Don’t Think Bitcoin, Think Milli Bitcoin
By chris on ALTCOIN MAGAZINE
Bitcoin is a scarce, decentralized, digital asset that in its short 10-year life has exploded in value.
Currently, a Bitcoin is nearly 8000 USD. As the price rises, FUD or fear, uncertainty, and doubt will appear.
For many who are not familiar with Bitcoin, spending 8000 USD is out of reach, some even think that it is not possible to buy a fraction of a Bitcoin — one definitely can. A bitcoin is divisible to 1 part in 100 million. That smallest unit is called a Satoshi.
Humans like to own a whole of something. If they can’t own a whole of a thing then ‘why bother’ they may say to themselves. While this is irrational, it is hindering adoption.
This is one of the many reasons why we should think in milli Bitcoin (mBTC), a one-thousandth of a Bitcoin. These units result in a much more user-friendly and easy to understand price: 1 mBTC is $8 at current prices.
Bitcoiners often talk about wanting to buy that mythical cup of coffee utilizing a Bitcoin wallet. Say the coffee costs $3.25. In BTC, the price would be 0.00040625 … yikes.
Too many decimal places that can lead to mistakes and overpaying. In mBTC, the cost is 0.40625 mBTC
You think to yourself: ‘Less than 1 mBTC so looks reasonable’ — peace of mind results.
Back to the desire to own a whole of something rather than some abstract fraction. Let's say I have $325 that I am happy to put aside from my pay or my saved pocket money. Assuming no fees, that is 0.040625 BTC — a frustratingly unsatisfying amount to own. However, it also is 40.625 mBTC — 40 units, fantastic, I am on my hodling way.
Comparing To Gold
It turns out that the most intuitive units to use to compare the Gold supply with the Bitcoin supply is oz (ounces) and mBTC, respectively. Let’s see how that comes about.
The total above ground supply of Gold is estimated at 190,040 metric tonnes. At 32.15 troy ounces per kg, this amounts to a supply of 6,109,786,000 oz of gold. That is about 6 billion oz of gold.
Satoshi Nakamoto, the anonymous inventor of Bitcoin, configured the code such that there will only ever be just under 21 million bitcoin. New bitcoins are issued to miners successful in solving blocks (see my article Simply Explaining Bitcoin for some more details).
To date, just under 18 million bitcoins have been issued. This corresponds to 18 billion mBTC. Now, recalling we had 6 billion oz of gold, we can easily see the comparison.
The table below summarises this. The current Gold price is about 1,350 USD. If gold had a supply, not of 6 billion oz but 3 times that, at 18 billion oz, we would expect the price, at constant market capitalization, to be a third or $450 per oz. From this, thanks to using mBTC, we can now clearly see how undervalued Bitcoin is with respect to Gold (by about a factor of 56 times).
Bitcoin is often called the digital Gold by its advocates. If the price in mBTC was to rise to $450 then the Bitcoin price would almost reach an astonishing 0.5 million USD.
To finish up, I hope I have shown the intuition value that thinking in mBTC brings. I am passionate about this as I see thinking in BTC as an increasing psychological hindrance to adoption as price increases.
Let me know what you think.
