The site says that 75% of all bitcoins have already been mined. I understand that it will become more and more difficult ensuring that the amount of money will continue to increase. However, I remember that I once read that bitcoins can only be split into so many "pieces" which wouldn't be enough to provide a sufficient amount of money for the economy to function. Does anyone know more?
Each bitcoin can be theoretically split into 100 million Satoshis (the bitcoin equivalent of a penny I guess). The maximum number of bitcoin that can exist given the current system 21 million. Those multiplied together seem to me sufficient for any economy (about 12x the total amount of US currency in circulation if you count a satoshi as a penny), but someone who knows more about economics would have to chime in for sure
The smallest transmissible unit of Bitcoin is the "satoshi", which is one hundred-millionth of a Bitcoin.
However, if the value of one satoshi ever grew large enough that people wanted to subdivide it, it'd be possible to migrate to a smaller division by consensus, by adding support in miners and clients, advertising that support without using it, and migrating when enough of those advertised the support.
That's a pretty big "if." There is currently a crisis over block size that has failed to reach any consensus. It's unlikely that any fundamental feature of Bitcoin will ever be allowed to change.
There is no crisis, consensus for the block size debate was reached quite a long time ago. The development community is in final stages of testing and QA for segregated witness, which would ~double the capacity of the network.
Also, I would not consider the divisibility of bitcoins as a fundamental feature of Bitcoin. Compared to the block size debate (which has effects on the decentralization of the network), divisibility is a pretty straightforward change that has little (none?) drawbacks and should reach consensus pretty easily.
> The development community is in final stages of testing and QA for segregated witness, which would ~double the capacity of the network.
A factor of two or four doesn't really solve the problem, it just puts off the problem. (The same thing goes for minor block size changes, really.) What will happen when the network needs 100x capacity?
It solves it for now, which tends to be how democracies solve problems, which is what bitcoin is. Fixing it permanently is how an engineer thinks, but that style of thinking doesn't work in a consensus network full of non-engineers. Kicking the can down the road is inherent to community based solutions.
A single bitcoin can be split infinitely -- it's just a matter of adjusting the number of decimal points. Currently, a satoshi amounts to a millionth of a Bitcoin. If a Satoshi becomes more valuable, there may be more decimal points added.
Is this statement correct? What's the point of a limited number of coins, if they can be split infinitely? That's no different than the government printing money.
I don't think it's currently correct (there's a base unit, but I don't know if it's that's hard limit or if it can be changed in future versions), but the difference is that when the government prints money, they get the money. The government printing money would be like someone issuing more bitcoins that don't already belong to anyone. Splitting up bitcoins doesn't change the fraction of all bitcoins that each person owns.
Plus, they're already "split up" as it were, it's just they're not valuable enough that people are using nanobitcoins or anything like that. It's only when the value of the currency goes up that people will do transactions in smaller fractions of a bitcoin.
There are some good comments in that stack exchange question. They divide the units by people and get 300000 satoshis/person. I was going to mention though in order for those small units to be useable the currency would have to be very valuable. Right now the trading fees are somewhere in the order of 0.0001-0.00001 so if you have any less than that you cant be sure that you will be able to transfer them.
It will not become "more and more difficult ensuring that the amount of money will continue to increase". The amount of money will not increase at all, period, past the designed-in limit of 21,000,000 total bitcoins. There is no ensuring anything, the rate of creation of new bitcoins was programmed in from the start and cannot be changed.
Most hardcore bitcoiners seem to subscribe to a macroeconomic theory that holds that allowing a Government entity to create more of a currency is a bad thing, and that the economy would be better off if the amount of currency in circulation was fixed by external factors.
I find more persuasive the theory that the total value of economies tends to naturally grow, and the total value of currency in circulation must increase at a controlled rate to create a small but positive inflation in order to have a stable economy. When there are artificial limits on the creation of currency, the value of goods created by the economy grows, but the total currency in circulation does not, so you get deflation, which slows spending and investment, and shrinks the economy again.
> The amount of money will not increase at all, period, past the designed-in limit of 21,000,000 total bitcoins.
Only if no majority (of hashing power) decides to change this "limitation".
EDIT: Or if there are sufficiently many people who want more bitcoins they might even consider a fork of the Bitcoin blockchain without having a majority of hashing power.
> No, hashrate majority can only introduce "soft" restrictions, not remove any hardcoded ones.
If there really is a strong wish from the majority to increase the maximum number of bitcoins, I see no technical reason why one couldn't implement a solution on the blockchain for this. Just, say, introduce some marker in the block indicating that this block follows a new block format that allows larger coin numbers than the existing hardcoded limit. Probably reading such a block would not be possible using a "classic" client. I can even imagine that lifting the hardcoded limit could be possible without making the blocks invalid to "classic" clients, but this would involve more work (for ane explanation of how this might be implemented I would have to research into the block format).
That's why there's a version tag in blocks. This would be a hardfork event where all clients must switch simultaneously to the new block format and rules.
> This would be a hardfork event where all clients must switch simultaneously to the new block format and rules.
Indeed, but a hard fork is possible (cf. debate about block size). There actually just good "social-economic" reasons not to do a hard fork, but nothing in the Bitcoin technology prevents them.
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[ 3.5 ms ] story [ 70.1 ms ] threadEdit: found the answer: The protocol allows to create new, smaller units. http://bitcoin.stackexchange.com/questions/122/will-we-ever-...
But... looks like today it is more like 2,000 satoshis per penny, pretty big difference?
However, if the value of one satoshi ever grew large enough that people wanted to subdivide it, it'd be possible to migrate to a smaller division by consensus, by adding support in miners and clients, advertising that support without using it, and migrating when enough of those advertised the support.
Also, I would not consider the divisibility of bitcoins as a fundamental feature of Bitcoin. Compared to the block size debate (which has effects on the decentralization of the network), divisibility is a pretty straightforward change that has little (none?) drawbacks and should reach consensus pretty easily.
A factor of two or four doesn't really solve the problem, it just puts off the problem. (The same thing goes for minor block size changes, really.) What will happen when the network needs 100x capacity?
Plus, they're already "split up" as it were, it's just they're not valuable enough that people are using nanobitcoins or anything like that. It's only when the value of the currency goes up that people will do transactions in smaller fractions of a bitcoin.
One satoshi is one hundred-millionth of a bitcoin, not a millionth of a bitcoin.
Most hardcore bitcoiners seem to subscribe to a macroeconomic theory that holds that allowing a Government entity to create more of a currency is a bad thing, and that the economy would be better off if the amount of currency in circulation was fixed by external factors.
I find more persuasive the theory that the total value of economies tends to naturally grow, and the total value of currency in circulation must increase at a controlled rate to create a small but positive inflation in order to have a stable economy. When there are artificial limits on the creation of currency, the value of goods created by the economy grows, but the total currency in circulation does not, so you get deflation, which slows spending and investment, and shrinks the economy again.
Only if no majority (of hashing power) decides to change this "limitation".
EDIT: Or if there are sufficiently many people who want more bitcoins they might even consider a fork of the Bitcoin blockchain without having a majority of hashing power.
Increasing the supply will fork them off into a separate chain incompatible with the majority of users.
If there really is a strong wish from the majority to increase the maximum number of bitcoins, I see no technical reason why one couldn't implement a solution on the blockchain for this. Just, say, introduce some marker in the block indicating that this block follows a new block format that allows larger coin numbers than the existing hardcoded limit. Probably reading such a block would not be possible using a "classic" client. I can even imagine that lifting the hardcoded limit could be possible without making the blocks invalid to "classic" clients, but this would involve more work (for ane explanation of how this might be implemented I would have to research into the block format).
Indeed, but a hard fork is possible (cf. debate about block size). There actually just good "social-economic" reasons not to do a hard fork, but nothing in the Bitcoin technology prevents them.