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-

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[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.

[flynn]

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

I understand that a protocol change would be needed to get a resolution smaller than the Satoshi.
But I may be wrong.

[zimmah]

stop making treads with the sole purpose of complaining that BTC is not at $10,000 yet. It will happen eventually, but it's not likely to happen overnight, or this month for that matter.

Come back next year or so.

Some people are just so impatient these days.

[William Wood]

The only thing I have ever agreed with "revans" about is the scarcity illusion with Bitcion.  Something that is "infinitely" divisible is not scarce.

What you are saying about scarcity is in contradiction with its very meaning. Scarcity is about quantity, not divisibility. If there was only one kilogram of rice on earth, the ability to divide it between everyone on the planet would not magically make it abundant : everyone would have some rice, but a quantity so infinitesimal that they better find something else if they don't want to starve to death.

[bitpop]

So m is micro what milli?

[bitpop]

Oh u is micro. That's gonna confuse anyone that never used utorrent

[BurtW]

m is standard for milli
µ is standard for micro, but if you cannot type a µ character then u is standard for micro
n is standard for nano

#1 reason for using nBTC is that it will make everyone will feel very rich because they can easily own millions of nBTC!

[GigaCoin]

mBTC main argument is for bitcoin utility as a currency.

mBTC 2nd argument was to help fuel mainstream investment, since $1 looks more appealing than $1000 (similar to 1 ounce gold bar vs 1 TTbar)

[Mjbmonetarymetals]

The only thing I have ever agreed with "revans" about is the scarcity illusion with Bitcion.  Something that is "infinitely" divisible is not scarce.

If you could divide a cake into an infinite number of pieces, do you have more cake?.

mbtc is a compromise to folk that need to feel like they have more of something than they have, what the need to start adding extra layers of confusion onto something that already has the average person confused. If you asked me how many btc I have with - 100 mbtc - 100 microbtc -100 nanobtc I wouldn't have a clue 

[Jcw188]

The thing I like about moving to mBTC is that you can own a whole bitcoin then instead of now a bitcoin is fairly expensive. It's like a stock split where the value is not increasing but makes it more palatable to own a decent number of shares.

[boogi]

so when does it get decided to make the change.

[drewster]

It will have nothing to do with anything, except in making some of the numbers easier for people to understand.

With publicly traded companies, companies often split the stock to bring the price down.  For example a stock at $90 per share might do a 4:1 split to drop the price to $22.50 per share.  Nobody makes money from a stock split (except whoever is actually handling the split gets fees for the work), but because on most exchanges, investors need to buy stocks in multiples of 100 shares.  So, bringing the minimum investment down to $2250 from $9000 makes the stock accessible to smaller investors.

If the value of bitcoin were to climb to $10,000/BTC, many people will find it annoying to have to be typing BTC0.0001 to buy a candy bar, and people will do the things people do with numbers with lots of zeros before or after the decimal point, and make errors in order of magnitude.  For this reason, mBTC or perhaps uBTC will make it more convenient.

Having "normal looking" numbers might help demand somewhat, however, as that will seem less hard to understand for some.

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".  It dawned on me today that switching to mBTC won't necessarily do a thing to increase price of Bitcoin.  In fact it may cause it to go down.

In my understanding, in order for Bitcoin price to go up, there needs to be (1) increased demand and (2) lack of availability, at any given time.  This is why the price shot up when China stepped in.  Purchases were still mostly in whole Bitcoins, everyone was scrambling to get one, and there were daily shortages.

Switching to mBTC will actually act as a psychological multiplier of increased availability.  Psychologically, people no longer "need to buy 1 whole bitcoin".  Therefore instead of 100 people buying 100 Bitcoins, you could very well have 100,000 people buying 1 Bitcoin.  And they could, theoretically all do so, at an unchanging price of $650 per BTC.  Scarcity goes right out the door.  When something is not scarce, there is no competition, and when there is no competition there is no shortage of supply.  When  there is no shortage of supply, there is no increase in price.  

In order for the price of Bitcoin to rise, there has to be a lack of supply.  The only thing I have ever agreed with "revans" about is the scarcity illusion with Bitcion.  Something that is "infinitely" divisible is not scarce.  Only if Bitcoins become (1) scarce (2) in comparison to the number of people who want to buy them at (3) any given period of time, will the price begin to nudge up.  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.  You would need billions of people scrambling to buy Bitcoin in waves, and not enough people selling, for the price to rise.  

Thoughts?

[dynodog]

corporations have been "splitting" their stock price since the beginnings of the stock market.  It's basic human psychology.  For whatever reason, people don't like to pay $700 for a stock (or for a bitcoin).  That is why master card, for example, recently had a 10 for 1 stock split, which immediately resulted in a big increase in the stock's value (stock split from $780 to $78).  Picture a new bitcoin user goes to a bitcoin atm.  What's more palatable - getting 135 mBTC for your $100 bill or 0.135 bitcoin? For a consumer, isn't it much easier to wrap your head around paying 7.5 mBTC for a coffee as opposed to 0.0075 bitcoin.  To me, bitcoin advocates should all be pushing for exchanges, ATMs, etc to quote bitcoin in terms of mBTC.  The scarcity argument you make doesn't make sense in this case although clearly one of the big draws to btc is that it is limited in nature.

[Siegfried]

The problem with mBTC is, four letters/syllables, awkward to say, ugly to write/type. All other major currencies use a three-letter abbreviation. Using mBTC would be more of a defect than having to use decimals.

[bitpop]

I vote nbtc beginning January 1, 2014

[cryptobanks]

m is standard for milli
µ is standard for micro, but if you cannot type a µ character then u is standard for micro
n is standard for nano

#1 reason for using nBTC is that it will make everyone will feel very rich because they can easily own millions of nBTC!

Windows Hold alt and pres 230... in case anyone ever wanted to know

[bitpop]

m is standard for milli
µ is standard for micro, but if you cannot type a µ character then u is standard for micro
n is standard for nano

#1 reason for using nBTC is that it will make everyone will feel very rich because they can easily own millions of nBTC!

Windows Hold alt and pres 230... in case anyone ever wanted to know

I cant do it

[BittBurger]

The scarcity argument you make doesn't make sense in this case although clearly one of the big draws to btc is that it is limited in nature.

Can you explain why it doesn't make sense?  Everyone likes to say "wrong" but nobody gives an explanation why its wrong.   I just end up writing the same thing 50 different ways, and not getting a single explanation why its wrong, in response.   The only thing that can push 1 whole bitcoin price up, is a lack of supply and an overabundance of demand.   Why will switching to mBTC, which alerts people to an "infinite" supply of sub-1BTC purchases, going to do a damn thing to push the price of 1 BTC up?  It may ... but it doesn't *have* to.  It can, in fact, provide 100,000 people with the ability to buy divisions of 1 BTC at a 1 BTC price of $650 without the value of 1BTC going up even one penny.  That was the argument I stated, and I fail to see why its false?

stop making treads with the sole purpose of complaining that BTC is not at $10,000 yet. It will happen eventually, but it's not likely to happen overnight, or this month for that matter. Come back next year or so. Some people are just so impatient these days.

Why don't you actually read what I write, so that you don't make inane comments like this.  Nothing in my post (or previous posts) was intended to "complain that we're not at 10,000 yet".  Open your eyes and take the time to actually read what's written.  Maybe this is why I am not getting any intelligent responses.

[bitpop]

The scarcity argument you make doesn't make sense in this case although clearly one of the big draws to btc is that it is limited in nature.

Can you explain why it doesn't make sense?

Everyone likes to say "wrong" but nobody gives an explanation why its wrong.

I just end up writing the same thing 50 different ways, and not getting a single explanation why its wrong, in response.

The only thing that can push 1 whole bitcoin price up, is a lack of supply and an overabundance of demand.

Why will switching to mBTC, which alerts people to an "infinite" supply of sub-1BTC purchases, going to do a damn thing to push the price of 1 BTC up?

It may ... but it doesn't *have* to.  It can, in fact, provide 100,000 people with the ability to buy divisions of 1 BTC at a 1 BTC price of $650 without the value of 1BTC going up even one penny.

That was the argument I stated, and I fail to see why its false?

Why would it push the price up? Simple. Each mbtc would be sold for $1 and that would push the final btc price much higher.

[BittBurger]

Why would it push the price up? Simple. Each mbtc would be sold for $1 and that would push the final btc price much higher.

The only way 1 mBTC would sell for $1 is if one whole BTC is *ALREADY* priced insanely high.  So no ... your argument doesn't work.  
We're discussing right now.  When one mBTC is worth $x.xxxxxxx1.  
We are not discussing 100 years from now when an mBTC is priced at $1.00
I want to know how it gets to that point.

Next?

[kuverty]

Why would it push the price up? Simple. Each mbtc would be sold for $1 and that would push the final btc price much higher.

The only way 1 mBTC would sell for $1 is if one whole BTC is *ALREADY* priced insanely high.  So no ... your argument doesn't work.  
We're discussing right now.  When one mBTC is worth $x.xxxxxxx1.  
We are not discussing 100 years from now when an mBTC is priced at $1.00
I want to know how it gets to that point.

Next?

What? 1 mBTC is about 0.7 $ at the moment and has already been worth more than 1 $.

[Foxpup]

m is standard for milli
µ is standard for micro, but if you cannot type a µ character then u is standard for micro
n is standard for nano

#1 reason for using nBTC is that it will make everyone will feel very rich because they can easily own millions of nBTC!

Windows Hold alt and pres 230... in case anyone ever wanted to know

I cant do it

Yes you can, you just need a better keyboard.

[e521]

Whether mBTC is a nasty move to increase the price or not, I think we should adopt it.
It's much easier for everybody to spend in units and not in 1/1000 or a unit, expect if you are a nerd.
I have no problem myself but I understand that others might do and this can easily help them.
So why not?

[kuverty]

m is standard for milli
µ is standard for micro, but if you cannot type a µ character then u is standard for micro
n is standard for nano

#1 reason for using nBTC is that it will make everyone will feel very rich because they can easily own millions of nBTC!

Windows Hold alt and pres 230... in case anyone ever wanted to know

I cant do it

Yes you can, you just need a better keyboard.

Alt+230? Huh? Does alt gr + M not work (almost) everywhere? I've been using that forever on all sorts of systems.

[bitpop]

Why would it push the price up? Simple. Each mbtc would be sold for $1 and that would push the final btc price much higher.

The only way 1 mBTC would sell for $1 is if one whole BTC is *ALREADY* priced insanely high.  So no ... your argument doesn't work. 
We're discussing right now.  When one mBTC is worth $x.xxxxxxx1. 
We are not discussing 100 years from now when an mBTC is priced at $1.00
I want to know how it gets to that point.

Next?

I can easily get $1 for mbtc on ebay

[Inedible]

Why would it push the price up? Simple. Each mbtc would be sold for $1 and that would push the final btc price much higher.

The only way 1 mBTC would sell for $1 is if one whole BTC is *ALREADY* priced insanely high.  So no ... your argument doesn't work.  
We're discussing right now.  When one mBTC is worth $x.xxxxxxx1.  
We are not discussing 100 years from now when an mBTC is priced at $1.00
I want to know how it gets to that point.

Next?

The change to mBTC won't in itself change the value of Bitcoin.

The belief is that the general public is badly informed (not a bad belief).

As others have mentioned, the general public may think that you can only buy a whole Bitcoin.

You and I know this to not be the case but the general public don't know this so they don't want to plop down $700 for a Bitcoin.

Now, if you denominate things in mBTC, the purchase price now __appears__ to be $0.70.

Nothing has changed, however, the same general public will now feel it's much more affordable and buy up, say, $7 worth. Heck, some might even go as far as $70.

This opens up the market to the less informed people, resulting in more Bitcoins being bought.

Sure, it's not a huge volume but it's going to be some amount (the long tail).

It's this additional fiat flowing in that will increase the Bitcoin exchange rate. By how much is anyone's guess. It all depends on how many people believe that you can only buy whole Bitcoins AND it's the high price that's preventing them from buying.

Hope that explains things for you.

[bitpop]

Why would it push the price up? Simple. Each mbtc would be sold for $1 and that would push the final btc price much higher.

The only way 1 mBTC would sell for $1 is if one whole BTC is *ALREADY* priced insanely high.  So no ... your argument doesn't work. 
We're discussing right now.  When one mBTC is worth $x.xxxxxxx1. 
We are not discussing 100 years from now when an mBTC is priced at $1.00
I want to know how it gets to that point.

Next?

The change to mBTC won't in itself change the value of Bitcoin.

The belief is that the general public is badly informed (not a bad belief).

As others have mentioned, the general public may think that you can only buy a whole Bitcoin.

You and I know this to not be the case but the general public don't know this so they don't want to plop down $700 for a Bitcoin.

Now, if you denominate things in mBTC, the purchase price now __appears__ to be $0.70.

Nothing has changed, however, the same general public will now feel it's much more affordable and buy up, say, $7 worth. Heck, some might even go as far as $70.

This opens up the market to the less informed people, resulting in more Bitcoins being bought.

Sure, it's not a huge volume but it's going to be some amount (the long tail).

It's this additional fiat flowing in that will increase the Bitcoin exchange rate. By how much is anyone's guess. It all depends on how many people believe that you can only buy whole Bitcoins AND it's the high price that's preventing them from buying.

Hope that explains things for you.

And at $1 it still won't feel expensive, gearing them up for $1,000 mbtc