this doesn't work super well because if a currency appreciates in value due to usage and you start to hold it, that means there's less of an incentive to spend

this doesn't work super well because if a currency appreciates in value due to usage and you start to hold it, that means there's less of an incentive to spend it in the first place. That's one of the reasons why we're not trading in gold coins any more, it's almost exclusively turned into an appreciating store of value. Deflationary currency is undesirable as a means of exchange because you don't want to use it, and that is also one of the reasons why central banks target low inflation rates.