmare. This is what happens when there is a limited supply of currency. The value of the currency goes up, so you can buy more stuff with it. This incentivizes people to hoard the currency, because if they wait long enough, everything they'll want to buy is cheaper. As a result, it discourages economic activity. This is, in fact, happening with Bitcoin now -- people are holding on to their Bitcoins instead of using them.
So economically, Bitcoin have two big strikes against them. Their creation does not stimulate economic activity (it rewards hackers for hijacking millions of computer to create botnets that mine Bitcoin). And it's deflationary, so people don't want to spend it.
I know its hard to think positive when our economy is in the dumps, unemployment is high, congress is incompetent, and the news is full of Kardashian butts. But remember that the economic issues are temporary. And, because George W. plunged us into the toilet, we were able to get Obama and national health care out of it. Which, regardless of how you feel about it politically, will significantly improve economic life for US citizens and companies.
Similarly, income inequality -- a big contributor to today's economic problems in the US -- is a political issue, a factor of tax rates and other problems. I think this needs to be solved in the voting booth and, hopefully, will be.
But neither inequality or unemployment are issues that can be solved with Bitcoin. Bitcoin does not improve the lot of poor people, and does not stimulate economic activity and create jobs.
