Your friend Jonathan argues that a Bitcoin Standard is in essence a digital version of a Gold Standard and like gold a good or even better hedge against inflation. Hence an international monetary system based on Bitcoin can best serve the trade and finance needs of the global economy unlike fiat money (e.g. dollar notes). Your friend Jimmy disagrees pointing out that Bitcoin like fiat money is not backed by anything valuable and pays no dividends. More importantly, he says Bitcoin is more prone to deflation than gold. What do you think?

This is a complex issue with valid points on both sides.

Jonathan's argument is based on the idea that Bitcoin, like gold, is a finite resource. There will only ever be 21 million Bitcoins, and this scarcity can make it a good hedge against inflation. Bitcoin is also decentralized, meaning it's not controlled by any government or institution. This can make it more stable and less susceptible to manipulation.

However, Jimmy's argument also has merit. While it's true that Bitcoin is not backed by any physical asset, the same can be said for most modern currencies, which are fiat money. The value of these currencies is based on the trust and confidence of the people who use them. Bitcoin does not pay dividends, but it's worth noting that neither does gold or cash.

As for the issue of deflation, it's true that Bitcoin could potentially be more prone to deflation than gold. This is because the supply of Bitcoin is fixed, while the supply of gold can increase as more is mined. If demand for Bitcoin increases faster than the supply, this could lead to deflation. However, this is a risk with any finite resource.

In conclusion, whether a Bitcoin Standard would be better for the global economy than a Gold Standard or a fiat money system depends on a variety of factors, including how these systems are implemented and managed, and how they are perceived by the people who use them. It's a complex issue that requires careful consideration and analysis.