A lot of this presumes a scenario in which Bitcoin replaces fiat and become the world's sole currency. It's hard to imagine why that would happen.
What we seem to actually be getting is multiple cryptocurrencies, in addition to fiat. Under these conditions, if the world falls into depression, where money is too scarce, then an easy solution is to launch new currencies. On blockchains that support smart contracts, this would be easy to do.
If Hayek was on the right track with his advocacy of competing currencies, this could be a more stable system than we have now. Easy deployment of local currencies could also help support local businesses over large monopolies.
What we seem to actually be getting is multiple cryptocurrencies, in addition to fiat. Under these conditions, if the world falls into depression, where money is too scarce, then an easy solution is to launch new currencies. On blockchains that support smart contracts, this would be easy to do.
If Hayek was on the right track with his advocacy of competing currencies, this could be a more stable system than we have now. Easy deployment of local currencies could also help support local businesses over large monopolies.