But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem?
…The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions. [1]
Won't loss of wallets and the finite amount of Bitcoins create excessive deflation, destroying Bitcoin?
…Bitcoin, however, offers a simple and stylish solution: infinite divisibility. Bitcoins can be divided up and trade into as small of pieces as one wants, so no matter how valuable Bitcoins become, one can trade them in practical quantities.
In fact, infinite divisibility should allow Bitcoins to function in cases of extreme wallet loss. Even if, in the far future, so many people have lost their wallets that only a single Bitcoin, or a fraction of one, remains, Bitcoin should continue to function just fine. No one can claim to be sure what is going to happen, but deflation may prove to present a smaller threat than many expect. [2]
[1] https://en.bitcoin.it/wiki/FAQ#But_if_no_more_coins_are_gene...
[2] https://en.bitcoin.it/wiki/FAQ#Won.27t_loss_of_wallets_and_t...