Hacker News Reader

Comment by cshimmin | Hacker News Reader

I am surprised to learn there are only 2,100 trillion Satoshi (smallest unit of bitcoin, equal to 1e-8 coin). For comparison, the Gross World Product [0] is roughly $85 trillion, or 8,500 trillion pennies, and growing (almost) every year.

I'm no economist, but wouldn't it be a long-term problem for bitcoin to not have enough units to represent the world's wealth? Or does the inherent deflationary nature of BC remedy this somehow?

[0] http://en.wikipedia.org/wiki/Gross_world_product

View on HN

The only thing that remedies this is the fact that the Satoshi maybe be divisible in the far future. (Code + protocol change)

I believe this is a major limiting factor for long term dominance, this is my list of things that need attention in the next few years:

- Make the units super divisible, Transaction fees will help to stop people sending silly stupid small amounts of coin.

- Allow unspendable dust to evaporate and return to the miners.

- Keep working on CoinJoin and ZeroCoin.

- Transaction costs are too high. These fees need to be much lower.

- Amount of transactions, we need Bitcoin to be able to handle 10,000 tx per second without this causes centralization problems.

- Allow unspendable dust to evaporate and return to the miners.

But surely by the time we get to the point where adoption means each satoshi is worth say $1 or 1 cent then this dust will no longer be dust so why shoud it be unspendable?

Of course the bigger issue will be the 1000's of coins that were mined and have subsequently been lost, e.g. 7500 coins in a landfill site in Wales (perhaps that will become the equivalent of a gold mine with only one tiny bit of resource at the bottom).

> so why shoud it be unspendable?

You can send money to accounts which are provably unspendable. It's a public key that provably has no private key. Some people send satoshis to these addresses to store data in the block chain

GWP is probably the wrong measure. Instead, take a look at the money supply (m0) [2]. It's the sum of currency in circulation plus money available in demand deposits. For Bitcoin, that's essentially the market cap =~ $15 billion. Total m0 for USD is about $3.1 trillion. [1]

[1] http://www.tradingeconomics.com/united-states/money-supply-m... [2] http://en.wikipedia.org/wiki/Money_supply

Interesting point. But as bitcoin adoption (hypothetically) increases, its market cap should approach some significant fraction of m0. And m0 is presumably increasing with time, while the total supply of BC does not.

As others pointed out, this can supposedly be relieved by updating the protocol to allow greater divisibility.

Didn't Bill Gates say that 21 million bitcoins ought to be enough for everybody?

M0 would work as a comparison only if nobody saved in BTC. If people did save in BTC, you'd need a much broader definition of money supply as comparison, and cshimmin's comparison makes sense.

And since that's a common objection: a reserve banking system on top of BTC would at best last two generations due to a lack of a central bank.

If we use M2, which is like $11t, then Bitcoin seems to be in the same situation as the dollar.

$11t is 1100 trillion cents. Bitcoin currently has exactly the same amount of indivisible currency units: 1100 trillion (11,000,000 BTC which are divisible into 100,000,000 units).

  > I'm no economist, but wouldn't it be a long-term problem for bitcoin to not have enough units to represent the world's wealth? Or does the inherent deflationary nature of BC remedy this somehow?

my guess is bitcoin would just eventually be treated like gold or just used for larger transactions, and some other currency (litecoin?) would be used for smaller/day to day transactions

From the Bitcoin FAQ:

But if no more coins are generated, what happens when Bitcoins are lost? Won't that be a problem?

…The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions. [1]

Won't loss of wallets and the finite amount of Bitcoins create excessive deflation, destroying Bitcoin?

…Bitcoin, however, offers a simple and stylish solution: infinite divisibility. Bitcoins can be divided up and trade into as small of pieces as one wants, so no matter how valuable Bitcoins become, one can trade them in practical quantities.

In fact, infinite divisibility should allow Bitcoins to function in cases of extreme wallet loss. Even if, in the far future, so many people have lost their wallets that only a single Bitcoin, or a fraction of one, remains, Bitcoin should continue to function just fine. No one can claim to be sure what is going to happen, but deflation may prove to present a smaller threat than many expect. [2]

[1] https://en.bitcoin.it/wiki/FAQ#But_if_no_more_coins_are_gene...

[2] https://en.bitcoin.it/wiki/FAQ#Won.27t_loss_of_wallets_and_t...

As I've read it, the protocol offers support to be divisible even further.

Ah okay. It wasn't clear from OP's document.

It offers support in that a fork will occur so lots of people need to download a new client before the changeover (if this ever happens)

I know it will sound obnoxious - but the protocol supports almost anything, if enough miners and full nodes update to that.

Or bitcoin backed currencies, given bitcoin will someday be somewhat stable. But this is still far away, worrying about this is like a startup worrying about scaling their infrastructure to twitter-sized userbases when they don't have a product yet.

You're putting the cart before the horse. It's because the value of the dollar deflates that prices for things increase. The worth of a single unit is not constant. That's why there are more millionaires than ever before - not because we all have increased purchase power but because the value of the individual denotation is less than before. You don't need an infinitely scalable system of measurement; it's an illusion that such a thing is even possible.

It's just decimal numbers and not written in stone. I guess you could divide it further down to smaller units if needed, probably with some upgrades to the current protocol.

In the reference client it's represented as a whole number and infact the denomination Bitcoin is an abstraction on top. They may have changed this recently but I was under the impression the units are not represented as a decimal number.

That's correct, Bitcoins are represented by 64-bit integers, since it's usually a very, very bad idea to use floats in the financial realm.

I suspect that Bitcoin's lack of divisibility past the satoshi won't ever be an issue, since there will probably be other digital currencies in use for small, everyday purchases (perhaps one of the altcoins, but more likely one that hasn't yet been created).

It seems to me like this isn't likely to be a problem. If it were an order of magnitude different from the number of pennies, we might need to worry, but it seems likely that one cent is far more granularity than is really necessary.

I've read many comments saying the protocol can be modified to add n more decimal places without too much trouble in the future if required. Would be a nice problem to have anyway!

There is always the possibility of altcoins taking up the slack.

It depends a lot where the BTC value ends up being.

But this is just a question of granularity. When Zimbabwe hit hyperinflation they printed trillion-dollar notes because the 1-dollar note was too fine-grained to be feasible. Conversely, Britain used to circulate half-pennies, because there was a time when a penny was too large a unit to represent realistic transactions.

In other words, as the world's wealth grows, won't we need a currency with greater range than "on a scale from 0-2,100 trillion, how valuable is X"?

Reply on news.ycombinator.com