Why switching to mBTC won't increase Bitcoin price.

[BittBurger]

Hello.

I have created numerous threads asking people exactly how Bitcoin is supposed to reach the $10,000 mark.  By what method.  Pages of responses all say "We need to switch to mBTC, which will encourage more people to purchase BTC, which will in turn push the price up".   Exactly how does "more people buying mBTC" push the price of 1 whole bitcoin up?  Switching to mBTC won't necessarily do a thing to increase price of Bitcoin.  In fact it may cause it to go down.

Switching to mBTC will actually act as a psychological (and literal) multiplier of increased availability.  People no longer "need to buy 1 whole bitcoin".  Instead of 100 people buying 100 whole Bitcoins, you could very well have 100,000 people buying subdivisions of 1 Bitcoin.  And they could, theoretically all do so, at an unchanging price of $650 per BTC.    If everyone can get a portion of a bitcoin at $650, there is nothing which will push the price of 1 bitcoin to $10,000.  So why would switching to mBTC result in 1 whole BTC going up in value?  I simply don't get it.

Its like offering a $10 pizza to a group of people.  None of them can afford a whole pizza for $10.  So instead, you offer them a slice each, at $1.00.
Guess what happens?  10 people now have a part of the pizza, and the price is still $10 for the whole thing.
Exactly how does offering slices of bitcoin make a whole bitcoin go up in value?

EDIT:  removed discussion about scarcity.  

Thanks all!

-BB-

[BittBurger]

I edited the first line to correct my poor phrasing.  Thanks.

[Technomage]

You seem to have a fundamental misunderstanding of Bitcoin and economic basics in general. Splitting bitcoins to smaller pieces does not affect the amount of bitcoins. The supply is exactly the same regardless of where we decide to put the decimal separator. The max amount of bitcoins will always be 21 million even if we switch to mBTC.

To put this another way, if you have 100 000 people buying bitcoins with $100, the scarcity equation is the same regardless. The amount they get will simply be shown in millibitcoins by default, instead of bitcoins. People buy bitcoins primarily with a certain amount of USD/EUR/ETC and get whatever they get.

mBTC can decrease the perception of bitcoins being "too expensive", thus it can help as far as the valuation is concerned. It is also a more sensible unit since 1 mBTC is much closer to the value of USD/EUR, or basically any other fiat currency, than 1 BTC is.

What you're implying is that since it would now be very cheap to buy 1 mBTC, people would buy only 1 mBTC. That is false. People want as much bitcoins as they can get, with whatever amount they are investing with. The problem with full unit bias is that people who don't afford to get a full bitcoin at all, might skip Bitcoin entirely and spend the money on something else. The problem is not that they will only buy 1 even if they could easily buy more. 10 is better than 1, 100 is better than 10 and 1000 is better than 100. If a buyer can afford it, he or she will buy 1000 mBTC (or more).

[BittBurger]

Splitting bitcoins to smaller pieces does not affect the amount of bitcoins.

I never said splitting bitcoins affects the amount of bitcoins.
I said splitting bitcoins affects the number of sub-1 BTC purchases that can be made.  Therefore effectively reducing "scarcity" for buyers.
Totally different statement.

The supply is exactly the same regardless of where we decide to put the decimal separator.

I never said the supply of Bitcoins changed.

The max amount of bitcoins will always be 21 million even if we switch to mBTC.

I never said otherwise.  

What you're implying is that since it would now be very cheap to buy 1 mBTC, people would buy only 1 mBTC.

No... I didn't imply that.  Nor say it.

mBTC can decrease the perception of bitcoins being "too expensive", thus it can help as far as the valuation is concerned.

How can a change in perception physically cause the price to rise?  
That is a false statement.
My post provided several examples.  So I guess I will repeat:

Price *only* rises if there is a lack of availability.  
Switching to mBTC increases availability of getting a piece of the bitcoin world.
1 BTC is still $650, but now 10 million people can own that 1 Bitcoin.  Therefore, price doesn't change.  Understand?

Why did the price rise with China?  Because most people were buying whole bitcoins, in large quantities, and there was a lack of availability.
If everyone in China was buying mBTC, there would have been plenty of whole BTC to supply that demand, and price would barely have changed.
There's absolutely nothing about converting to "mBTC" that would make the price rise, unless even mBTC were hard to come by.
Far in the future I can see mBTC being scarce.  Maybe?   Hard to say when its "infinitely divisible".  You'd need a lot of hoarders and a lack of availability.
For the time being, the very opposite would be true.  Right now there's plenty of whole Bitcoins to supply trillions of mBTC purchases.  
Therefore:  No rise in value. And if everyone starts buying in mBTC, scarcity (in the sense of being able to get some piece of Bitcoin) decreases.

[Technomage]

Okay, I give up.

[kcirazy]

Switching to mBTC wasn't one to increase the Bitcoin price.... it was done because the price per bitcoin rose.
People didn't want to see the price of BTC0.00xxxx for a coffee, they wanted to have whole numbers like mBTCx.xx

[JohnBlack]

I second the fact that the switch to mBTC in websites like Bitcoinity  has been pointless if it was meant to drive the price up, for the same reasons that have been expressed before.

If you look at the exchanges though (MtGox, Bitstamp,..) they NEVER switched to it, that's why I am sure this change DID NOT influence the price so much, if at all.

I hope exchanges never switch to mBTC in the future anyway, let's face it, BTC has more of a future as a store of value than as a currency, probably something else can take that place in the future, honestly I don't see people spending "mills" around town, just my feeling anyway.

[Foxpup]

I said splitting bitcoins affects the number of sub-1 BTC purchases that can be made.  Therefore effectively reducing "scarcity" for buyers.

I didn't realise there was a magical limit on the number of sub-1 BTC purchases that can be made before switching to mBTC. Do explain how this works.

[Arksun]

No I don't buy this argument at all, it doesn't matter whether its BTC, mBTC, uBTC or whatever, if someone wants to dip their toe into bitcoins they'll be thinking in one thing first and foremost, and thats how much to spendin their existing FIAT. So they'll say ok, lets try out this Bitcoin thing I've heard about, i'm gonna spend 50 dollars into it.  That'll be their decision process, how many dollars, pounds etc do I want to use to buy Bitcoins with.

[titulng]

Simply, easy to learn, hard to master..

[BurtW]

If mBTC is better than BTC then uBTC must be even better, right? And if uBTC is better than mBTC then nBTC would be even better, right?

Therefore, please join my campaign to force everyone, under penalty of death (or something like that) to use nBTC on all web sites, all posting and all emails concerning Bitcoin.

Obvious reasons:

1) The smallest purchase or transaction would be 10 nBTC.  No more single digit accounts, purchases or transactions ever.  Everyone feels rich!

2) You can buy one million nBTC for less than one dollar!  Everyone feels rich!

3) It would make me a nBTC trillionaire.  I like the sound of that!  I feel richer already!

[bryant.coleman]

The reason why we should shift to mBTC is not to increase the prices. The whole purpose is to make it look like more affordable to the newbies.

[bitpop]

I never valued my 1 Bitcoin like this. I never saw it like this. One day people will look at 1mbtc the same way.

People buy a gram of gold all the time, at a premium!

[beetcoin]

i don't know if it was to drive up the price, but i didn't think it would do so.. as others have said here, it was to make the appearance of 1 unit of bitcoin to seem closer to what $1 is. paying 5 mBTC for your meal is much easier to understand than .05 mBTC. whole units are easier to understand than fractional ones.

[BurtW]

i don't know if it was to drive up the price, but i didn't think it would do so.. as others have said here, it was to make the appearance of 1 unit of bitcoin to seem closer to what $1 is. paying 5 mBTC for your meal is much easier to understand than .05 mBTC. whole units are easier to understand than fractional ones.

OOPS

5 mBTC = 0.005 BTC

[beetcoin]

i don't know if it was to drive up the price, but i didn't think it would do so.. as others have said here, it was to make the appearance of 1 unit of bitcoin to seem closer to what $1 is. paying 5 mBTC for your meal is much easier to understand than .05 mBTC. whole units are easier to understand than fractional ones.

OOPS

5 mBTC = 0.005 BTC

well i guess that just proves my point  

didn't think that over, forgot that an mBTC is one thousandth of a bitcoin.

[BurtW]

Here is a handy table for those that need it.

Code:

        BTC     milli BTC      micro BTC      Satoshis        nano BTC
----------   -----------   ------------   -----------   -------------
1.00000000   1,000.00000   1,000,000.00   100,000,000   1,000,000,000
0.10000000     100.00000     100,000.00    10,000,000     100,000,000
0.01000000      10.00000      10,000.00     1,000,000      10,000,000
0.00100000       1.00000       1,000.00       100,000       1,000,000
0.00010000       0.10000         100.00        10,000         100,000
0.00001000       0.01000          10.00         1,000          10,000
0.00000100       0.00100           1.00           100           1,000
0.00000010       0.00010           0.10            10             100
0.00000001       0.00001           0.01             1              10

[bryant.coleman]

Here is a handy table for those that need it.

I don't understand the logic of using Nano Bitcoin. Bitcoin will never reach a value which is high enough to justify using the term "Nano Bitcoin". Even Satoshi is excessive.

[Technomage]

I don't understand the logic of using Nano Bitcoin. Bitcoin will never reach a value which is high enough to justify using the term "Nano Bitcoin". Even Satoshi is excessive.

µBTC is the best unit in my opinion. It is identical to the way regular currencies are split up, as the satoshi unit is 1 cent / penny when using microbitcoins. However it seems that the concensus move is mBTC first, and µBTC later if necessary. I'm okay with that.

[bryant.coleman]

However it seems that the concensus move is mBTC first, and µBTC later if necessary. I'm okay with that.

I agree. For the time being, lets proceed with mBTC. We can use uBTC later, if it is necessary. Satoshi and nBTC are completely useless as far as I am concerned.