So Gold that was deflationary over long periods was not a 'real' currency? Your economic arguments are simply wrong. Deflation by money destruction will hurt the economy, like in the Great Depresion. Deflation that happens because of increased in production will not destroy lending. The real intrest rate will still be positiv.

The real story is more complicated since I have ignored money demand.

Note that I have not said Bitcoin will become a 'real' currency. There are real problems, Im just saying that your argument is wrong.