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I understand that, at time of writing, splitting a bitcoin into more than 10⁸ parts is not useful. However, say that in the far future enough bitcoins have been destroyed (through deleted wallets due to negligence or whatever else) that a billionth becomes too valuable for people to work with.

I know we're a long way off from this issue yet, but just say it were to happen.

Would the bitcoin spec easily allow you to further bifurcate these coin fragments into arbitrarily small values, thereby eliminating this sort of problem?

meshcollider
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Christian Chapman
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2 Answers2

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The Bitcoin protocol doesn't allow you to easily have denominations lower than a satoshi (10^-8 bitcoins). But once there is a need and widespread agreement, it can be modified to allow it.

Destroyed bitcoins however will not have any significance as a factor contributing to this need.

Meni Rosenfeld
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  • For example, it could trivially be agreed that all transaction outputs from transactions prior to a particular block have their outputs multiplied by 1,000 before being processed. That would turn 1 "old bitcoin" into 1,000 "new bitcoins", each of which can be divided into a billion parts. – David Schwartz Sep 02 '12 at 00:41
  • @DavidSchwartz or, even simpler, they could add one more byte of precision - assuming Bitcoin is already using some library with arbitrary precision numbers - is it? – o0'. Sep 03 '12 at 11:55
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    @Lohoris That would be much less simple, requiring changing many algorithms and data formats. – David Schwartz Sep 03 '12 at 12:20
  • @Lohoris: Bitcoin amounts are integers, with 1 being a satoshi and 100000000 being a BTC. – Meni Rosenfeld Sep 03 '12 at 16:30
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    They are signed integers, so using another bit for more precision doesn't even require changing the data structure. (Still backward-incompatible, though.) More precision could have easily been supported, but I think Satoshi wanted to make it possible to store BTC amounts in double-precision floating-point numbers -- with 21 million max BTC, 8 decimals is the maximum amount of precision for this. – theymos Sep 03 '12 at 22:11
  • @theymos: I wonder if quadruple precision will be the standard by the time we need to improve the granularity of Bitcoin. Anyway, while being representable as FP is nice, eventually I think it will be trumped by other considerations. – Meni Rosenfeld Sep 04 '12 at 04:47
  • Being able to represent them as double is pretty important, considering many programming languages have no other built in number type. – CodesInChaos Sep 04 '12 at 15:36
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It cannot be done easily. It can be done, if the majority of Bitcoin nodes agree with a given replacement solution.

It probably won't need to be done unless the human population increases by orders of magnitude and/or all live American lifestyles AND switch to Bitcoin as the sole global currency. So, probably not a problem.

Consider this: total global currency of all kinds is worth approximately $4.5 trillion. If Bitcoin were used in place of 100% of that, a Satoshi would be worth $0.002. That is, a fifth of a penny. And even pennies are basically worthless today. Since Bitcoin is deflationary/stable, a Satoshi will continue to be a certain percentage of the world's currency. I suppose the problem might be if the human population increases its real product by orders of magnitude, so that a Satoshi would have the buying power of $0.20 or even $2.00. At that point, I suppose people might be annoyed at not being able to sell something for less than a Satoshi.

In that absurdly far-future and unlikely scenario, the Bitcoin protocol could be replaced with something more precise. Or people could supplement their Bitcoin use with Litecoin use (or another cryptocurrency). Bitcoin could end up being the currency of choice for large transactions and Litecoin (etc.) for buying Pan-galactic Gargle Blasters and Soylent Green. Or banks could issue IOU notes for fractions of Satoshis. Or, you know, maybe people will pay with credit cards and the fractional reserve banking system and use fractions of Satoshis that are only recognized by the banking network. Or maybe we'll all be communist Star Trek people with holodecks and replicators who trick Ferengi into accepting Bitcoin.

Dane
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