To get everybody on board, let’s have a quick look at how bitcoin is denominated by its tech: One Bitcoin or 1 BTC is the official currency of the bitcoin network. Every bitcoin can be split into 100.000.000 pieces, so the smallest unit of a bitcoin is 1/100 millionth of a whole coin.
This is fairly unusual to an average fiat currency user, as the biggest currencies in the world like the US-Dollar, the Euro, and the British Pound Sterling are all denominated in units of one hundred. For example, 1 USD as official currency can be divided into 100 cents (likewise in EUR and pence in the UK, respectively.)
The adaption and habituation of the decimal fiat system shall not be undervalued: Each day, every one of us is looking at several decimal numbers indicating prices and values. It starts with a coffee in the café, let it be $3.29 for the Grande Americano, it goes on with currency values in a professional environment and ends with the daily commute where you see gas prices around $4.58/gn.
This psychological anchor effect might be one reason why Bitcoin and several other cryptocurrencies, in general, are still used as a “hobby for geeks,” as a “casino” or an outright “scam.”
As Bitcoin already phonetically resembles a coin in real life and the word “coin” is mentally tied to a round piece of metal worth half or a quarter of a Dollar, it is difficult the get the head around a Bitcoin should be worth around 19.000 Dollars (at the time of writing this article.)
I mean, if one Bitcoin accounts for about the median savings of a US household times four, how could that ever be a suitable financial vehicle for average people and not only the next shiny toy for the super-rich? Why should average Joe bother with this as he can’t even purchase a single one of those coins?
This is where a shift in denominating this currency for everyday use might be helpful: For the smallest piece of one bitcoin, or 0.00 000 001 BTC, there is a non-official denomination as “Satoshi.” In honoring Satoshi Nakamoto, the founder of Bitcoin and author of the corresponding whitepaper, almost every player in the community is referring to this smallest piece of a Bitcoin as Satoshi, SAT, or even s.
Having 5.000 SATs worth around one US Dollar and paying for a pack of gums at the petrol station seems much more approachable, isn’t it?
Not only is writing 0.00034567 BTC tedious and prone to makings typing errors, but it is also not imaginable with the monetary numbering conventions we are used to. I’d argue people would have a much easier time getting their head around Bitcoin when they were to use 34.567 SATs as the payment for a media subscription or maybe a fast-food menu.
Although denominating BTC in SATs will still not solve the 9-digit writing of a whole bitcoin, as 736473391 SATs would be, (quickly shifting the decimals,) 7.36 BTC plus change.
There are several attempts on working around this issue, but none of them has been accepted widely by the community or set as a quasi-standard:
- Electrum wallet denominates the balance in “milli-Bitcoin” or “mBTC” with 1.23 mBTC being 0.00123 BTC or 123,000 SATs.
- Bitcoin Magazine proposed a hybrid displaying option as follows: ₿1.23 | 456 789 sats, so the Bitcoin value resembles the common fiat denomination whereas a 6-figure SAT budget remains also readable and understandable.
Either way, I suppose an official denomination of Bitcoin in a more approachable and usable way would help a lot in getting some mental barriers out of the way that kept people from entering the Bitcoin protocol.
What do you think about this? Would a standardized denomination in SATs or mBTC be useful to you?
Originally published on 09/26/2022 on Publish0x*, where you can earn crypto for reading and writing articles.
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