Yes, but that doesn't guarantee demand.

Of course, the complement to this is that people whose knowledge of currency comes largely from Neal Stephenson novels give way too much credence to stories breathlessly championing Bitcoin as the future.

Something that can trace its ancestry in a vague way to Bitcoin? Maybe. Bitcoin itself? Exceedingly unlikely.

A deflationary currency might be considered undesirable but it is not an oxymoron any more that "inflationary currency" is.

Deflation - good for you, bad for the state. http://www.youtube.com/watch?v=a6E1k2YO9qU

Mild deflation is the natural state of things - over time, most tasks should take less labor to accomplish because of improvements in technology and organization. Are we to prefer that a man who labors enough to buy four gallons of milk can only purchase a one if he chooses to do so 30 years later, even though the cost of producing milk in real terms (and indeed the price of milk in real terms) has decreased?