Bitcoin crashes when those investing realise 2 things

[Chalkbot]

Okay, for simplicity's sake, lets assume that there are only 10 bitcoins, and they are each divisible into 10 sub units, for a total of 100 possible units.

When it was just me and you, I bought your bicycle for 2 Bitcoins, and you bought my stereo for 1.5 bitcoins. People took notice of our seamless trade system, and wanted some bitcoin for themselves, so we sold them each a few of our bitcoins at bicycle/stereo rates. Pretty soon, we have 50 people using bitcoin to trade. This means that on average, each person has only 0.2 bitcoins, and thus the value of all bitcoins needs to go up to accomodate trade, as nobody can afford to buy that bicycle at 2 BTC.

Bicycles are being traded for 0.1 BTC now, and it's impossible to make BTC trades for items worth less than that. How do I buy a candy bar for BTC, when the smallest sub-unit is worth a bicycle? Do I need to buy 100 candy bars at a time? That's not very convenient.

So we subdivide the currency to another decimal point. Now a bicycle is still 0.1 bitcoin, and a candy bar is 0.001 bitcoins. Everyone is much happier with this.

It's important to note that the relative value of our bitcoins didn't change by adding another level of subdivision. All the coins in existence were owned by someone, and the value established. By saying that we can now break them into smaller pieces doesn't change the fact that a bicycle is trading for 0.1 bitcoin.

But let's pretend that it did. We add the ability to subdivide our bitcoins to another decimal, and you declare to the others that this redudes the value of all BTC, and that you now want 0.4 BTC for your bicycle. But guess what? Nobody can afford your bicycle at 0.4, and other people are still selling them for 0.1, so it doesn't make sense to buy yours anyways.

 

[Tirapon]

You can't increase the total amount of something by dividing it into lots of pieces. You still have the same overall amount, but there are more pieces of it, and each piece is smaller

Yes you can if this something is a mathematical abstraction not pegged nor backed by anything and whose 1/10th of a unit is as good for conveying information as the whole unit.

Right now we have 21 million coins being marketed, but this notion is wrong. We have 21 quadrillion "coins" capable of representing information, and creating more decimals has the same effect as augmenting the number of coins. It will, at some point, crash the market.

BTW I'm not trolling.

So you're telling me that if I want to sell something for 1 BTC, you're gonna come along and say, 'Yeah, I have 1 BTC but I'm gonna divide it into 10 pieces first and give you one of those, because 1/10th is just as good at conveying the information as 1 whole BTC'. And then I'm gonna be like, 'Yeah sure, just give me 0.1 BTC because that conveys the information just as well...'

No, I'm gonna say, 'Sure you can divide it into 10 pieces, but you'll still have to pay me 10 of those smaller pieces because I'm not a fucking retard'

Fuck me I hope you are trolling.

[Odrec]

I find this topic interesting. I think both sides are right and wrong in a way. I mean yes dividing the coin will have some similar effects to some o the problems we have now. For example rich people getting richer, a bigger wealth gap and the social problems that entails but also I don't think dividing the coin will lower its value on the contrary it will increase it precisely because the divsion is necessary. I don't know I think there's still much place to analysis but I would hope people could argue this more respectfully since that is a better way to find new solutions... and new problems to solve!

[piramida]

Right now the prevailing mindset is that Bitcoin is limited to 21 million units.

No, it's not. The prevailing mindset is that Bitcoin is limited to 21 million bitcoins. Which may be composed of any arbitrary number of units. Mostly everybody who already possesses the knowledge of fractions get it. I understand that it may be hard for pre-school kids, but tough luck, maybe bitcoin would become easier for them too, once all calculations would be carried out in satoshis.

[Kluge]

OP has not yet died of embarrassment, is troll.

"I have 1 pie."

"But you can divide that into small-enough slivers where it's 1.00 pie! Now there are 100 pie units and your pie is worthless."

"Well, shit. I never thought of it like that. Guess you're right."

[rampantparanoia]

You can already send "subunits" of a bitcoin today. If I wanted to send you 0.0002 of 1 BTC, you would have 2 mBTC. Point of this thread?

[freebird]

I think the mBTC will become the standard unit sometime next year, after 1 BTC = $1000+

Switching to mBTC will help people use the currency more easily and intuitively (since 1 mBTC will be worth something much closer to a dollar).

It will also help to drive up the price more, since a lot of people have a psychological barrier to buying something that's priced so high. That's why stocks split. It's all about psychology and making things comfortable for the "average Joe" to invest.

[proudhon]

This reminds me of those Verizon reps that were unable to grasp the difference between .002 dollars and .002 cents.  All the way up to the managers at the call center.  They all had such a poor education of basic math, that they simply were unable to grasp the difference.

[briguy37]

Look at it this way for a moment. Forget about labels within the ledger: Bitcoins, satoshis and whatever other sub divisions labels may exist in the future, just look at it in terms of units.

Right now the prevailing mindset is that Bitcoin is limited to 21 million units. As we move along people will have to adapt to the reality of 2.1 quadrillion, and then maybe amounts even larger than that.

Talking about the divisibility of the dollar is specious as it is a fiat currency now, it does not now derive it value from any sense of scarcity or a promise of supply constraint.

When I found out that the bitcoin economy could be divisible into 2.1 quadrillion units, it clicked for me that everyone in the world could use it.  Before that point, I was confused because it appeared that only .3% of the population could ever own even a single one, and what good is that for a currency?  

That realization skyrocketed the value of the bitcoin ecosystem as a whole in my mind, and with it the value of a bitcoin.  Did that realization devalue it in yours?  If not, why would further subdivisions devalue it for you?

[revans]

Look at it this way for a moment. Forget about labels within the ledger: Bitcoins, satoshis and whatever other sub divisions labels may exist in the future, just look at it in terms of units.

Right now the prevailing mindset is that Bitcoin is limited to 21 million units. As we move along people will have to adapt to the reality of 2.1 quadrillion, and then maybe amounts even larger than that.

Talking about the divisibility of the dollar is specious as it is a fiat currency now, it does not now derive it value from any sense of scarcity or a promise of supply constraint.

When I found out that the bitcoin economy could be divisible into 2.1 quadrillion units, it clicked for me that everyone in the world could use it.  Before that point, I was confused because it appeared that only .3% of the population could ever own even a single one, and what good is that for a currency?  

That realization skyrocketed the value of the bitcoin ecosystem as a whole in my mind, and with it the value of a bitcoin.  Did that realization devalue it in yours?  If not, why would further subdivisions devalue it for you?

The community is broken. It's riven with wild eyed speculators who are so desperate to get rich they lose to power of logical argument; this thread is a case in point.

[briguy37]

Look at it this way for a moment. Forget about labels within the ledger: Bitcoins, satoshis and whatever other sub divisions labels may exist in the future, just look at it in terms of units.

Right now the prevailing mindset is that Bitcoin is limited to 21 million units. As we move along people will have to adapt to the reality of 2.1 quadrillion, and then maybe amounts even larger than that.

Talking about the divisibility of the dollar is specious as it is a fiat currency now, it does not now derive it value from any sense of scarcity or a promise of supply constraint.

When I found out that the bitcoin economy could be divisible into 2.1 quadrillion units, it clicked for me that everyone in the world could use it.  Before that point, I was confused because it appeared that only .3% of the population could ever own even a single one, and what good is that for a currency?  

That realization skyrocketed the value of the bitcoin ecosystem as a whole in my mind, and with it the value of a bitcoin.  Did that realization devalue it in yours?  If not, why would further subdivisions devalue it for you?

The community is broken. It's riven with wild eyed speculators who are sop desperate to get rick they lose to power of logical argument; this thread is a case in point.

Logically speaking, how does being able to subdivide a currency into smaller portions devalue the total net worth of that currency? 

[BittBurger]

Right now the prevailing mindset is that Bitcoin is limited to 21 million units. As we move along people will have to adapt to the reality of 2.1 quadrillion, and then maybe amounts even larger than that.

Okay so like I said:

Your entire argument is the psychology of investors "learning its more than 21 million".

Lets look at your logic for a second:

You think people will run for the hills in fear, and the market will crash, because people who have poured millions of dollars into Bitcoin, know nothing about it.

-----------------

I will repeat:  Even if 21 million is erroneous, Bitcoin is still "scarce" and its production will always have a "limit".  As opposed to the US Dollar.

I will repeat:  It takes all of 14 seconds to educate those who might be surprised by this news, that even the divided subunits are limited, and therefore scarce.

More importantly, I highly doubt the majority of Bitcoin investers aren't already aware of its divisability.   Whereas you believe the majority of Bitcoin investors (enough to make it crash!) don't even understand basic properties of Bitcoin. Only a fool would pour tens of thousands of dollars into something and not know the basics behind it.  Therefore your premise is likely incorrect and your conclusion as well.

-----------------

Bitcoins value is in its application, and what it can do for merchants and consumers alike.    
I don't believe bitcoins value is influenced by a bunch of idiots who don't know how it works. 
Therefore a sudden revelation to a bunch of idiots is a scenario that I don't think will ever happen.

-Burger-

[RodeoX]

Maybe think of it this way. Dollars (mostly) accommodate more value by increasing the number of dollars in circulation. Bitcoins accommodate more value by increasing the value stored in each unit.   

[BitcoinAshley]

So much math fail on the part of OP & Friends. So many examples were given, you guys have tried your best, and he Just Doesn't Get It. I call troll.

Rather than feeding the troll, sometimes the best thing to do is put it on your ignore list.

Then it may respond with something along the lines of "Lol, see that person is blinded with investor greed and ignores basic mathematics and my irrefutable logical argument, because they are part of the bitcoin cult, so they just ignore everyone who dares question their cult logic."

But it is no worry, since a convenient script built into this website will hide the post and all others made using that particular username.

What a joyous concept!

 

Valiant efforts:

Bitcoin is already divisible to an infinite number of sub units. For now, only 8 decimal places are displayed because we simply don't need any more than that. In the future, we may add more decimal places for convenience.

You can't increase the total amount of something by dividing it into lots of pieces. You still have the same overall amount, but there are more pieces of it, and each piece is smaller

It is not possible that anyone can be too stupid to understand this, and yet capable of turning on a computer and typing words. These people are trolls. Congratulations, you have successfully trolled for four pages now.

Can we all just ignore these guys now please.

Okay, for simplicity's sake, lets assume that there are only 10 bitcoins, and they are each divisible into 10 sub units, for a total of 100 possible units.

When it was just me and you, I bought your bicycle for 2 Bitcoins, and you bought my stereo for 1.5 bitcoins. People took notice of our seamless trade system, and wanted some bitcoin for themselves, so we sold them each a few of our bitcoins at bicycle/stereo rates. Pretty soon, we have 50 people using bitcoin to trade. This means that on average, each person has only 0.2 bitcoins, and thus the value of all bitcoins needs to go up to accomodate trade, as nobody can afford to buy that bicycle at 2 BTC.

Bicycles are being traded for 0.1 BTC now, and it's impossible to make BTC trades for items worth less than that. How do I buy a candy bar for BTC, when the smallest sub-unit is worth a bicycle? Do I need to buy 100 candy bars at a time? That's not very convenient.

So we subdivide the currency to another decimal point. Now a bicycle is still 0.1 bitcoin, and a candy bar is 0.001 bitcoins. Everyone is much happier with this.

It's important to note that the relative value of our bitcoins didn't change by adding another level of subdivision. All the coins in existence were owned by someone, and the value established. By saying that we can now break them into smaller pieces doesn't change the fact that a bicycle is trading for 0.1 bitcoin.

But let's pretend that it did. We add the ability to subdivide our bitcoins to another decimal, and you declare to the others that this redudes the value of all BTC, and that you now want 0.4 BTC for your bicycle. But guess what? Nobody can afford your bicycle at 0.4, and other people are still selling them for 0.1, so it doesn't make sense to buy yours anyways.

So you're telling me that if I want to sell something for 1 BTC, you're gonna come along and say, 'Yeah, I have 1 BTC but I'm gonna divide it into 10 pieces first and give you one of those, because 1/10th is just as good at conveying the information as 1 whole BTC'. And then I'm gonna be like, 'Yeah sure, just give me 0.1 BTC because that conveys the information just as well...'

No, I'm gonna say, 'Sure you can divide it into 10 pieces, but you'll still have to pay me 10 of those smaller pieces because I'm not a fucking retard'

Fuck me I hope you are trolling.

[challen]

And what if...

My argument as now revealed is solid...

Using a "what if" statement to define a "solid argument" is completely non-sequitor. In reality, it's ok to be upset cos you blew your load early, but you don't have to turn into a troll over it. We'll even let you buy back in whenever you want. 

[antimattercrusader]

1. The fact that only 21 million coins can be mined (assuming that does not get altered) is irrelevant when they can be sliced up into 100,000,000 sub units.

2. That there have already been discussions about increasing the divisibility.


When exchanges start working in sub units it may dawn on people that the scarcity argument used to promote Bitcoin is disingenuous rubbish.

I don't see how any of this is of any consequence.

[Chalkbot]

Let's say we're stranded on a desert island. I have a cheeseburger and you and 3 other guys are very hungry.


After negotiating for some time, it becomes clear that you all want the cheeseburger, and you're willing to trade every possession on your person for it. I, being the generous guy that I am, decide to cut it into 4 equal pieces and trade one to each of you, for 1/4 of your original offer.

The 3 other guys immediately agree to these terms and begin scarfing down their share of the burger. You, however, insist that I now have 4 burgers, so the burger as a whole is worth less, and refuse to pay the price (which you just a moment ago agreed to).

I sell the remaining piece of the burger to one of the other guys and you die of starvation.


The end.

[Kluge]

Let's say we're stranded on a desert island. I have a cheeseburger and you and 3 other guys are very hungry.


After negotiating for some time, it becomes clear that you all want the cheeseburger, and you're willing to trade every possession on your person for it. I, being the generous guy that I am, decide to cut it into 4 equal pieces and trade one to each of you, for 1/4 of your original offer.

The 3 other guys immediately agree to these terms and begin scarfing down their share of the burger. You, however, insist that I now have 4 burgers, so the burger as a whole is worth less, and refuse to pay the price (which you just a moment ago agreed to).

I sell the remaining piece of the burger to one of the other guys and you die of starvation.


The end.

Um... You'd starve, too. 

[DeathAndTaxes]

Let's say we're stranded on a desert island. I have a cheeseburger and you and 3 other guys are very hungry.


After negotiating for some time, it becomes clear that you all want the cheeseburger, and you're willing to trade every possession on your person for it. I, being the generous guy that I am, decide to cut it into 4 equal pieces and trade one to each of you, for 1/4 of your original offer.

The 3 other guys immediately agree to these terms and begin scarfing down their share of the burger. You, however, insist that I now have 4 burgers, so the burger as a whole is worth less, and refuse to pay the price (which you just a moment ago agreed to).

I sell the remaining piece of the burger to one of the other guys and you die of starvation.


The end.

Um... You'd starve, too.  

He didn't tell the others the island wasn't uninhabited and on the other side there was a burger stand.  Actually it wasn't a very good metaphor and OP will likely use that as "proof" he is right.  That is what trolls do.

[Chalkbot]

Um... You'd starve, too. 

The desert island is a metaphor for being ignorant. I can leave any time I want.