Are Bitcoins destined to forever increase in value? The idea of a currency with a limited number of units seems to me to be fundamentally different to existing currencies.  While other currencies are generally based on permanent inflation - more 'units' coming into the currency pool - which causes each unit to be worth less, Bitcoin is based on a fixed number of 'units', never changing.  Does this mean that, as usage increases and time passes, each 'unit' will necessarily be worth more and more and have to be split into smaller and smaller amounts?
In theory yes. If demand grows at a steady rate this will certainly be the case, as less coins will be produced making what is available more desirable.

In reality there are other factors which could affect the value of bitcoins.


Alternate chain could supersede bitcoins (unlikely at this time)
Vulnerabilities like what has appeared (with hacking) already in the main markets
Overspeculation of market trends


Think of it more like gold than a fiat currency in the likelihood of behaviour (nb. my opinion, may not be the case)

If the value does keep increasing it can split into eight decimal places to make a very large number of potential units of currency.