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Author Topic: Are there plans to shift the Bitcoin decimal point to the right?  (Read 2034 times)
matrixfighter
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January 11, 2014, 09:45:58 AM
 #1

Hi,

Bitcoin has passed the $1000 mark at least 3 times now. At the same time, while Bitcoin isbeing adopted by small shops on the high street, ordinary people on the street who are accustomed to talking about money in integers rather than decimals, find it very odd (not user-friendly) to count zeros for a cup of coffee. Let's face it 0.00176 BTC as a price-tag for a cup of coffee doesn't make sense to ordinary people as much 1.76 BTC.  Not to mention the amount of confusion those zeros create.

My question is:  are there any serious plans or work being done to shift the decimal point 3 digits to the left?

NB: please don't confuse this action with suddenly increasing in the supply of bitcoins, like the process that is known in economics as "printing" or even devaluation.  Whoever had 5 bitcoins will now have 5,000 bitcoins and the total nominal supply will go from 21 million to 21 billion.  It's just a process of shifting decimal points to make currency more useful in every day transactions.   
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coinrevo
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January 11, 2014, 09:55:38 AM
Last edit: January 11, 2014, 10:10:04 AM by coinrevo
 #2

Interesting. The quoting mechanisms could be improved, and the infrastructure for them as well. Currently you can quote 1mBTC = 0.001, and there is no problem with that (if the software and hardware supports it). So one cup of coffee costs roughly 2mBTC in the US. Note that bitcoin is the first true international currency, so in rural Africa one cup of coffee might cost 0.1mBTC.

I have a different solution to this problem I will publish, once a few details are worked out. The problem is the price of Bitcoin changes a lot, so it is not a reliable quoting mechanism, and will not be in the near future. Basically it comes down to that quotes are arbitrary. I could sell my goods for 1.34 ounces of gold. Then somebody would convert say dollars into gold and pay me with that. But I can quote in gold, even if I get payed in dollars (there is some mental computation involved). The beauty of it is we can invent our own things, and don't depend on banks, centralbanks and governments to do it.
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January 11, 2014, 10:09:38 AM
 #3

Interesting. The quoting mechanisms could be improved, and the infrastructure for them as well. Currently you can quote 1mBTC = 0.001, and there is no problem with that (if the software and hardware supports it). So one cup of coffee costs roughly 2mBTC in the US. Note that bitcoin is the first true international currency, so in rural Africa one cup of coffee might cost 0.1mBTC.

However quoting prices in BTC is currently not viable as you have to change them every other day. So people mostly quote in US-Dollars, because BTC is too volatile.

The solution to this would be a new unit and to "peg" bitcoin to that unit. The volatility problem would be solved this way. You create an index and publish it. Then people can use it to quote their prices and have a reliable indicator of price. Its essentially like quoting in USD, but without supporting the USD as a the worlds reserve currency.
I agree. Most of Bitcoinia is currently driven by microeconomic theory. Raw Bitcoin trading and purchases will soon be a thing of the past. New layered currencies will be pegged through APIs and statistically modeled indexes. I think this will evolve through the decentralized markets currently in development i.e. Open Transactions and Colored Coins.

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January 11, 2014, 10:14:16 AM
 #4

Yes, I deleted parts of my answer. But anyway, I want to publish a clean version with some example code. I don't have a good name yet.  Thinking about this it became clear to me that Bitcoin should not even be used as a quoting mechanism, and can be separated. But we want the same sort of ideas transported when quoting a price. Quoting in Bitcoin is an excitement in itself. It stands for support of the ideals behind the system.
matrixfighter
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January 11, 2014, 10:37:27 AM
 #5

I was actually asking if any significant number of Bitcoin developers thought about this problem and whether there is a serious plan to update the Blockchain, not just the tools like wallets to use "mBTC" and other confusing nonsense like that.

Here's an interesting article about the perception of these http://bitcoinmagazine.com/8274/the-psychology-of-decimals/
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January 11, 2014, 10:46:15 AM
 #6

The answer is no, nobody is considering it, because it does not make sense. You must realize that its first of all impossible to change "the decimal" of bitcoin, and secondly why would anyone do that? Just because some person is "confused", doesn't mean bitcoin has to be changed. I pointed out to you that even if you do that, that wouldn't solve the problem. As you might have noticed a) the price of BTC/USD fluctuates, b) prices in the world are at different levels. Also I don't see what the problem with mBTC is. A bitcoin is what it is, and nobody is going to change the fundamentals of the currency.
matrixfighter
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January 11, 2014, 11:04:45 AM
 #7

Thanks for your insight @coinrevo .  By the number of your posts, I'm assuming you're a relative newbie like me.

You are quite mistaken in assuming that the decimal point cannot be shifted in the blockchain and therefore, within the whole of Bitcoin ecosystem. It is actually possible.   In fact, almost anything about Bitcoin can be changed provided that the majority agrees.

If we take all of the fiat M2 in the world and convert it to USD, that would come to 21 trillion USD.  Incidentally, or maybe not, there can be only 21 million Bitcoins.  But to gain the adoption by the critical mass this problem in perception must be addressed by Bitcoin developers, rather than the rest of humanity.  to simply say "Just because some person is "confused", doesn't mean bitcoin has to be changed." -- is arrogant to say the least.  That "some person" is 7 billion people in this world.   
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January 11, 2014, 11:36:36 AM
Last edit: January 11, 2014, 11:58:40 AM by prezbo
 #8

You are quite mistaken in assuming that the decimal point cannot be shifted in the blockchain and therefore, within the whole of Bitcoin ecosystem. It is actually possible.   In fact, almost anything about Bitcoin can be changed provided that the majority agrees.

All the values in the blockchain are actually in satoshis, not in bitcoins, so there is no decimal point in the blockchain to be moved. This basically comes down to what should be named "bitcoin". Coinrevo is right. It makes no sense whatsoever. You also don't change the length of a meter because it is too short/long for you, you fix it with implementing prefixes. Metric system has worked for centuries, I don't see why we wouldn't follow the same (proven to work well) model.

Also fwiw from what I have read coinrevo has a much better understanding of bitcoin than most of people on this forum.
coinrevo
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January 11, 2014, 11:41:15 AM
Last edit: January 11, 2014, 11:54:59 AM by coinrevo
 #9

Quote
In fact, almost anything about Bitcoin can be changed provided that the majority agrees.

While some of these thoughts are worthwhile this is not correct, and a misleading view of the consensus which is achieved through the network. to quote satoshi:

Quote
The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime.

not everything can be changed. and the number of units (supply of money) is one of them. its certainly one of the core features this quote is referring to. so the 21 million is fixed for ever. otherwise the bitcoin nodes could push bitcoin to some other state. say a developer introduces a bug, and this allows 100 millions coins to be created. hopefully the network would adjust accordingly and move back to the old version. in the end its a bunch of computers running software, and the value of bitcoin relies on them running in a certain way.

Quote
That "some person" is 7 billion people in this world.    

As I said above the quoting problem is much more complicated. I agree better solutions are needed, but "changing decimals" is not one of them. one can detach the quoting mechanism from bitcoin and that would actually be a workable solution. you can always use USD, EUR, etc., and that works well enough. somebody quotes 10$, then the buyer has to convert into BTC using an exchange price. question is then which price they use etc. this problem is unsolved, because the bitcoin exchange rate fluctuates a lot.
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January 11, 2014, 12:16:11 PM
 #10

http://edition.cnn.com/2009/WORLD/africa/02/02/zimbabwe.dollars/
"Zimbabwe removes 12 zeros from currency"
Will Bitcoin have the same problem?

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matrixfighter
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January 11, 2014, 12:42:07 PM
 #11

@coinrevo I think we're talking about the same thing but without understanding each other.  As @prezbo correctly reminds us the information within the blockchain itself is stored in terms of Satoshis. So the question indeed becomes what should be regarded as a "Bitcoin" unit? At the moment it is 100,000,000 Satoshis.  I say that this framing is not very convenient to the ordinary members of the human species whose grammar (in many different languages) and psychology over the centuries has been developed in such a way that they prefer to talk in integers when it comes to money.  the most that those primitive species called *humans* who are not programmers, hackers, geeks and mathematicians have grown accustomed to think of the money is no more than 2 decimal places.  There's a problem of acceptance and adaptability  there. There are in fact many perception related problems there, which are outlined in the article that I linked to above.  When Bitcoin was $1 or $10 this problem was not so obvious, but as Bitcoin increases in value this problem is becoming worse and worse.  So something needs to be done to revalue what we call "Bitcoin", so that instead of 100,000,000 satoshis it becomes 100,000 satoshis.

Nobody is proposing to increase the number of bitcoins.  Satoshi Nakamoto proposed that there will be only 21mln BTC, i.e.  2,100,000,000,000,000 satoshis.  I'm not proposing that there should be more satoshis, but that there should be a different number of satoshis that should represent a bitcoin unit.  As I said in the original post, I'm not proposing to increase the money supply!

Anyway, as I understand it, the stance of the Bitcoin developers community is not to change any of this anytime soon.  Great! Most people still don't know, nor understand what Bitcoin is; and most of those who do, think its an overpriced bubble.  Now we'll have to wait for another 5 years to explain to 7 billion people what mBTC is or what uBTC is.

By the way many governements in history have removed the ZEROS following hyperinflation:Turkey, Russia and recently Iraq.  Oneday Bitcoin has come to terms with the fact that what has happened to it in recent month and what is likely to happen toBitcoinis a perceived hyper-deflation,which will lead to increasingly volatile price fluctuations.

PS: Suddenly I feel like I'm wasting my time here.  Maybe Bitcoin is just an experiment.  Maybe another crypto alt-coin that is more in tune with the real world and historically proven economic facts will take the place of world currency.  
  
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January 14, 2014, 01:01:43 PM
 #12

The satoshi is not a fundamental unit of bitcoin.  It is just the current scaling factor used by the protocol, an accident of history.

The fundamental unit of bitcoin is 1 bitcoin.

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January 14, 2014, 01:16:13 PM
 #13

thanks for pointing that out, see also
http://bitcoin.stackexchange.com/questions/4097/is-the-value-of-satoshi-fixed-or-dynamic

As I reasoned above, the quoting problem can be abstracted away. Which would mean one could have new virtual "currencies" which are essentially indexes (I call them virtual monetary units, to distinguish from currencies per se). For example one could easily invent Newcoin as 50% Bitcoin and 50% Litecoin, or 50% USD and 50% EUR. As long as the numbers are consistent the calculation used does not matter. This solves the quoting problem, and such a unit could be used for other purposes as well. Instead of paying a salary in BTC, and quote in USD, one can quote in say Newcoin and pay in BTC.
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January 14, 2014, 02:14:19 PM
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No, you don't need to do it at the protocol level. (An actually, at the protocol level, all values are represented as integers in Satoshi)

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January 14, 2014, 02:28:27 PM
 #15

I think a new unit should be created.  This would be purely for display purposes.

When people started their clients they would see their balance (in BV) increasing over time.

BitValue(BV) = BTC * difficulty / 1 billion

If you had 1 BTC, it is currently worth $800.

The BitValue of that bitcoin is

1 * 1,789,546,951 / 1,000,000,000 = 1.79BV

BitValues could be used for things like menu pricing.

Difficulty is roughly proportional to price (BTC vs $).  This assumes that the cost of hashes is constant.  

This isn't true over the long rule, due to tech improvements.  

Assuming $1000 worth of BTC and 1st Jan

2011: 1941 BTC * 16307 = 32 million
2012: 180 BTC * 1,250,000 = 225 million
2013: 48.6 BTC * 3,200,000 = 155 million
2014: 1.25 BTC * 1.2 billion = 1.5 billion

Bitcoin increased in value by around 1500, but the BitValue of an account increased by only a factor of 50.

BV is much more stable.

I think I need to incorporate the change to the minting fee into that calculation, but it wouldn't affect it much.

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coinrevo
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January 14, 2014, 02:37:28 PM
 #16

TierNolan, you need something that is based on demand and supply, such as fiat money, commodities, .. the best thing would be something like an inflation index basket based on global traded goods, but it is hard to construct and prone to manipulation, so using fiat money is the most viable (and has very low volatility). for instance, I can convert 1€ into 1.3$ or 1$ into 100Yen or 1$ into 0.01 grams of gold, but I can't convert 1 difficulty into gold. every component of an index so created has to have an exchange rate (a unit/contract/good that is valued at a price).
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January 14, 2014, 04:41:14 PM
 #17

TierNolan, you need something that is based on demand and supply, such as fiat money, commodities,

Multiplying by difficulty ties the reference value to the cost of hashing power.  It was reasonably stable while GPUs were dominant and then it shot up with ASICs.

Longer term, ASICs manufacturers will have sufficient capital to make (near) cutting edge chips.  That means that hey are limited by Moore's Law.  Halving the price per hash every 18 months isn't exactly stable as a reference, but it is much less of a change than BTC's price variation.

The advantage is that you can compute it purely from the block chain.

Quote
but I can't convert 1 difficulty into gold. every component of an index so created has to have an exchange rate (a unit/contract/good that is valued at a price).

It's a reference.  You can convert BTC (and $) into hashing power though.  The market exists, but works only in one direction.

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January 14, 2014, 05:20:42 PM
 #18

Hmm, I'm not sure. Say I agree with somebody to buy a product. He says it will cost 5 cows. Then I ask what standard of cows? He says look up the standard for cattle on the Chicago Mercantile exchange. One can literally shift pork belly and oil around, via these contracts. You can buy a tanker full of Western Texas Intermediate oil and drop off at some port and get fiat money for it.

Now imagine he says it cost 10 X, where X is some number on a website which is published daily. I can't buy X. See, cows as described above can be money, but X not. I can't convert a good I own into X. I can't move X around. Bitcoin is just a number, but it can be shipped around. Every number in a network that can be reliably produced in scarce amounts and be moved around is currency. It is money if there is an agreement about what can be shipped. I don't see the point in a factor of BTC if that factor is not money (in this sense).

My argument was instead of using BTC one can use say VU=33%*USD+33%EUR+33%YEN. Its money, i.e. can be converted in trade, as long as USD, EUR, YEN exist (they are is a market). People quote in USD, so they can quote in VU.
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January 14, 2014, 05:42:12 PM
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Hmm, I'm not sure. Say I agree with somebody to buy a product. He says it will cost 5 cows. Then I ask what standard of cows? He says look up the standard for cattle on the Chicago Mercantile exchange. One can literally shift pork belly and oil around, via these contracts. You can buy a tanker full of Western Texas Intermediate oil and drop off at some port and get fiat money for it.

In those cases, your trade is still based on a reference.

Quote
Now imagine he says it cost 10 X, where X is some number on a website which is published daily. I can't buy X.

X is not simply published.  The difficulty is an inherent part of how bitcoin works.

If Minting fee > (cost of hashes in BTC) * difficulty, then you can buy ASICs.  This pushes up the difficulty and brings the equation into balance.

You aren't buying difficulty, but the effect is the same.  Ignoring speculation and short term effects (which are big things to ignore), then in the long term (fees per block) should be equal to (cost of hashes in BTC) * difficulty.

It actually works very like gold.  If the value of gold is more than the cost to mine, then people will mine.  However, you can't "unmine" the gold very easily.  Making jewelery would be one way to take it out of supply. 

Similarly, the overall market can't un-buy ASICs.

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January 14, 2014, 10:12:14 PM
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So the question indeed becomes what should be regarded as a "Bitcoin" unit? At the moment it is 100,000,000 Satoshis.  I say that this framing is not very convenient to the ordinary members of the human species whose grammar (in many different languages) and psychology over the centuries has been developed in such a way that they prefer to talk in integers when it comes to money.  the most that those primitive species called *humans* who are not programmers, hackers, geeks and mathematicians have grown accustomed to think of the money is no more than 2 decimal places.  There's a problem of acceptance and adaptability  there. There are in fact many perception related problems there, which are outlined in the article that I linked to above.  When Bitcoin was $1 or $10 this problem was not so obvious, but as Bitcoin increases in value this problem is becoming worse and worse.  So something needs to be done to revalue what we call "Bitcoin", so that instead of 100,000,000 satoshis it becomes 100,000 satoshis.

You clearly haven't thought through how you would enforce your bitcoin re-valuation in a peer-to-peer decentralized system.

There is no authority that can declare that a bitcoin represents a particular number of Satoshi.  Each user is allowed to rename any number of base units in any way that they like.  There is no law or authority that can stop them.  They can even release modified wallets that use their new naming system.

If you want the naming system changed, create a wallet that changes it (or pay a programmer to do it for you).  Then release it to the public.  Those that agree with your system will use it.  Those that don't, wont.

However, you'll most likely find that you are fighting against a very strong network effect.  There is a significant majority of the users and people who are aware of bitcoin that expect 1 BITCOIN to represent a particular thing.  If you try to change that, you will cause enough confusion between those that want to leave it the way that it is, and those that want to change it, that eventually one party will give up and adopt the naming convention of the other.

Since there are already names that allow us to use integers to talk about smaller quantities, you may find it difficult to convince enough people to use your system.

Note, the base integer unit in the blockchain is the Satoshi (equivalent to 10 nBTC).  If we think of this like we might the US penny, then saying something costs "3 bitcoin" is just a nickname for a large quantity of Satoshi (in the same way that saying something costs "3 grand" might be a nickname for a large quantity of pennies).  Do we "redefine" how many pennies "a grand" is so that we don't have to say that a hamburger costs 0.005 grand?  No.  We simply use a different nickname.  Perhaps that burger costs "a fiver", or "a lincoln", or even "5 bucks".

Humans have been creating nicknames for various quantities of money to avoid excessive zeroes and decimals for as long as they've had money.  This won't change with bitcoin.  1 BTC will almost certainly always be the same amount of Satoshi as it is today, but eventually people will gravitate to nicknames for smaller quantities of Satoshi.

Perhaps a mBTC (milliBitcoin) will be called a MilliBit, or a Millie, or a Mill, or an emBee, or an emBit.  The nicknames will form organically as the need arises.  Feel free to use whatever nickname you like best.  Either others will like your choice and will adopt it as well, or they won't and eventually you'll switch to what ever seems to be in common use.
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