By Angeline Mukami Mbogo; An urban planner and writer on cryprocurrencies.
“NOTE: The views expressed here are those of the author and do not necessarily represent or reflect the views of The Kenyan Wallstreet”
The bitcoin price is currently trading close to $20,000, a figure that is intimidating to anyone who wants to purchase a full bitcoin. What most people do not know is that fractions of bitcoin are purchasable. As a matter of fact, the smallest bitcoin unit has 8 decimals, which means that you do not necessarily have to own 1 BTC. Unfortunately, it is not uncommon to see people preferring altcoins over bitcoin because of its high price. “If only I had bought bitcoin earlier when it was below $1, 000,” you will hear them say. It is for these reasons that the use of smaller units has been debated over and over again. A potential bitcoin buyer is likely to feel more motivated if exchanges displayed the price in smaller units.
The Proposed Bitcoin Units
A recent discussion on the Reddit bitcoin forum r/Bitcoin saw users propose the adoption of miliBitcoin (mBTC) instead of BTC. mBTC is a thousandth of a BTC which means that the current price of bitcoin on global charts would read as $16.541. Other proposed units include microBitcoin (a millionth of a BTC) and bits. If you don’t already know this, 1 BTC is equal to 1,000,000 bits and 1 bit is equal to 100 satoshis.
The Bitcoin Price Is Headed To The Million Dollar Mark
The major reason why the bitcoin price should be displayed in smaller units is its increasing price. In this article by Quartz, Mike Novogratz, the head of Galaxy Investment Partners predicts that the bitcoin price will have reached $40,000 by the end of 2018. However, the bitcoin price might surpass this figure. Therefore, it is more reasonable to currently use mBTC than BTC. But as the bitcoin price continues to grow, mBTC will cease to be the suitable unit and µBTC will become the standard bitcoin unit. However, by the time 21M bitcoins are in circulation, the satoshi (the smallest bitcoin unit) will be the most practical unit for exchanges to display.
On the other hand, as the bitcoin price nears the $1M mark, the extent of bitcoin’s growth will be much more impressive when tracked with its smaller units than with BTC.
The Layman Will Understand BTC Better
By using mBTC or µBTC, people are more likely to understand bitcoin better than they do at the present. For instance, one might ask, ”Can I buy bread when 1BTC is over $16,000?” Yes, you can and here is why: the creator(s) of bitcoin had a vision of a currency whose value would increase with time since there can only ever be 21M bitcoins in the world. Therefore, bitcoin was broken down into smaller units to ensure that as it rises to thousands of dollars, people can still purchase it and use it to buy the cheapest items online.
In view of this brief background, the decimal nature of bitcoin is clear and easy to understand. It indicates a coin different from fiat currencies that inflate with time. The only issue with bitcoin at present is its volatility. However, once it becomes stable, it will be life-changing.
The Bitcoin Units
According to an unknown source, the bitcoin units are as shown in the table below. Note that the second smallest bitcoin unit is called a “Finney.” It was named after Hal Finney, a computer scientist who made the first bitcoin transaction with Satoshi Nakamoto.
|Original Block Reward||50|
|Current Block Reward||12.5|
Will Exchanges, Bitcoin-Based Companies, And Wallets Adopt Smaller Bitcoin Units?
According to bitcoin.com, the adoption of smaller bitcoin units might take time. However, exchanges such as Bitfinex are already displaying the bitcoin price in mBTC. So other exchanges might take up this trend as the bitcoin price increases.