Why Bitcoin may never hit the mainstream – usability

decimal place valueDecimal points may be the death of Bitcoin as far as widespread adoption is concerned.

We learned a good amount about Bitcoin and Bitcoin startups last night at the Refresh Miami monthly event, but beyond all the complicated lessons about wallets, cryptography, and blockchains, that will make the general consumer unable to understand how their money translates to Bitcoin and how to use it, one singular thing stood out in my mind, that could be the greatest stumbling block to adoption – decimal points.

One of the speakers (my apologies for not catching the name) was asked about the limits to the number of Bitcoins that can be made available being 21 million and if there is a limit on them, then how could they become a currency worldwide and used by all. The response was that Bitcoins can be broken down into 8 decimal points, so you can fractionally spend Bitcoins with one of the denominations being a MilliBit.

The name chosen by popular vote in poll on the Bitcoin forum to represent the SI unit of 0.001 bitcoins (BTCs). – Bitcoin Wiki

Sorry folks, but that isn’t going to cut it, at least in the good ole US of A, where we can’t even get people to switch to metrics or be able to convert it. Can you imagine trying to get people to understand calculating their current Bitcoin counts down to 8 decimal points? Without having a solid footing on how to make this as simple as denominations for the US Dollar, I am concerned that this will be a dismal failure. Of course there are ways around this, but we are just getting started with trying to get normal humans to understand how Bitcoin works and why it’s better. I’m not sure we can get them past this very simple sounding, but very complex to others issue.

I am all for this cryptocurrencies making it to the mainstream, but am definitely concerned about our ability to spread adoption.

The other very human factor issue, is that until there is drastic change in attitudes about these currencies, users will always have to calculate against their own currency every time they discuss buying something and that is a barrier to adoption. Certainly software can make that easier, but getting humans to think that way all the time is a very difficult obstacle to overcome. Now add these 2 significant usability issues to the complexity of what it is and how it works and I think we have very serious problems to deal with for this to be a success.

Don’t get me wrong, I am on the bandwagon and want to be a part of the mix and see success, but if someone doesn’t come up with a way around it, I think there is more promise in the underlying technology and platform to be used for other concepts, than full adoption of Bitcoin. Fred Wilson has more on that here.

  • Brad, there is talk to call the smallest unit a Satoshi, which is its smallest denomination. See also my latest explanation – http://startupmanagement.org/2014/02/01/the-8-identities-of-bitcoin/

  • Any kind of naming scheme would definitely help, but I am most concerned with the average Joe being able to just do fractional math beyond 2 decimal points.

  • I’ll take a look at your post. Sounds very interesting. Thanks for sharing.

  • although “satoshi” doesn’t roll off your tongue that easily 🙂

  • Tuxavant

    denominations will probably end up being “ubits” or “microbits” – a millionth of a bitcoin. This allows for two decimals at the end to mimik traditional currencies. So “.001” bitcoin would be called “1000.00” ubits.

  • Mruiz

    Brad, You should have done a little more research before writing this.

    This already has been thoroughly discussed in the Bitcoin community and there will be adjustments mad to the units of account.

    Major Bitcoin players have already started moving to the millibit unit of account.

    Don’t underestimate the creative mental capacity of the worlds smartest people to come up with a solution to a vested financial interest.

  • Jeremy Lynn Teynor

    well guess people will have to learn how to count! or the parents can ask there 5th grader how much money they have.

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  • I actually did do a bit of research and quote the millibit decision above, but I don’t think that solves the problem. The problem is naming and it’s also changing habits and it’s the fractional math issues, that I am not confident average folks will get or be willing to adapt their spending towards. I can definitely be wrong about this and hope that I am, but I’m not confident it is something that is solvable with a name.

    In the US, we are used to specific denominations and they always mean the same thing to us. Asking people to shift to variable values for a currency they don’t even understand and then asking them to calculate to 8 decimal points based on each value is a huge habit changing problem.

    I am sure others will have creative solutions, but I still don’t see it. Let’s hope I am wrong, but changing human habits is incredibly difficult.

  • That sounds like a better solution, but still more complex than what folks are used to. I think kpeople are capable of adjusting, just not sure they will be willing to do it.

  • Mruiz

    You did Research? but from the comments you made it seems you didn’t even know what a satoshi was?

    Obviously dealing in fractions and decimals is mentally cumbersome and confusing.

    This will be all taken care of with time. There is already talk of switching to Satoshi units as to never have to adjust again. When Bitcoin is at $100k in a few years this wont even be an issue.

    Youre right to be concerned, It could have a short term effect on user adoption but this is probably the least of Bitcoin’s problems.

    I think the greater hurdle to conquer is the scalability issue. But again, all of this is 100% solvable and will be done.

  • Nasim

    As someone with a math degree who has tutored many people it really is useless to rail against the math skills of the average person. They are the average person and if they can’t easily and simply understand it they won’t use it. All the eggheads can just take their stupid buttcoins and twiddle them all they want.

  • I guess we have differing definitions of research, but your criticism aside, I appreciate your insight and hope you are right the issues will be “overcome with time”, but it leaves bitcoin vulnerable to being left behind as a niche tool while something else captures users, but with far less, capability than Bitcoin. It is a recurring theme in the tech world.

  • Mruiz

    Thanks for the quick reply and Convo.

    have a good day 🙂

  • Dieter Engel

    There’s a really easy solution for this. Have computers do it.

    A store selling computers could price them in Dollars or whatever old currency the customer wants, but behind the scenes the transaction happens in bitcoins at the current exchange rate. Thus the customer keeps bit coins, doesn’t have to worry about the exchange rate and buys things based on the currency unit they are used to. The computer calculates the fractions of a bitcoin needed to pay and the seller gets the bit coins.

    Sellers who get a lot of bit coins can then decide based on their own needs when and how much to exchange into dollars or even other currencies.

    Thus, a store in Europe selling french cheese could price in Francs in their computer system (e.g.: the shop keeper works in the currency they prefer). The exchange happens in bit coins but the customer in the USA sees a price in Dollars.

    Bitcoin is just a medium of exchange between these two parties, who both get to work in their preferred currency.

  • Dieter Engel

    Stupid people think things they don’t understand are stupid and call them “stupid buttcoins”, until their stupidity comes back to haunt them and they then complain about how it isn’t fair.

  • Nasim

    If the brains behind bitcoin were wise right now they would take a lesson from Dogecoin and immediately start talking and demoninating the ‘bitcoin’ currency in Satoshi’s so people can feel they have a real stake in it and stop dealing with decimals just like the Mexican peso has done.

    Who cares how many bitcoins you have it’s all about the Satoshi’s. The titanic number of daily transactions seen in Dogecoin are based on this idea, amongst other staggering quasi technical innovations like tipping culture, user-friendliness, extremely short block-halving time etc. Too many details to discuss here but definitely worth investigating for those who aren’t yet familiar.

  • I think that is a very likely step in the process to adoption and brings up the question of whether users will care what goes on behind the scenes as long as they spend what they know. It would not help the “brand” of bitcoin or what I perceive as the ultimate goal, but would definitely be a step in the tight direction if the infrastructure gets built and adopted.

  • Nasim

    What the average person thinks is and isn’t fair becomes morality which becomes which becomes law enforced by men in black tactical suits who freely swoop in and crush any proud dread pirate freedom fighter believing in their supposed right to do anything they please.

  • Thank you for your comments and insight.

  • Dieter Engel

    I think what you’re missing in my description (because it wasn’t clearly there) is that all the parties know they’re working in bitcoin. The user is paying in bitcoin the seller is getting bitcoin. They just set and evaluate prices in their preferred currency. So this still helps the brand of bitcoin, because bitcoin causes a transaction like this to be quick, easy and a whole lot cheaper than the alternative.

    The alternative is having to think in francs and convert your dollars to francs (incurring a %1 charge) plus a spread for the exchange rate, not to mention %2.5 + $0.30 credit card fees.

    Right there that’s about %4 savings (Depending on the exchange spread which due to the nature of the current highly regulated system will always be much wider than bitcoin.) For some people their bank tacks on an additional %1 for the hell of it.

    I don’t think people will have much problem paying with “bitcoin” when they save up to %5.

  • Excellent points. Thanks for commenting. I can definitely see the savings motivation, especially on the merchant side .

  • Dieter Engel

    That works until technology disrupts things, which is what bitcoin is: a disruptive technology.

    also, until the average person realizes they’ve been enslaved by the guys claiming to protect them, then you get a revolution.

    Revolutions are not too controllable. So, I’m hoping for technology to ensure liberty.

  • Nasim

    It’s yet another defect of bitcoin that the smallest significant digit, 1/100,000,000th of a bitcoin, a satoshi, can not be represented in engineering notation (i.e. 10^-3 10^-6, 10^-9) What could Mr. Nakamoto have been thinking to do this when the obvious solution was to have 1 satoshi=10^-9 or 10^-6 and could have equalled a nanobit or a microbit and avoided a whole host of confusing problems for people.

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  • Jeremy Lynn Teynor

    why do you care if you have none!

  • Jeremy Lynn Teynor

    with this comment u just sound retarded!

  • Jeremy Lynn Teynor

    guess you never traded on the forex market, lot of decimals there!

  • Tuxavant

    It is curious. Describing bitcoins as having 8 decimal places requires huge mental gymnastics and ends up being wasted energy. Bitcoins are not stored as fractions. The basic unit of value stored in every transaction, a satoshi, is an integer, not a floating point number. My guess is that Satoshi Nakamoto defined a bitcoin as 100,000,000 “pennies” to confuse and slow adoption of the technology to let it develop
    before the masses figured out what it was and just how disruptive it
    will be to global finance.There is other evidence of Satoshi’s concern for rapid adoption in several of his communications.

  • Nasim

    What a wily rascal. He should have gone all the way and made the total number of bitcoins to be this very important number 37,234,701

  • Nasim

    Scalability issue of course and let’s never forget to remind ourselves that bitcoin is slower than spreading molasses on a shit sandwich and therefore just as useless for point of sale operations because of this.

  • Nasim

    you make a valid point

  • Tuxavant

    The total number of monetary units is derived, not by a hard number, but by a decrementing calculation of payout values. The genesis block reward was 5 billion satoshi (50 bitcoins). At every 210,000 transaction blocks (about 4 years), that reward divides in half until the reward value equals zero, at which point, monetary inflation ceases. This process will take 130 years and end with 2.1 quadrillion satoshi being created.

  • Magdalena

    This is what happens if cryptocoin newbie tries to understand a system which is a little big for their heads. PAYPAL and EBAY are already on their way to integrate bitcoin. I made a FORTUNE! and still getting more! hahaha,newbies…

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