Bitcoin - A Decentralized Digital Currency

I've been theorizing on how to make an inflation-proof and fraud-proof digital currency which was also decentralized. The task seems next to impossible to fulfill. However, that doesn't mean that other people aren't trying. Meet Bitcoin.

http://www.bitcoin.org/faq

Bitcoin uses a network of nodes in order to attempt to control its currency without the inevitable betrayal that comes from centralization. It is designed so that inflation of Bitcoin currency (creation of new Bitcoins) requires significant CPU processing time. Furthermore, Bitcoin is totally digital. While the intentions and philosophy behind the Bitcoin are good, I still think that Bitcoin is doomed to inevitable failure. And here's why.

Inflation And The Future Of Money

The most basic and fundamental rule of economics would probably be the law of supply and demand. If there is less of something, it will cost more to acquire. And if there is more of something, it will cost less to acquire. For example, the Mona Lisa is worth a fortune because there is only one original. If someone, somehow, created a perfect duplicate of the original Mona Lisa so that there were two originals in existence, what would happen to the value of the first? It would drop by 50%, with the new Mona Lisa acquiring 50% of its value.

Well, what happens when a monetary supply, such as dollar bills, is inflated by 100%? There are twice as many dollar bills in existence (twice the supply), so the value (purchasing power) of the dollar bill gets cut in half. Except, it doesn't take a lot of work to print up as many zeros as you need.