21 Million Bitcoins

Divisibility is one of the important qualities of money, but is it a good feature if you are continually dividing something that has no substance?  Where is the end in that? If bitcoin can be divided into eight digits to the right of the decimal and eight digits to the left of the decimal (as it is now), does it really even matter where we place the decimal?  We still wind up with a maximum of 2.1 quadrillion bitcoin thingies. Why not just a maximum of two possible bitcoins with 16 digits to the right of the decimal?  Or, 21 bitcoins with 15 digits to the right of the decimal?  Or, two million with nine digits to the right?

With a maximum of two bitcoins, each bitcoin could be described as a much better value than it is nowadays. Talk of profits from a small initial investment could be greatly enhanced. The current level of bitcoins that have been put into circulation through “mining” would then be something like 1.679236869802712 instead of something like 16792368.69802712. We would have a much better value per coin of $131,059,952,096 rather than the measly $13,105 that one coin fetches under the current decimal chicanery. The number of crypto units would still be the same.

We often hear people saying that bitcoins are limited to 21 million. This is merely because the word “bitcoin” is defined as digits to the left of the decimal. But, the total number of crypto units would seem to be the more important factor for the currency’s actual or perceived value. As it stands now, there are currently 1.67 quadrillion “mined” units of one common iteration of bitcoin competing in the bitcoin wars. Also, bitcoin forums frequently mention that miners could decide to increase the number of digits to 16 to the right of the decimal or to any other amount “if the need arises.”  But, they also say that this wouldn’t affect the fundamental value of each bitcoin since the amount to the left of the decimal would still be limited to 21 million. It would only enhance its usability in commerce they say. I don’t quite understand that.

If we add another 8 digits to the right of the decimal, as has been proposed by some, how are we not altering the value of the virtual thing by making it much more numerous?  Would a change in value not occur because the new digits would be seen as the result of some sort of a fancy stock-split type dealie, but without a reduction in value for the now-diluted item?  I really think that a move from a maximum 2.1 quadrillion bitcoin thingies (as it stands now) to 210,000,000,000,000,000,000,000 bitcoin thingies should make a difference in how people perceive the value of each imaginary thingy. There would be 210 sextillion crypto units if bitcoin miners agreed to add eight more digits. But even as it stands now, quadrillions of bitcoin units doesn’t really seem like a tightly limited quantity to me.

But bitcoins (the various iterations) aren’t the only crypto kids on the block. There are over a thousand different types of crypto currencies, each competing for market share. So, if only one of them has a cap of 2.1 quadrillion, what is the total maximum number of crypto units out there for all crypto currencies combined?  We can’t really know because some of them are truly infinite in their maximum quantities. Also, new crypto currencies are being invented all the time. But, if we assumed for the sake of discussion, that the current ones were all capped at 2.1 quadrillion crypto units, as is bitcoin, what is the approximate total number for the ones that already exist?  As of this writing, there are approximately 1,324 crypto currencies that are well-enough known to be tracked. So, if each one of those was limited to 2.1 quadrillion, that would give us 2.78 quintillion. That is the equivalent of hundreds of millions of crypto currency units for each and every man, woman, and child on Earth.

A common theme in the marketing of these items is that their quantity is limited. But, paradoxically, under the concept of making them more user-friendly, they are also marketed as being very divisible down into tiny units—each tracked as a separately owned entity within the block-chain. This is allegedly done to make them more spendable for the proverbial “cup of coffee.”  This micro divisibility is described as something not problematic when it comes to the value of the crypto currency; something that only enhances the value and usability of the crypto currency—since the divisibility comes to the right of some arbitrary decimal position. I don’t see how this has the dual effect of maintaining a limited number of crypto units while merely enhancing spend-ability for small things. The computerized tracking mechanism actually only computes the ownership of the quadrillions of separate items. It is not worried about the human psychology behind describing a more limited “larger” coin that human marketers want to portray as the master unit. The tracking system just sees and tracks quadrillions of units. It seems to me that the world of crypto currencies is not very limited at this point in time by much of anything, including the decision to put a decimal at a random point along a lengthy string of digits.

I have another question about crypto currencies. Do internet mechanisms for exchanging value not count as true crypto currencies if they are tied to something?  I recently reviewed a proposal for an issuance of a new brand-name block chain currency tied to ownership of rights to use a pool of rural survival / hunting  / recreational properties. There are others related to ownership of various tangible things like precious metals. Would these not be included in the 1,324 total mentioned above because they are not purely “virtual” and are related to something tangible? Would they then be more accurately described as futures contracts, stock certificates, or warehouse receipts?   Do they have to represent a pure numbers game in order to be a true virtual or crypto currency that is tracked within the crypto currency world?  If there is some confusion between these two types, maybe we should come up with a name for tradeable units that represent ownership of something. Maybe a term like IGE — “Internet Goods Exchange” — currency. Then we could distinguish those value-based units from purely number-based systems. We could then have two categories of internet money: One type could be purely virtual and the other could be known under the category of “IGE currency.” We could have IGE tracking sites that would list the various goods exchange systems. Or, instead of calling them “IGE currency,” we could just call them “money.”

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