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Infinitely-Divided We Stand

Published on October 26th, 2013 by george

Setting Standards Today is an Investment in Bitcoin's Future

By George Ettinger Bitcoin has been accused more than once of being ultra-exclusive. With our market cap of 21,000,000 bitcoins a century away, our current twelve million in print puts us already halfway there. 21 million already isn't a lot to share among seven billion inhabitants, much less the twelve million we have now. Unfortunately, we have far less than even that. THE DREAD PIRATE'S LOST TREASURE [caption id="attachment_1439" align="alignright" width="333"]Source: http://www.flickr.com/photos/pelegrino/ The blockchain has put a crate of Pirate treasure in all our homes, with no way in hell to open it. (img credit; Flickr)[/caption] One of the newest crises-du-jour in the face of Silk Road's shutdown is not only the fate of the 26,000 coins the FBI has seized, but the nearly mythical half-million they haven't. Despite the 26,000 coins the FBI was able to quickly round up from Silk Road escrow and assets, it appears that Dread Pirate Roberts own accumulated funds are still out of their reach. With his wallet in hand, they lack the necessary encryption keys to open "Dread Pirate" Ross Ulbricht's supposed 600,000 BTC stash. The lost fortune of the notorious bandit proprietor of Silk Road? The screenplay writes itself.  What, then, if this legendary pirate treasure is never opened? Out of a present twelve million bitcoins in circulation, this is potentially five percent of the entire supply- further on, still nearly three percent of all bitcoins there shall ever be. ...and yet, that's nothing compared to the scope of the untouched "Satoshi Wallet," an address sitting on more than 1.1 million bitcoins that have not moved in years. Whether or not it's genuinely the lost vault of Satoshi him-her-their-self, it is nonetheless another ten percent of the pool gone as well. These two grandiose sums are one seventh of the market, now taken out of the game. Add in the incalculable amount of bitcoin wallets and keys lost or deleted over the last three years, and we could have this much all over again. This pool is leaking, and it may end up leaking faster than we can fill it. THE DWINDLING RESERVE Lost bitcoins are a more unforgiving hazard than many of us care to admit. The word "lost" conjures up reassuring notions of checking between couch cushions and under furniture- it gives you delusions of something waiting to be found. Your optimism is no good here: lost bitcoins are practically destroyed, and it happens on a regular basis. It isn't just a matter of feds seizing and squatting on funds- hell, those might still re-enter the market in some way. No, this is the threat from acts of God and man. Hard drives crash. Backups fail. The best laid passphrases of mice and men can be forgotten. Plenty of bitcoins have even just been thrown away as digital clutter. As one early miner on bitcointalk admitted, "Bitcoin was worthless then, the software was annoying... I didn't keep my original wallet."   [caption id="attachment_1443" align="aligncenter" width="474"]If somebody had only warned me that green paper with dead white guys on it was more than a fad... (Img credit: Flickr) How was I supposed to know this dead-white-guys-on-green-paper thing wasn't just a fad?!  (Img credit: Flickr)[/caption]   The actual number of bitcoins this economy can still count on are difficult to measure, but the ones we've confirmed lost thusfar are more than enough to fuel Bitcoin's many detractors. Those who call it exclusive, a scam, or simply use "deflationary" as a pejorative can find plenty wrong with this trend: a future of reduced mining rewards combined with more-frequent coin-losing catastrophes. The diehard deflationists will suggest another point of view: that every coin lost just bolsters the value of the ones being held. The Bitcoin Wiki assures us, "If you lose your coins, all other coins will go up in value a little. Consider it a donation to all other bitcoin users."  They aren't wrong- at least not mathematically. Increased scarcity with consistent demand does lead to higher value, but there's a world of other consequences that will affect the perception (and function) of "value." Massive events that lead to lost coins tend to have far-reaching repercussions in and of themselves.  Prices have rebounded with gusto since the collapse of Silk Road, but this was more an expression of consumer confidence than the ripples of lost coins increasing value.  Of course higher values per coin are great for existing owners and investors, but if we keep losing coins on the scale of Ulbricht and Satoshi's lost stashes, the handful of coins remaining will start to develop an ivory tower around them. ...or will they? Anyone who knows their way around a transaction knows what is supposed to prevent this. One of Bitcoin's most intrinsic features can keep the currency viable for the masses, but only if our culture can embrace it in full. THE GREAT DIVIDERS The immediate, obvious reassurance is that Bitcoin is "infinitely divisible!" Well, that's actually not true at all. It's not "infinite," but it's a hell of a lot, and it feels good to call it that, so we will.   [caption id="attachment_1445" align="aligncenter" width="320"]Since the dawn of the digital age, human avarice has stopped at nothing to achieve "Infinite" this and "Infinite" that. Since the dawn of the digital age, human avarice has stopped at nothing to achieve "Infinite" this and "Infinite" that.[/caption]   Many of you may already know the details, but, for those who don't, "infinite" divisibility is the subtle bread-and-butter of bitcoin transactions.  Bitcoin can be sent in fractions as small as eight decimal places; the oft-mentioned "Satoshi" of Bitcoin, the smallest chunk o' change, is .00000001 BTC. The 21-million limit on whole BTC seems a lot less threatening when you think of it as roughly two quadrillion Satoshis. Compared to the estimated one trillion US Dollars in circulation, that leaves us a little breathing room to lose a few coins over the years. Bitcoin needs to scale down, and it needs to scale with methods that suit the modern world. The "Satoshi" is, right now, a junk unit- a technological benchmark, not a fiscal one. While it's possible we may eventually reach the scenario of operating on a Satoshi level, such a tremendous gap could prove insurmountable to the thousands of new Bitcoin users arriving every week. We already have a crisis of decimal-illiteracy in the innumerate-and-proud United States threatening to hold it back. This is where the crypto community of the world needs to find kinship in the scientific. The International System of Units, established in 1960, set the course for scientific and mathematics work on a global level. Global standards, and the resulting phase-out of regional "legacy" terminology for scientific and chemical terms in particular, have been a boon for the information age. Scientific works worldwide all function on base-ten metric prefixes and suffixes; today, the centi-, kilo-, and millimeters of research measurement are recognized apolitically across nearly all borders. A universal language that transcends borders should speak volumes to any Bitcoin supporter. The recent adoption of mBTC by wallets and users is a monumental investment in the currency's future. Bitcoin's ongoing deflation needs a semi-rigid framework to continue scaling. The millibitcoin- be it mBTC, embit, millie, or elsewise- will need to be the recognized standard in the very near future. The theoretical uBTC, the microbitcoin, may not have purpose today, but it is not a long road to reach it. The SI's "metric" system remains something of a joke in the United States, seemingly the last holdout of irrational Imperial units in the modern world.  As a nation, it is so deeply entrenched against SI units that change seems impossible.  But Bitcoin isn't the United States, and plenty of its users aren't either.  However you view your place on the blockchain- a consumer, user, member, hobbyist, advocate, you name it- it is in your best interests to abandon local bias and think globally.   [caption id="attachment_1446" align="aligncenter" width="610"]Just this once, I'm asking you to reject everything The Simpsons taught you and embrace this knowledge. (src: Wikipedia) Just this once, I'm asking you to reject everything The Simpsons taught you and embrace this knowledge. (src: Wikipedia)[/caption]   No matter how we use (or lose) it, Bitcoin is going to deflate. To survive these changes, to transcend borders, it has to make way for these new scales. It can't stand on its own if we keep treating it only as a medium of other fiat currencies.  Cryptocurrency isn't exclusive to the erudite or the wealthy, either; it's exclusive to the open-minded and the hard-working, like the research and technology communities that set these standards.  From "millies" to "mikes" to the occasional "kilo," embracing SI units is not only a step towards Bitcoin's future, but a gesture of maturity for a culture that is coming of age.

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