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Author Topic: Eight decimal places isn't enough...  (Read 8275 times)
bhagwad
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May 17, 2011, 04:16:07 PM
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I keep hearing people say that since bitcoins are divisible down to the eighth decimal place, we can afford losing bitcoins since the rest will grow in value. But the maths doesn't bear this out.

With 21M bitcoins in existence, that means we have a maximum of 2,100,000,000,000,000 or ~2 quadrillion unique transaction units. It's like cents - you can't possibly sell a chocolate for less than a cent.

Given that people continue to lose bitcoins on a regular basis due to hard disk crashes, fires, laziness (especially in the early days when bitcoins are not worth that much), each bitcoin lost represents a loss of 100 million unique transactions. To make matters worse, if a truly rich person (in bitcoins) dies and leaves no will or whatever, we could end up losing tens of thousands of bitcoins over time equating to billions of unique transactions.

This kind of loss can't be made up over decades since bitcoins are not infinitely divisible. I think we need more than just eight decimal places to keep the current structure intact.

Another option is to assume a certain percentage of coins will be lost over time and therefore continue to generate the bitcoins even after 21M at a rate which more or less cancels out the loss. This might end up building in a small inflationary pressure over time, but it will be a predictable pressure and automatic - not subject to the whims and fancies of political entities.
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myrkul
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May 17, 2011, 04:49:58 PM
 #2

The current software only allows division up to 8 decimal places. That's not a hard limit.

Even if it were, and this has been said many times elsewhere .00000001 BTC == $0.01 means that 1.0 BTC = $1 000 000.00

God, I hope that ever becomes a problem.

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niklas_a
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May 17, 2011, 08:39:57 PM
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That's 21 trillion dollars. Double the size of the US economy.
tomcollins
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May 17, 2011, 09:08:53 PM
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That's 21 trillion dollars. Double the size of the US economy.

And not all of the economy is in dollars.  Due to velocity of money, you don't need 21 trillion dollars floating around to do that.

We got plenty of digits for a LONG time.
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May 18, 2011, 04:18:14 PM
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It's like cents - you can't possibly sell a chocolate for less than a cent.

No, but you can sell more that one piece of chocolate for a cent, or a bigger piece.  Hershey's made a five-cent chocolate bar for almost fifty years, and the bar's weight fluctuated with the price of chocolate: http://www.foodtimeline.org/foodfaq5.html#candybar
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May 18, 2011, 08:01:39 PM
 #6

The current software only allows division up to 8 decimal places. That's not a hard limit.

Even if it weren't, it would be possible for systems to be set up which would distribute shares of the smallest divisible value. It would be a problem, but not a hard one to solve - especially considering how widely it would already have to be used and accepted before we ever got to that point.

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May 19, 2011, 03:30:39 AM
 #7

First, we can change from 64 bit to 128 bit at any time.  My guess is that we will do it for technical reasons LONG before economic reasons show up.

Second, there is rampant confusion between "bitcoin" the name of account for a single unit of this currency and "bitcoin" the thing that lives in your wallet (and can be lost with your wallet) that gives a claim on some arbitrary amount of bitcoin (in the first sense) units.  A lost wallet can lose a bitcoin (in the second sense) with an arbitrary value denoted in bitcoins (in the first sense).

Third, essentially no one cares beyond 0.01 btc (first sense).  Maybe we should reconsider this in AD 2215 when the minimum (current) resolvable amount is something that people actually care about.

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May 19, 2011, 07:40:29 PM
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That's 21 trillion dollars. Double the size of the US economy.

And not all of the economy is in dollars.  Due to velocity of money, you don't need 21 trillion dollars floating around to do that.

We got plenty of digits for a LONG time.

M2 money supply in the USA is currently $9 trillion. I'm not going to worry about all the problems Bitcoin will have when it is more than double the US dollar money supply.


Eight decimal places is ridiculously overoptimistic. It is a not a problem. Period.

Do not waste your time debating whether Bitcoin can work. It does work.

"Early adopters will profit" is not a sufficient condition to classify something as a pyramid or Ponzi scheme. If it was, Apple and Microsoft stock are Ponzi schemes.

There is no such thing as "market manipulation." There is only buying and selling.
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May 19, 2011, 07:51:02 PM
 #9

When one of the smallest current bitcoin units is worth many dollars that will be great as it will create more use for less valuable sister-currencies that can serve as "small change".

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cloud9
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May 19, 2011, 08:21:14 PM
 #10

If eight decimal places is not enough - everybody with 1BTC will be a millionaire someday when non-BTC currency inflation escalated the price of BTC to that level.  If the eight places are for two places of cents and the remaining six for millions...

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April 05, 2014, 08:23:06 AM
 #11

If the eight places are for two places of cents and the remaining six for millions...
Sorry for resurrecting the dead,  I just thought that this comment was incredibly insightful and apt - considering the range of current estimates for world M1 (in USD).  Scarcity is relative.

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April 05, 2014, 08:21:19 PM
 #12

If the eight places are for two places of cents and the remaining six for millions...
Sorry for resurrecting the dead,  I just thought that this comment was incredibly insightful and apt - considering the range of current estimates for world M1 (in USD).  Scarcity is relative.

Yes. We will run out of decimal places much sooner than previously thought.  You don't want to be late to this party, or you will end up with a permanent legacy workaround like ipv4 vs ipv6.

Scarcity may be the most powerful social force of all.  Lets not let bitcoin run short on scarcity.  We don't want to face a peak scarcity situation.

Give a man a fish and he eats for a day.  Give a man a Poisson distribution and he eats at random times independent of one another, at a constant known rate.
Dotto
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April 07, 2014, 12:45:55 AM
 #13

Quote
To make matters worse, if a truly rich person (in bitcoins) dies and leaves no will or whatever, we could end up losing tens of thousands of bitcoins over time equating to billions of unique transactions.

That means all the community possesing BTC´s would get the wealth of this man automatically distributed.

Would be the good time to kill whales for profit´s sake. Can´t think in a higher level of poetic democratia.
maurya78
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April 07, 2014, 02:53:47 AM
 #14

We are not gonna need more Than eight for a long time yet

johnytelevision
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April 07, 2014, 12:17:59 PM
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Btc with all its flows still is great base for future altcoins. I'm even sure we can't just upgrade bitcoin at this stage.

bgmc
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April 14, 2014, 08:32:01 PM
 #16

As long as one satoshi is less than a penny, then I think 8 decimal places is fine.

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jparsley
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April 15, 2014, 03:39:32 PM
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We can use tonal bitcoin wallets when needed.

please unban me.
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April 15, 2014, 09:36:46 PM
 #18

Same old misunderstandings again and again.  Kind of get old when people insist any flaw they think they see is the end of BTC.
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April 15, 2014, 11:02:15 PM
 #19

This is not going to be an issue for a very very long time, and can be adjusted if need be in the future.

waldox
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April 16, 2014, 07:24:13 AM
 #20

adding another 8 decimals would probally be trivial

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