I can't see a problem with a currency gaining value by the hour. If you hold a currency that keeps gaining value, then your purchasing power keeps increasing. Why is that a bad thing? Everyone would be happy to trade in such a currency.
Everyone would be happy to sell in such a currency, but why on Earth would anyone want to buy with such a currency? The only currency that is good for both sides of the equation is the one that is stable in value.
Also (to tie to a comment above this one) a currency which is gaining value quickly is highly regressive to the poor. The poor have to spend their limited means in such a currency - they have to spend substantial fractions of their working capital on consumables.
Conversely, the rich don't. In fact, above a key level depending on how quickly it gains value, the rich functionally never lose any money - they can hold such levels of it that the amount they spend on food is rapidly eclipsed by the increase in value in their wealth.
Of course, this sounds good and is somewhat true with normal currency via investment but there's the rub: with a deflationary currency you don't have to invest. You don't have to put your money in the bank, or loan it out or indeed engage in any type of productive activity to get wealthier. The poor are doomed to work all their lives because they can't get above the magic level of wealth where they don't have to, meanwhile those with the piles of wealth dispense tiny fractions to them to buy necessities. It entrenches a stratified society in a way an inflationary system does not (which is not to say that inflationary money puts us all in the free and clear, but it's better).
> The poor are doomed to work all their lives because they can't get above the magic level of wealth where they don't have to, meanwhile those with the piles of wealth dispense tiny fractions to them to buy necessities.
A historical example of how bad a too-valuable currency can be was the situation surrounding the Free Silver Movement, a Populist-Progressive plan to make the gold-based late-19th-Century American currency inflationary by increasing the amount of cheaper silver in circulation. This was popular because it would help deeply indebted farmers pay back their loans. William Jennings Bryan made a wonderful speech, the Cross Of Gold speech, on the issue: "You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold."
In the extreme limiting case, the money economy based on the deflationary currency freezes to death: The rich are left holding money nobody else wants when the majority of society goes to some other currency that actually meets their needs.
In the non-Bitcoin world, the majority usually moves to another currency (a 'hard currency' like USD or Euros) when the local currency is hyper-inflationary toilet paper, but hyper-deflationary Super-Gold (Super-Duper-Super-Gold!) is, as has been explained, just as bad, and so would provoke the same reaction.
Everyone would be happy to sell in such a currency, but why on Earth would anyone want to buy with such a currency? The only currency that is good for both sides of the equation is the one that is stable in value.