Bitcoin – the Satoshi limit

28Nov13

The smallest presently supported subdivision of a bitcoin is 0.00000001, known as a Satoshi. This unit could also be called 0.01 µBTC or 10 nBTC (if there was such a thing as nano Bitcoin[1]).

BTCshrink

The Satoshi limit[2] happens when the smallest unit of Bitcoin equals the smallest unit of currency that we’re happy to use for everyday transactions. This reasonably falls in the range of 1¢ to $1.

So what happens if a Satoshi is worth 5¢ (a log midrange value for the reasonable range)?

A 5¢ Satoshi implies that all 21 million BTC would have a total value of  5¢ * 21000000 / 0.00000001 = $105 Trillion. At that valuation a single BTC would be worth $5m

$105T is in the same order of magnitude as all world total liquid assets, and an order of magnitude more than all of the gold ever mined (which has been used by one analyst already as a model for Bitcoin value).

It looks like whoever designed this ‘weapon which exploits greed and social engineering to astonishing effect‘ got their sums right.

Notes

[1] There’s no reason why the Bitcoin protocol couldn’t be subsequently modified to deal with smaller subdivisions, but the Satoshi is what we have for the time being.
[2] I have my brother to thank for this observation.



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